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Fines, small tax bill send Baltimore home to tax sale

Tim Nickels' rowhouse in Baltimore went to tax sale over less than $4 in unpaid property taxes and hundreds of dollars in citations for a messy yard.

Perfectly legal, under the city's rules. But Nickels was flabbergasted.

Baltimore's annual tax sale, an effort by the city to collect on delinquent accounts, has drawn criticism for putting residents at risk of losing their homes over municipal bills as small as $250. Nickels' past-due tab of $955.60 — including the citation fines and late fees — was one of 6,421 unpaid city bills recently sold as liens to investors, who can move to foreclose later this year if the owners don't pay up with interest.

By law, the citations against Nickels for trash in his property's backyard and other maintenance issues couldn't have forced him into a tax sale. Neither could the $3.91 tax bill, left over when he mistakenly paid the wrong amount in 2008. But together, they did.

"What it comes down to is, they socked it to me for four dollars," said Nickels, a small business owner who says he didn't realize he owed the city any money.

Nickels' saga ended well, relatively speaking. He's not losing the rowhouse, which he used as an office for three years, because he paid as soon as he got notice in July of the sale. But his story offers a new window into a much-maligned system and adds to a debate over how the city collects debts.

Nickels not only objects to the amount that sent him to tax sale, but to the process that led to that point. The citations were sent to an old address, and he says he never saw any of them.

City officials, noting that tax sales are held throughout Maryland, say some property owners simply ignore their obligations until faced with the tax-sale threat. Henry J. Raymond, director of the city's Bureau of Revenue Collections, said the city gives residents plenty of warning before the tax sale takes place.

"The money collected at the annual tax sale is used to provide essential services for all citizens of the city," he added.

Much of the criticism of tax sales has centered on the size of debts that put homes in jeopardy. A dozen of the Baltimore City Council's 15 members signed on to a resolution this summer asking the state legislature to allow "some discretion" to keep unpaid water bills and any debt under $750 out of tax sale.

At least 400 city homes were foreclosed on from 2004 to 2006 as a result of city debts other than property taxes, a Baltimore Sun investigation in 2007 showed. About half the bills were under $500 but mounted after the tax sale as interest and attorney fees were added.

"Turning an owner-occupied home into another vacant structure in exchange for a few hundred dollars more in the City's accounts is simply not in Baltimore's long term interests," the sponsors wrote in the resolution, which hasn't yet come up for a vote.

Another criticism has been that some homeowners — many of them low-income — say they weren't aware anything was wrong until foreclosure loomed and their debts had grown too big for them to afford, according to legal-aid attorneys.

"The clients who come to us, who are eligible for our services, aren't able to pay that kind of money in lump sum," said Joseph Rohr, chief attorney for housing, consumer and domestic law in the Baltimore office of the Legal Aid Bureau.

Andrew D. Freeman, a Baltimore attorney who won a $115,000 award in 1999 for tenants evicted without notice from a property seized through tax sale, said he's sympathetic to the city's needs but thinks the system ought to be completely revamped. He suggests the city auction off truly problem properties, the vacant ones that are extremely delinquent on their bills, and hire a collections agency to deal with the rest.

"What the city's done is privatized the tax collection, and given the tax-sale purchasers these ridiculously high incentives to take advantage of people who make small mistakes," said Freeman, with the law firm of Brown, Goldstein & Levy.

Nickels, who lives in Abingdon and runs his own roofing company, appears to have gotten caught in a farce of compounding errors.

The first mistake can be traced to October 2008, when he was still using the Westport property as his office. Baltimore Housing, the city agency that handles code enforcement, sent citations for the state of his yard to a home he had moved out of two years earlier -- the only mailing address it had on file for him. The agency continued to mail citations to that address. But he said he didn't see any of the citations. Most came back to the agency unopened, marked "return to sender" with no forwarding address.

The fines, which began as $300, tripled as interest and penalties were added.

Code-enforcement records note that an inspector talked to Nickels in November 2008 after finding bags overflowing a trash can, and that the homeowner promised the problem would be fixed.

Nickels said it's possible someone talked to him -- nearly two years later, it's testing his memory -- but added that he's sure no one ever mentioned fines. He would have been upset, he said, but he also would have paid.

The agency cited him for building materials, trash, bulk items and the overflowing can, all in the backyard. It also cited him for failing to register his property as "non-owner-occupied," which the city requires. If he had registered, Baltimore Housing spokeswoman Cheron Porter pointed out, he would have given the agency the correct mailing address.

"If you change your address … you've got to tell us," Porter said.

Nickels said he thought owners only had to register rental homes, which he did in 2009 when he moved his office to Harford County and put a tenant in. As for the trash, he said a neighbor dumped construction debris in his yard once, but he thinks he keeps his property in good shape.

The rowhouse has a fresh coat of red paint. And last week, the front yard was neat with new mulch while the backyard, covered in concrete, was clear. On a block full of sagging rowhomes, boarded-up windows and overgrown grass, it was a standout.

Nickels said that while his citations headed to his old home, at least one city agency had his correct address, because his water and sewer bills for the Baltimore rowhouse always arrived in Harford County.

Meanwhile, yet another city agency — the tax collectors — also didn't seem to have the right address. But that was one bill Nickels knew he owed. So he had his office manager, Krystal Walker, send a certified letter this year to ensure the city knew where to mail it. (In previous years, Walker said, she paid the property taxes by going online to see how much was due.)

Walker isn't sure how she managed to slightly underpay the 2008 bill. She and Nickels said they never received the past-due notice the city says it sent out in 2009, and the unpaid amount wasn't added to the 2009 bill they saw.

Raymond, with the revenue collections bureau, thinks his office did all that could be expected once the account was flagged for tax sale. It mailed two warnings. "The notice is very clear and specific," he said.

Nickels and his office manager insist the first warning never arrived and the second gave the past-due amount -- which at that point was $915.16 -- but didn't specify what was being billed.

Walker assumed it was a tax issue and called the revenue collections office to find out what was wrong. She said a staffer assured her that no taxes were due. She got the employee to write "paid in full" on the 2009-2010 tax bill and sign it, just for her own peace of mind.

Walker said the staffer never mentioned that anything was owed for the previous year, or that the property had outstanding citations.

"It's crazy," Nickels said. "I don't understand it."

Raymond, the bureau chief, said he can't comment on "what that conversation may or may not have been."

"In general, we work to the best of our ability with all constituents to resolve all billing issues prior to tax sale, because we do not want to take properties into tax sale that do not legitimately belong in tax sale," Raymond said.

Nickels had planned to keep the home until the nearby Westport waterfront was redeveloped. Now he has changed his mind.

"I'm going to sell," Nickels said. "I don't want anything to do with real estate in the city anymore."

jamie.smith.hopkins@baltsun.com twitter.com/realestatewonk

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