Dan Ellis, co-chair of Baltimore's Tax Sale Work Group, joined faith leaders and other advocates to call for the end the city's current tax sale process. (Barbara Haddock Taylor/Baltimore Sun video)
Mayor Catherine Pugh says Baltimore's water billing system is a problem and promises a complete examination of it. City Council President Bernard C. "Jack" Young says he is "sick and tired of seeing people lose their homes to tax sale for small water bills." The head of the Department of Public Works says he expects new technology to greatly diminish the problems of erroneous water bills — within a year. Yet 1,000 properties went to tax sale last month over unpaid water bills, far more than in recent years, leaving property owners across the city at risk of losing their homes, churches or businesses if they can't come up with not only what they owe but additional fees and interest the law allows investors to assess.
Even if Baltimore's water billing system were perfect, there would be good reason to question the wisdom of a process that can lead to foreclosure — and with it, more vacant properties and diminished property values — over what often start as small bills. People can lose their homes over initial debts of as little as $750, and just $350 for non-owner occupied properties. We understand the need for the city to have some mechanism to make sure people pay their water bills, but one that leads to the economic and social devastation of foreclosure can't be the best option.
But the billing system isn't perfect. Far from it. Before the city switched over to new meters that can be read remotely, Baltimore's water bills were a massive scandal, including documented cases of meter readers making numbers up. In 2012, the city auditor found that DPW had overcharged homes and businesses by at least $9 million. After the new meters and the roll-out of a new billing system in October, customers still reported massive errors, including bills that ran into the tens of thousands of dollars for single-family homes. Others report that they have been billed sporadically, if at all, under the new system, or that they haven't gotten credit for payments.
And the process of listing properties for tax sale is clearly equally shoddy. The Sun reported that the city sold liens for Oriole Park and M&T Bank Stadium, among other state properties that are not eligible for tax sales. Liens for other properties whose owners could document payment of their water bills were also sold.
Water rates have risen by double-digit percentages on a nearly annual basis for years in an effort to pay for decades of deferred maintenance. As part of the shift to the new billing system, DPW has eliminated one of its previous mechanisms for consumers to contest bills. And the city allows investors to charge 12 percent interest plus other fees on the liens they purchase (18 percent for non-owner occupied properties). If the city were trying to concoct a set of policies to encourage foreclosures, it could hardly do better.
The mayor, council president and others say they are exploring ideas to ameliorate the problem — for example, setting up an assistance fund for homeowners, reducing the interest and fees investors can charge or changing the process by which water rates may be raised. Such reforms certainly could help. But the real question is why Baltimore City (and several other Maryland jurisdictions) are allowed to sell tax liens for overdue water bills alone.
It doesn't have to be that way. New York City and Washington, D.C., for example, do not list properties for tax sale based solely on water bills. Neither do a majority of Maryland counties. Their water systems have remained viable, nonetheless. Other utilities, electric and gas companies, for example, do not have the tool of tax sales to ensure payment, yet they survive.
A new state task force is slated to review Maryland's antiquated tax sale process in the months ahead. The top of its recommendations should be ensuring that no jurisdiction can send homes to tax sale for water bills alone.