Baltimore City

Baltimore officials manually reviewing properties on tax sale list to find errors

Baltimore officials are working through the city's tax sale files to remove all state and federal property, part of a broad review of the controversial process that helps the city collect some $20 million a year in unpaid bills.

Finance Director Henry Raymond said officials began the project after a computer error caused them to mistakenly sell tax liens on the Orioles and Ravens stadiums last month. The properties should not have been offered for sale because they are owned by a state agency.


An analysis of auction records by The Baltimore Sun showed the city also sold liens on at least five other state-owned properties. The city offered some 10,800 liens in the annual tax sale last month.

Raymond said the Pugh administration has confidence in the process. He pointed to internal fact-checking before the sale and multiple mailings sent to property owners warning them before the auction that investors could bid on property liens against them and ultimately foreclose.


"We're putting our best efforts into having the best possible file that we can," Raymond said. Officials said Friday the review was ongoing.

The city places liens on properties for unpaid taxes or fines. If owners don't pay, the city may sell the lien to an investor for the amount outstanding. The investor may then try to collect the debt, plus interest and legal fees, or foreclose on the property.

The review is one part of an effort by city agencies to study the tax sale and improve the process. Officials want to maximize the amount of overdue taxes and fines they can collect, intervene when longtime residents get behind on their bills, and avoid creating more abandoned property as a result of the sales.

Del. Curt Anderson, chairman of the Baltimore House delegation in the General Assembly, said he sees problems with the process.

"That whole thing is an extreme mess," said Anderson, a Democrat. "If the stadiums can be put into tax sale, what does it mean for the little guy? What about the little guy who owes $400 or $500 dollars?

"We haven't gone far enough to fix the problem."

Several other city leaders have also called for changes.

The process has long been controversial because in can cause small debts to balloon as investors charge property owners up to 18 percent interest plus legal fees on top of the unpaid bills.


The process has attracted particular attention in Baltimore because tax sales can be triggered by unpaid water bills, and the city's water billing system has been plagued by errors. Some city residents say they are getting inaccurate bills they can't afford to pay. Hundreds of homes were put on the auction list this year over unpaid water bills.

City Council President Bernard C. "Jack" Young says he is drafting legislation to address the interest and fees, and he is investigating the possibility of basing water rates on income. City Councilwoman Mary Pat Clarke wants to reinstate appeals procedures for customers who want to argue the accuracy of their water bills.

Gov. Larry Hogan signed legislation this year to create a 17-member task force to carry out a statewide review of the tax sale process.

A dispute over water charges is what sent liens on the Ravens and Orioles stadiums to tax sale.

The city auctioned liens on $70,000 in overdue water bills for M&T Bank Stadium and Oriole Park at Camden Yards during the May 15 sale. The Sun alerted officials to the sales, and the city swiftly voided the transactions.

The other state-owned properties identified in The Sun's review included a $19.5 million parking garage at Johns Hopkins Hospital owned by a state agency that funds hospital and higher education construction projects, and a lot owned by the Department of Public Safety and Correctional Services that was once intended to be the site of a new juvenile jail.


Two properties owned by Amtrak were also listed, even though the federally subsidized passenger rail line is exempt from taxes and government fees.

Janice Simmons, a chief deputy in the city finance department, said government-owned properties can end up on the tax sale list if programmers who search the city's mainframe computer system do not use their exact names.

For example, Simmons said, a search for the United States Postal Service would not yield results if the programmer used the abbreviation "USPS" instead of "U.S.P.S." The Amtrak property was listed under its formal name "National Railroad Passenger Corporation."

A spokesman for the water department said the review will identify ways to deliver more reliable service. Spokesman Jeffrey Raymond said that could involve "improving our policies, our procedures or something else."

"The City of Baltimore understands the critical importance that, for the sake of public confidence, our procedures be clear and consistent," Raymond said in a statement. "Once we learned that properties owned by government entities had landed on the tax sale roll, City officials took steps to review how that happened and then to correct it.

"Further, we are investigating precisely how widespread is this occurrence."


It is unclear what actions the manual review might yield, including whether it will help the city ensure government-owned property isn't sold in the future, or if it will lead to more sales being reversed.

"The review is presently occurring," city finance director Henry Raymond said. "It is ongoing because there are a lot of records to go through."

The stadium lien sales were among 95 that were voided from this year's tax sale before the end of May.

The city typically voids hundreds of sales after the annual auction.

In 2014, nearly 9 percent of all sales, involving more than 800 properties, were voided. The number has dropped each year since, to 592 in 2015 and 321 in 2016.

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Henry Raymond said sales can be voided when properties are subject to bankruptcies or prior foreclosures, when payments were made but applied to the wrong account, or when a debt was settled in the days immediately before the annual sale.


Raymond said the reason for most voided sales is the city did not have information prior to the tax sale that would have led officials to take the property off the list.

When property owners inform the city of errors after the sale, he said, officials void the transaction when appropriate.

The Rev. Alvin J. Gwynn Sr. said trying to get his Friendship Baptist Church in Northeast Baltimore taken off the tax sale list is the latest battle with the city in an ongoing water bill dispute.

With $6,829 gathered from church offerings, Gwynn said, he sent an aide to the city water department three days before the tax sale to rescue the church.

A receipt dated May 12 that Gwynn provided to The Sun shows the church paid the city. But tax sale records show an investor was allowed to buy the lien on the $1.4 million church at auction anyway.

"Nothing surprises me with Baltimore City," Gwynn said. "Especially with the water department."