HomeMy WebLinkAbout2024-04-08 24-122 OrderCITY COUNCIL ACTION
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Council Order 24-122
April 8, 2024
CITY OF BANGOR MAINE
MATURED TAX OR UTILITY LIEN POLICY
It is the City of Bangor's policy to administer a tax collection and lien policy that is fair and
consistent for those that have fallen behind on taxes and also for the residents and
taxpayers of the City. Further, it is the City's policy to collect, to the greatest extent
possible, all property taxes and utility charges due to the City in a timely manner and in
accordance with applicable state statutes. In accordance with the policy, the C�c�will
work with individual taxpayers who make a good faith effort to meet their obligations.To
ensure that system is fair, however, the City will not release its ownership interest in a
property with matured liens, unless the property owner pays all amounts due to the City.
This applies to monies owed for any and all purposes,1 whether or not such amounts
relate to the property with the matured lien(s) and brings the property into compliance
with life safety and property maintenance issues deemed critical by the Code
Enforcement Officer.
1.0 Purpose
This policy does not affect the applicability of the Maine Statutes, case law of the
State of Maine, or any other law governing tax or utility liens. Instead, it offers
guidance on how staff should process any property with a matured tax or utility
lien and informs taxpayers of how they can expect such a propertyto be processed.
In that regard, this policy comes into effect only after a tax or utility lien has
matured, said maturity renders title to and ownership of the property to the City.
This policy deals only with two issues: (A) when the City should take possession of
a property with matured liens, and (B) when the City should release its ownership
in such a property.
2.o Definitions
As used in this policy, the following terms have the following definitions:
1 The amounts due that must be paid do not include amounts due under loans made by -
the City to the taxpayer and secured by either a Uniform Commercial Code (UCC) filing or
secured by a mortgage deed executed by the taxpayer if those loans are not past due.
pg. 1
Council Order 24-122
April 8, 2024
Tax lien: a recorded legal claim against the property of a taxpayer that fails to pay
real estate or development district property taxes owed to the City.
Utility lien: a recorded legal claim against the property of a taxpayer that fails to
pay sewer or stormwater utility charges owed to the City.
Matured lien: a recorded tax or utility lien that has passed the allowed redemption
period for the taxpayer to pay the outstanding amounts. Once matured, the lien
automatically passes title ownership to the City.
Tax Acquired Property: property whose title has passed to the City due to a
matured lien.
Possession: the City taking official action to take formal custody of a property with
a matured lien. The City may have title ownership of a property without exercising
its right to take possession of the property.
Taxpayer(s): the term taxpayer(s) is used to describe the owner of the property
prior to the tax or utility lien maturing. This term is used instead of "owner" to
avoid confusion and to avoid any argument that the City does not "own" or have
title to a property upon the maturity of a tax or utility lien.
Workout A�reement: an agreement between the City and a Taxpayer establishing
conditions and payment of amounts owed.
Development a�reement: an agreement between the City and a Taxpayer
establishing conditions and/or corrective measures of life safety or property
maintenance code violations.
Quitclaim Deed: a term used in this policy as shorthand for "Municipal Quitclaim
Deed," which is an instrument used by the City to release any title that it may have
to a property. This is the method by which the City will transfer its ownership
rights to a property with a matured lien to another party.
pg.2
Council Order 24-122
April 8, 2024
3.0 Policy:
3.1. Release of Ownership Interest
a. If a taxpayer has the opportunity to sell a property with a matured lien before
the City takes possession, staff may recommend the sale without payment of
all other charges due by the taxpayer. The City would still require payment in
full of all charges related to the property and resolution of any life safety or
property maintenance issues. That resolution may be in the form of a
Development Agreement with the buyer.
b. If upon payment in full of all charges there are remaining unresolved life safety
or property maintenance code issues, the taxpayer must enter into a
development agreement with the City before the City will execute a quitclaim
deed. The development agreement, and the related quitclaim deed, will
establish conditions for corrective measures to resolve any or all violations and
a clause to revert the property back to the City in the event of non-compliance.
Upon compliance of all life safety or property maintenance issues, a release
deed will be prepared and/or a certificate of occupancy may be issued by the
Code Enforcement Officer in order to remove the reverter type clause.
The above requirements apply to any request for the City to release its interest in
a property due to a matured lien.
3.2 Possession
A variety of factors will be considered in making determination as to whether or
not the City should take possession of a property with a matured lien, such as:
• Willingness and demonstrated ability of the taxpayer(s) to pay all amounts
due to the City,
• The ratio ofthe amount owed the Cityto the assessed value ofthe property,
• The impact of the property within the neighborhood,
• The condition of the property including its overall appearance,
pg.3
Council Order 24-122
April 8, 2024
• Willingness and ability to address any code and/or property maintenance
issues,
• Exploration of other options to meet obligations to the City, such as
execution of a workout or development agreement,
• The property "type."
The following are the various property types that will be considered:
➢ Vacant - Buildings and land which are vacant.
➢ Commercial Properties - This category includes not only properties
utilized in the conduct of business but also properties used for
residential and commercial rental purposes.
➢ Owner Occupied Residences — These are single-family residences in
which the owner lives.
It is not the City's desire to take possession of owner-occupied single-family
residences unless the continued occupancy of the residence poses a direct and
immediate threat to the health, safety and welfare of the residents or unless the
City determines that the owner/resident is unwilling or unable to meet their
obligations to the City.
Staff will also take into consideration if possession of a property may create a
significant legal or financial liability to the City such as, but not limited to, if a
property may have hazardous material or other environmental impact issues.
The ultimate question in determining whether the City should take possession of a
property is the following: what is in the best interest of the City and its residents
at-large.
3.3 Partial Payment
The City will not accept partial payments on an account with a matured lien unless
the taxpayer has entered into a payment arrangement with the City or they provide
with the payment a signed Partial Payment Waiver form indicating they agree the
City does not waive its rights or in the case of the taxpayer's primary residence,the
Tax Collector may accept a partial payment if it is determined that the taxpayer is
pg.4
Council Order 24-122
April 8, 2024
making a good faith effort to redeem the property. The City may also accept a
partial payment received on behalf of the owner(s) from a recordedz mortgage
holder which is paying on the most recent tax or utility charges even if there are
matured liens against the property. If the recorded mortgage holder attempts to
pay any other charges, the same requirements described above will take effect.
3.4 Exceptions
Exceptions to this policy may be made by the City Council or the Finance
Committee on a case-by-case basis.
4.0 Procedure
4.1 Staff Responsibility
Prior to any recommendation to the Finance Committee a review committee
consisting of staff representatives from Treasury, Finance, Economic Development,
Code Enforcement and Legal will review a listing of all property with matured liens
prepared by the Tax Collector. Staff will focus its review efforts on the most
delinquent accounts first, beginning with vacant properties and then moving to
occupied properties. Staff may also consult with other Departments as needed.
Once a preliminary list of properties has been identified, staff will move forward
with the following procedures:
• Tax Collector will, through inquiry, determine whether or not the Police
Department has had recent contact at the address.
• The Code Enforcement Officer and the Housing Rehabilitation Coordinator,
will determine if the property is occupied.
• The Code Enforcement Officer and/or Housing Rehabilitation Coordinator
will conduct an exterior assessment (i.e. drive by) to determine the
apparent condition and status of the property. In addition, staff will leave
notification, with contact information, at the property that the City is
considering taking possession of the property.
z Recorded is defined as a documented mortgage interest in the property which has been filed at the
Penobscot Registry of Deeds.
pg.5
Council Order 24-122
April 8, 2024
• The Code Enforcement Officer will review the Code Enforcement files to
determine if there are any documented and outstanding code violations.
• The Tax Collector will verify that all legally required notices have been sent.
If necessary, the Tax Collector will take the necessary steps to remedy any
notification issues.
• The Tax Collector will mail by Certified Mail and regular mail a notice to the
last known address of the Taxpayer(s) indicating the City's intent to take
possession of the property.
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• Staff will prepare a recommendation to retain or dispose of the property to
present to the Finance Committee.
4.2 Finance Committee Review
The Finance Committee will review the information and determine what if any
recommendation should be made to the City Council. Staff recommendations will
typically take one of the following positions;
• Recommend taking Possession.
• Recommend entering into a Workout Agreement and/or Development
Agreement.
• Recommend accepting payment in full, releasing the City's ownership
interest and executing a Development Agreement to address outstanding
life safety or property maintenance code issues
pg.6
Council Order 24-122
April 8, 2024
If the Staff recommendation is for the City to accept payment in full, release its
ownership interest back to the taxpayer and there are no outstanding life safety
or property maintenance code issues the item will be placed on an upcoming City
Council agenda, without Finance Committee review.
4.3 Council Action
Nothing in this policy shall limit the discretion of the City Council to either take
possession of a specific property or take some other action based upon the
Council's evaluation of that property and its determination of what action, if any,
is in the best interest of the City of Bangor and its citizens.
5.0 Disposition of Tax Acquired Property
5.1 The City Authorizes the Property to be Deeded Back to the Taxpayer
If the City Council authorizes the property be deeded back to the taxpayer or
subsequent owner, the Legal Department should prepare a municipal quitclaim
deed and, if required, a development agreement. Further, the Legal Department
should ensure that all documents are properly executed and that any quitclaim
deed is recorded with the Penobscot County Registry of Deeds.
5.2 The City Has Taken Possession of the Property
If the City Council authorizes taking possession of a property, the Tax Collector or
Housing Rehabilitation Coordinator must notify the Assessing, Code, Risk
Management, Police, Fire, and Public Works Departments. This notification
ensures that departments are aware of the ownership change and that the
property is insured. Community and Economic Development shall be responsible
for maintaining the property until disposition.
The Housing Rehabilitation Coordinator, in association with the Code Enforcement
Officer, should conduct a complete interior/exterior inspection and secure the
property. The inspection shall be used to gauge the condition of the property for
further recommendation of disposition as well as personal property notification.
Depending on the perceived value and condition of the property Staff may
recommend the City bring an Action to Quiet Title which would eliminate the five
pg.7
Council Order 24-122
April 8, 2024
(5) year window the former owner has to challenge the City's lien process and
possession.
As needed, Staff may also recommend demolishing unsafe or dangerous buildings
or portions of buildings on the property or recommend that the demolition be a
requirement of any disposal.
In determining its recommendation to retain or dispose of a property, Staff should
consider what would be in the best interests of the City.A number of factors should
guide staff in determining their recommendation for the appropriate disposition
of the property. Those factors include, but are not limited to the following:
• Whether the property is a "buildable" lot;
• Design concept compatible with the neighborhood characteristics;
• The condition of any structures thereon;
• Neighborhood density;
• Zoning;
• The value of the lot;
• The City's long-term plans, if any, for the neighborhood.
At least 90 days prior to listin�the property for sale,Staff shall send a written notice
to the last known address of the former owner, by United States Postal Service
certified mail, return receipt requested, and first-class mail, of the ri�ht to require
the sale process described in Section 5.2.1. The State Tax Assessor has prepared
application forms, notices and instructions that must be used by Staff to inform
former owners of their ri�ht to apply for the sales process provided under Section
5.2.1 of this Policy.
5.2.1. Process if the Former Owner Submits a Written Demand within 90 Days After
the Notification Provided Above.
If the former owner of the acquired property submits a written demand
within 90 days after the written notification sent by the Staff, Staff shall:
pg.8
Council Order 24-122
April 8, 2024
• List the property for sale with a real estate broker licensed underTitle
32, chapter 114,who does not hold elected or appointed office in the
City and is not employed by the City;
• Sell the property via quitclaim deed to the successful buyer at the
hi�hest price at which the property is able to sell, or the price at
which the property is anticipated by the real estate broker to sell
within six months after listin�; and
• Pay to the former owner any sale proceeds in excess of:
o The sum of all taxes owed on the property;
o Property taxes that would have been assessed on the property
durin� the period followin� foreclosure when the property is
owned by the City;
o All accrued interest;
o Fees, includin� property listin� and real estate broker's fees;
o Any other expenses incurred by the City in sellin� or
maintainin� the property, includin�, but not limited to, an
administrative fee equal to 10% of the property taxes owed
and reasonable attornev's fees;
o The cost to the City of the lien and foreclosure process,
includin�, but not limited to, reasonable attornev's fees; and
o Unpaid sewer, water, or other utility lien char�es and fees
imposed by the City.
5.2.2 Process if the Former Owner poes Not Submit a Written Demand Within 90
Days After the Written Notification Provided, or if Staff Is Unable to List or Sell the
Property After a Written Demand was Submitted.
If the former owner does not submit a written demand within 90 days after the
written notice provided by Staff, or if Staff is unable to list or sell the property under
the requirements of subsections 5.2.1(a) and (b) after a written demand was
received from the former owner, then Staff maytake the followin�steps to sell the
property:
a. If the lot for sale is a vacant, non-buildable lot, Staff may offer the property
directly to an abutter(s) for proposals.
b. If(a) above does not apply and staff recommends that the property be sold,the
Community& Economic Development Department should prepare and publish
a Request for Proposals (RFP). As part of this process, Staff may consider
requiring a minimum bid which factors in:
pg.9
Council Order 24-122
April 8, 2024
• The amounts written off upon taking possession,
• The assessed value of the property,
• The condition of the property and the costs incurred for securing and
maintaining the property.
Upon review of the RFP submissions, Staff shall recommend the proposal that
it believes best fits the interests and needs of the City. To that end, staff should
consider the following factors before making a recommendation:
• The proposed uses of the land or property;
• The ability of the proposed buyer(s) to fund any necessary construction or
rehabilitation;
• The amount the proposed buyer is willing to invest in the property;
• The design concept of any building or structure and only those concepts
that best preserve the existing neighborhood characteristics;
• The experience or capability of the proposed buyer to complete the
proposed project.
To be eligible for staff recommendation, the proposed buyer(s) or entity shall
be current on all of its outstanding obligations to the City, including amounts
due for taxes, utilities, code enforcement violations or liens, or any other
amounts due.
Further, to receive Staff recommendation, a buyer must agree to enter into a
Development Agreement with the City when applicable. The Development
Agreement will call for the rehabilitation or development of the property
consistent with the buyer's proposal. The Development Agreement shall
contain a clause to revert the property back to the City, with no refund or
reimbursement of monies spent, if the buyer fails to comply with the terms of
the Agreement. It shall also contain a provision ensuring that taxes, utilities,
and other assessments must be paid on time during the term of the Agreement
and that the property shall always be subject to taxes, utilities and other
assessments.
pg. 10
Council Order 24-122
April 8, 2024
In addition to the above, special considerations apply to single-family
residential properties. If the previous owner was 65 or older prior to the lien
maturity date and received the homestead exemption, the Tax Collector will
follow the special disposition rules in Title 36 Section 943-C.
c. Staff may recommend that the City dispose of the property by sellin� �+�g
it to a legally recognized non-profit entity e�t+t+es specifically for the
development of affordable housing. The sale �^^�R would require payment
by the non-profit entity to the City of at least the outstandin� amounts owed to
the City by the former owner for the taxes, utilities, and other items owed to
the City as listed in subsection 5.2.1(c). Such a sale to a non-profit entity would
also require the non-profit entity to enter into a Development Agreement with
a provision requirin� the non-profit entity and its successors in interest to pay
the {^� +"^ �^���^^^+ ^{ property taxes^� ^ �^�+�^^ +"^�^^{, unless the property
is transferred to an owner who is able to claim the homestead exemption on
the property. The sale would also require that the non-profit entity a�ree for
itself and its successors in interest to a reverter clause in the quitclaim deed
that would require reversion of the property ownership to the City in the event
that the property owner transfers the property to a person or entity who/which
cannot claim the homestead exemption.
All final decisions on the disposition of property shall be made by the City Council.
The Community and Economic Development Department and Legal Department
shall:
• Prepare all final sale documents;
• Prepare the Development Agreement (if applicable);
• Prepare the Quitclaim Deed;
• Attend the sale closing;
• Ensure that all sale paperwork is executed;
• Ensure that full payment is received.
As a condition of disbursement of excess sale proceeds to the former owner under
5.2.1., the municipal officers may require the former owner to execute a quitclaim
deed without covenant convevin� any interest of the former owner in the property
pg. 11
Council Order 24-122
April 8, 2024
to the municipality and to deliver that deed before convevance by the municipality
to the buyer. Receipt of such excess sale proceeds by the former owner is deemed
to be a waiver of any ri�ht of the former owner to commence any action pursuant
to 36 M.R.S. §946-B.
All documents between the City and the Buyer shall be executed within ninety days
of the Council decision. Failure of the buyer(s) to execute said documents within
the required timeline may result in the City retaining ownership of the property or
disposing of it in another manner.
Any conveyance by the City shall be by a Municipal Quitclaim Deed, which may
contain development restrictions, a reverter clause, and a provision to ensure the
payment of future taxes, utilities, or other assessments.
6.0 Legal Rights
This policy is not intended to create legal rights on the part of Bangor residents or
taxpayers. Failure of the City to follow the guidelines or procedures established by
this policy shall not constitute a defense or bar to the City's foreclosure of matured
tax or utility liens, or to any legal title derived from such foreclosures. Failure of
the City to follow the guidelines or procedures established by this policy shall not
constitute a defense or bar to the City's collection of any taxes, utility charges, or
other charges owed.
7.0 Policy Administration
Annually, the Finance Committee shall review this policy and provide direction as
to any proposed amendments.
Additions are underlined; deletions are �+r,,,.�, +�,r,,,,,��,
pg. 12
IN CITY COUNCIL
APRIL 8, 2024
CO 24-122
Motion made and seconded for Passage
Passed
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CITY CLERK