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Pugh administration seeks to limit legislation that would block water-bill tax sales in Baltimore

The Pugh administration is attempting to weaken a General Assembly bill that would permanently ban Baltimore City from placing liens against homes, churches and other properties over unpaid water bills.

Arguing the legislation could result in the city losing about $5 million in revenue annually, officials from Mayor Catherine Pugh’s administration are seeking to amend the legislation in Annapolis to apply to only owner-occupied properties without any other city debts.

The legislation — sponsored by Sen. Mary Washington and Del. Nick J. Mosby, both Baltimore Democrats — would repeal the mayor’s authority to enforce a lien for unpaid charges for water and sewer service.

But at a meeting Wednesday of the Senate’s Budget and Taxation Committee, Karen Stokes, Pugh’s chief lobbyist, testified that the administration wants “common sense” amendments to the legislation.

Stokes acknowledged deep problems in city water-billing but said eliminating the enforcement mechanism of liens would cause the city to lose millions. She said she’s assuring lawmakers the Pugh administration will not enter owner-occupied homes into tax sale.

“It is clear that the system is broken,” said Stokes, noting Pugh already instituted a moratorium for owner-occupied homes that removed about 4,000 from the tax sale process. “That prohibition remains… We absolutely will not be predatory. Homeowners will not lose their homes for water bills only.”

But Washington called the mayor’s amendments a “nonstarter.”

“This amendment would totally eliminate the protections for tenants,” she said.

Washington noted that other counties do not use tax sale as a means of collecting water bill debt.

“Why has tax sale become the primary means the city uses for collecting overdue water bills?” she asked. “The average Baltimore homeowner in tax sale is a senior who has lived in their home for 22 years.”

A proponent of the legislation, Rianna Eckel, Maryland Organizer with Food & Water Watch, noted that 53 percent of Baltimore residents are renters.

“The mayor’s proposed amendments would weaken the bill,” Eckel said. “It’s choosing who gets to be protected from this immoral and predatory practice.”

Currently, owner-occupied homes can go to tax sale if they have at least $750 in unpaid water bills that are at least nine months late. At tax sale, investors can buy that debt from the city — important revenue for a cash-strapped City Hall — and can then foreclose if homeowners don’t pay.

Community advocates and church groups have called on the city to end the process, which can send about 1,000 properties a year, including some churches, to tax sale for water debt.

Brooke Harper, political action chairwoman for the Maryland NAACP, said black residents in Baltimore are disproportionately affected by tax sale proceedings.

“Nobody should lose their home or place of worship over our most basic necessity: water,” she said. “If a family is behind on a water bill, the tax sale process can multiply their debt.”

Baltimore officials say about half of all water bills in the city are overdue at any time.

In fiscal year 2017, through the threat of foreclosure, Baltimore brought in a “significant amount of delinquent water and sewer charges,” according to a fiscal analysis of the bill.

Baltimore sent about 7,000 legal notices that year warning of pending tax sale in an effort to collect $13.3 million from delinquent accounts. About 5,200 of those accounts — worth $9.3 million — were paid prior to tax sale, the city said.

“If this goes through as written, we will lose the ability to collect,” said Rudolph S. Chow, the city’s director of public works.

Baltimore’s Department of Public Works also offers a range of programs to assist customers who are unable to pay their water bills, including adjusting bills, payment plans and financial assistance.

If water bills were removed from tax sale proceedings, Baltimore would use water shutoffs to enforce non-payment of bills, city officials say.

In the last General Assembly session, the House of Delegates unanimously passed legislation sponsored by Washington to ban such sales. But the state Senate passed a weaker version of the legislation, which applied only to homes for one year. In a compromise, the House agreed to back the weaker bill, which Gov. Larry Hogan signed into law.

The legislation comes as Baltimore’s Board of Estimates, which is controlled by Pugh, recently voted to raise water rates by more than 9 percent for the next three years. The city, citing costly but necessary improvements to its aging water and sewer systems, has regularly raised rates in recent years to the point that residents pay double what they did nine years ago.

Baltimore also has struggled to bill accurately for water use for years. In 2012, the city had to refund about $9 million after overcharging residential and business customers. It switched to a new billing system, but some problems continued. Earlier this year, for example, hundreds of customers received bills of more than $50,000, which city officials attributed to a software upgrade.

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