The Honorable Jay R. Kaufman, House Chair
The Honorable Michael J. Rodrigues, Senate Chair
Joint Committee on Revenue
State House, Boston
Dear Chairman Kaufman, Chairman Rodrigues, and Distinguished Committee Members,
On behalf of the cities and towns of the Commonwealth, the Massachusetts Municipal Association appreciates the opportunity to offer testimony on H. 2605/S. 1463, An Act Relative to the Improvement in the Process for Collecting Delinquent Property Taxes. This legislation proposes significant changes to municipal property tax collection practices in the case of tax payment delinquencies. We respectfully urge the Committee to create a special commission to examine current law and practice around the collection of delinquent property tax revenue, prior to the Committee advancing any legislation that would alter this fundamental municipal function.
This measure, as written, would mandate several changes to the way municipal treasurers or collectors pursue the collection of property taxes from those property owners who fail to pay in response to quarterly or semi-annual tax bills. The proposal would require a municipality to include a new enclosure with mailed demand notices to inform property owners that non-payment of taxes may result in the taking of the property, and that owners may be eligible for exemptions, abatements, and tax deferrals. However, such a notice may be duplicative of other municipal communications and may not arrive at a point in the process during which the property owner would be able to access any of the relief described within the notice. In addition, the legislation would change the property owner notification process that is initiated when a municipality begins a tax taking process, requiring both that a constable or sheriff serve notice and that a municipality post notice in a local newspaper. Under current law, a municipality may elect to do one or the other, and requiring both would drive up the costs associated with the process and raise questions as to procedure if an owner could not be located to be served.
H. 2605/S. 1463 would extend the required waiting period from six months to one year before a municipality with a tax taking could initiate the foreclosure process in land court. This would delay by six months any municipal receipt of revenue from the case, and would drive up redemption costs for the property owner, as interest would continue to accumulate over that additional six-month period.
Beyond making changes to the property tax collection process that would impact municipalities, the legislation would also impact the sale of bundled tax liens from a municipality to a third-party private investor. This local-option practice, used by at least 20 cities and towns across the Commonwealth in recent years, involves the sale of tax liens through a request for proposals auction assignment process that generates much-needed local revenue. Changes to the legal structure through which municipalities may sell bundled tax liens could depress the third-party investment market in Massachusetts. This would make it more difficult for municipalities that elect to sell bundled tax liens to find buyers, thus decreasing the benefit to the community, and, by extension, increasing local reliance on the local taxpayers who actually pay their property taxes.
Because the changes proposed in this legislation are significant and technically complex, we urge the Committee to form a special commission to examine current law and practice around the collection of delinquent property taxes and the sale of liens to third-party investors prior to advancing the bill. This special commission should include a representative of the Massachusetts Municipal Association, a representative of the Office of the Attorney General, a representative of consumer advocates, and a representative of third-party investors, among others.
The commission could examine and assess current local property tax collection processes, including property owner notification and communication, property tax deferral options or exemptions that exist for special classes, the laws governing the purchase of tax liens by a third- party investor and any subsequent foreclosure proceedings, the consumer outcomes associated with the purchase of tax liens by third-party investor, and the potential impacts of H. 2605/S. 1463 on municipalities.
Thank you very much for the opportunity to submit testimony on this legislation. If you have any questions, please do not hesitate to have your staff contact me or Catherine Rollins of the MMA staff at (617) 426-7272 at any time.
Geoffrey C. Beckwith
Executive Director & CEO, MMA