HomeMy WebLinkAbout2024-10-14 24-313 OrderCITY COUNCIL ACTION
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Item No:
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Requested Action:
Summary
Committee Action
Meeting Date:
For: Against:
City Manager City Solicitor Finance Director
Map/Lot:
Introduced for:
Order
Committee:
Action:
Staff Comments & Approvals
Date:
Item No:
Assigned to Councilor:
24-313
OCTOBER 16, 2024
CITY OF BANGOR MAINE
MATURED TAX OR UTILITY LIEN POLICY
It is the City of Bangor's policy to administer a tax and utilitv collection and lien policy that
is fair and consistent for those that have fallen behind on taxes or utilitv char�es 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, unless nonpavment of certain char�es is deemed to be in the best interest of the
City, and in accordance with applicable �State statutes. In accordance with the policy,
the City 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 taxpayer pays all
amounts due to the City with respect to that property. T�,;� ,^^i;o� +^ m^^;o� ^.•,o,� f^r
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Per State law, the Citv becomes the owner of a propertv on the date of automatic
foreclosure, whether or not the propertv remains occupied. This Policv will refer to the
owner or owners of record at the time of foreclosure as the "taxpaver" or "former owner"
of the propertv in order to avoid confusion.
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 property to 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.
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
24-313
OCTOBER 16, 2024
2.o Definitions
As used in this policy, the following terms have the following definitions:
Former owner(s): the owner or owners of record at the time of foreclosure or, if
deceased, the former owner's heirs, devisees, or personal representatives.
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.
Municipal Bill of Sale: the instrument used bv the Citv to transfer ownership of a
mobile home located on the land of another, which is considered personal
propertv bv statute, back to the taxpaver.
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.
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 real property. This is the method by which the City will transfer its ownership
rights to � real property with a matured lien to another party.
Tax Acquired Property: property whose title has passed to the City due to a
matured lien.
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.
Taxpaver(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
a vo i d co n fu s i o n ��e�eT^' ^ �^e�^�T���Qe es�e�e�'�e��e
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Utilitv lien: a recorded legal claim against the property of a taxpayer that fails to
pay sewer or stormwater utility charges owed to the City.
pg. 2
24-313
OCTOBER 16, 2024
Workout A�reement: an agreement between the City and a Taxpayer establishing
conditions and payment of amounts owed.
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3.0 Policy:
3.1. Release of Ownership Interest
The Citv will recommend releasin� a matured lien before takin� possession of
a propertv if the taxpaver pays their taxes in full.
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 �require payment b�r
the purchaser or the taxpaver in full of all charges related to the subiect
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The above requirement� applies a-�� 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:
pg. 3
24-313
OCTOBER 16, 2024
• Willingness and demonstrated ability of the taxpayer(s) to pay all amounts
on a subiect propertv due to the City,
• The ratio of the amount owed the City to the assessed value of the property,
• The impact of the property within the neighborhood,
• The condition of the property including its overall appearance,
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• Exploration of other options to meet obligations to the City, such as
execution of a workout ^� ^'�„�'^^�^�^+ agreement,
• The property "type."
The following are the various property types that will be considered:
➢ Vacant - Buildings and land which are vacant.
o If a buildin� is vacant, consideration will be �iven to
whether the taxpaver has re�istered under the Citv's
Vacant Buildin� Re�istration Ordinance and paid all related
re�istration fees.
➢ Commercial Properties - This category includes not only properties
utilized in the conduct of business but also properties used for
residential and commercial rental purposes.
➢ ��Taxpayer-Occupied Residences — These are single-family
residences in which the ^�•��taxpayer lives.
It is not the City's desire to take possession of e�e�taxpayer-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 e��tax a er resident is unwilling or unable to
meet their obligations to the City.
pg.4
24-313
OCTOBER 16, 2024
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-la rge.
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
making a good faith effort to redeem the property. The City may also accept a
partial payment received on behalf of the e�e�taxpaver(s) from a recorded2
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
ta ke effect.
Should the taxpaver send partial pavments, without si�nin� a Partial Pavment
Waiver, of their tax or utilitv char�es to the Citv, acceptance of these partial
pavments shall not be deemed a waiver of the Citv's ri�ht to foreclosure on anv
matured tax or utilitv liens. Staff will notifv the taxpaver of the Citv's continued
ri�ht to foreclose on the propertv, whether or not partial pavments have been
accepted by the City.
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
Z Recorded is defined as a documented mortgage interest in the property which has been filed at the
Penobscot Registry of Deeds.
pg. 5
24-313
OCTOBER 16, 2024
4.1 Staff Responsibility
°r���e ��T�Ee�����+e��e ��^,�Ee--C^�T��ee� A review committee
consisting of staff representatives from Treasury, Finance, Economic Development,
''��'� �������m��+ 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 or the Housing Officer °�"�"�'�+�+;^^
, will determine if the property is occupied.
• The Code Enforcement Officer and/or Housing Officer °�"�"�'�+�+;^^
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.
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• 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.
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• Staff will prepare a recommendation to retain or dispose of the property to
present to the Finance Committee.
pg. 6
24-313
OCTOBER 16, 2024
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. a„^'���e�o-�;�e-r�
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If the Staff recommendation is for the City to accept payment in full; and release
+�s of the City's ownership interest back to the taxpayer� �„�t�
e�T���� �^��+.,^ er+., m ^+e^^^^e^^^'e ; ��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 or municipal bill of sale �^^�, �f ��^�����^�, � ^��.,��^^�^�^+ �R����^�^+. Further,
the Legal Department should ensure that all documents are properly executed and
that any quitclaim deed or municipal bill of sale is recorded with the Penobscot
County Registry of Deeds.
5.2 The City Has Taken Possession of the Property
pg. 7
24-313
OCTOBER 16, 2024
If the City Council authorizes taking possession of a property, the Tax Collector or
Housing Officer Q�������+,+;,,� �,,,,,-,�;�,+,,,- 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 Officer Q�������+,+;,,� �,,,,,-,�;�,+,,,-� 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, per the Citv's outlined disposition process in the Personal Propertv
Process.
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As needed, Staff may also recommend demolishing unsafe or dangerous buildings
or portions of buildings on the property or may 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�#e+�its 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;
pg. 8
24-313
OCTOBER 16, 2024
• The City's long-term plans, if any, for the neighborhood.
At least 90 days prior to listing�e a tax-acquired 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 t�e
r;,�"+ +^ re^,,;r� the sale process outlined in this section ^���^��"�^' �^ ��^+�^^ � ' �
The State Tax Assessor has prepared ���'���+��� ���m�, notices and instructions
that must be used by Staff to inform former owners of +"e;r r;,�"+ +^ ^^^'., �^r +"e
this sales process p;�=o=ra���� ��^+;^^ � ' � ^�+";� °^';^.,
� � � �,-,.,.e�� ��+�,e �,.,-,.,.,e,-n,.,�e,-c���,,.,.,�+� -, �ni,-�++e� ne,.,.,-,�,� , ,�+�,�� on n-,.,� n�+e,-
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When sellin� a tax-acquired property,�t�x.�T�T�������
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„vt�#+e��se�t�t�e-�#�Staff sha I I:
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�;+., ^^^' ; ^+ e ^'^.,e^' "., +"e '';+., List the property with the City's
contracted real estate broker or a�ent at the hi�hest reasonable
price the broker or a�ent anticipates the propertv will sell at;
• � Convey the property via quitclaim deed to the successful buyer
+ +�, �, + � + �,,,.�, +�,.. �,� + �� +�,..
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within �twelve months after listing; and
• Pay to the former owner any sale proceeds in excess of:
o The sum of all taxes owed on the property;
o ��The sum of all taxes that would have been assessed
on the property during the period following foreclosure when
the property is owned by the City;
o All accrued interest;
o Fees, including advertisin�, mailin�, recordin�, property listing
and real estate broker's or a�ent's fees;
o Any other expenses incurred by the City in selling� e�
maintaining, or improvin� the property, including, but not
limited to, a-r� documented administrative costs ��� �^��^' +^
1�6-e�t�x. ��+., +�.,� ��' and reasonable attorney's
fees;
pg. 9
24-313
OCTOBER 16, 2024
o The cost to the City of the lien and foreclosure process,
including, but not limited to, reasonable attorney's fees; and
o Unpaid sewer�����, ^� ^+"�� and stormwater utility lien
charges and reasonable fees imposed by the City.-; and
Provide to the former owner a written accountin� of the amount of excess
sale proceeds itemizin� anv of the fore�oin� deductions at the former
owner's request.
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If the Citv's contracted broker or a�ent is unwillin� to list a propertv, the Citv will
reach out to at least two other brokers or a�ents. If no broker or a�ent is willin� to
list the propertv or if a broker or a�ent is unable to sell the propertv within twelve
months, staff mav take the followin� steps to sell the propertv, as lon� as the Citv
pays to the former owner anv excess sales proceeds as calculated above:
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:
• 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.
pg. 10
24-313
OCTOBER 16, 2024
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.
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pg. 11
24-313
OCTOBER 16, 2024
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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;
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• Prepare the Quitclaim Deed or Municipal Bill of Sale;
• Attend the sale closing;
• Ensure that all sale paperwork is executed;
• Ensure that full payment is received.
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pg. 12
24-313
OCTOBER 16, 2024
If the City chooses to retain a tax-acquired property for municipal use,the City shall
procure an appraisal report from an appraiser licensed to provide real estate
appraisals in Maine showin�the value of the tax-acquired propertv bein� retained.
The appraiser mav not hold elected or appointed office in the Citv or be otherwise
emploved bv the Citv. The Citv, after providin� the notice required in Section 6.0,
shall pav to the former owner anv excess sale proceeds as calculated in this section,
substitutin�the value of the tax-acquired propertv as shown in the appraisal report
for the sellin� price of the tax-acquired propertv. The appraisal report must be
prepared within 120 days before the time the excess sales proceeds are paid.
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 or Municipal
Bill of Sale.�Tc�i��ee�ta-i„��e�op,�;T��t�+Etior;�����e�^��
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6.0 Notices
If, after the sale of a tax-acquired propertv, there exist anv sale proceeds as
described in Section 5.2, the Citv shall send written notice of its intent to pav the
former owner the excess sale proceeds at least 30 days prior to the disbursement
of those proceeds. The notice must be sent bv first-class mail and certified mail,
return receipt requested, to the last known address of the former owner and the
last known address of each record holder of an interest in the tax-acquired
property.
If the Citv is unable to locate the former owner of a tax-acquired propertv after
reasonable dili�ence in order to send the above notice, the City shall place a notice
in a newspaper of �eneral circulation in Penobscot County once a week for three
consecutive weeks. The notice shall include the name of the former owner, a
description of the tax-acquired propertv that was sold, the amount of the excess
sale proceeds (as calculated usin� the checklist attached to this policv), and the
date bv which the excess sale proceeds must be claimed.
If, after the Citv provides the notice as described in the above para�raph, a former
owner fails to claim the excess sale proceeds within 30 days of the final published
pg. 13
24-313
OCTOBER 16, 2024
notice, the City shall transfer the excess sale proceeds to the Unclaimed Property
Fund underTitle 33 M.R.S. §2141.
Within 10 days of pavment of anv excess sale proceeds to the former owner, the
Citv shall record in the Penobscot Countv Re�istry of Deeds a notice si�ned bv the
municipal officers.The notice must include the name of the former owner to whom
the excess sale proceeds were paid, the amount of the excess sale proceeds, the
date on which the excess sale proceeds were paid to the former owner, a
description of the tax-acquired property that was sold, and a statement that
receipt of the excess sale proceeds by the former owner is deemed to be a waiver
of the former owner's ri�ht to commence anv action challen�in� the takin�
pursuant to 36 M.R.S. §946-B.
�7.0 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.
�8.0 Policy Administration
Annually, the Finance Committee shall review this policy and provide direction as
to any proposed amendments.
pg. 14
24-313
OCTOBER 16, 2024
Documentin� Fees Associated with the Sale of Tax-Acquired Properties
Staff shall accurately document any fees associated with the tax lien, foreclosure,
and sale of anv tax-acquired propertv bv utilizin� this list of fees.
Per 36 M.R.S. §943-C, the City may char�e for the followin�:
1. The sum of all taxes owed, includin�those taxes assessed on the propertv after
the foreclosure bv the Citv.
2. The sum of all sewer and stormwater utility char�es, includin� those utility
char�es assessed on the property after the foreclosure by the City.
3. All accrued interest on the taxes and utility char�es associated with a tax-
acquired property.
4. Anv advertisin� fees.
5. Mailin� fees.
6. Recordin� fee for the cost of recordin� the notice at the Penobscot Countv
Re�istry of Deeds.
7. Any property listin� fees.
8. Real estate broker or a�ent fees, to the extent these fees are not included in
the broker or a�ent fee a�reement with the Citv.
9. Anv fees associated with sellin� the propertv.
10.Anv fees associated with maintainin� the propertv, includin� insurance fees,
mowin� fees, etc.
11.Any fees associated with improvin� the property.
12. Documented administrative costs and reasonable attornev's fees.
13.Any costs to the City to lien the property.
14.Anv costs to the Citv to foreclose on the propertv.
All fees associated with all tax-acquired properties should be documented. Some
fees mav need to be estimated and assessed prior to actuallv char�in� the fee, due
to filin� and notice requirements.
pg. 15
IN CITY COUNCIL
OCTOBER 16, 2024
CO 24-313
Passed
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CITY CLERK