For more than 75 years, the Baltimore City government has sold tax liens to the highest bidders for homes whose owners failed to pay their property taxes, water bills and other fees. Designed to turn tax delinquent properties over to tax paying owners, this system has had the opposite consequence in modern day Baltimore, where many properties are not marketable.
With a quarter of our citizens living in poverty, homeowners are expected to pay the state’s highest property tax rate and the city’s skyrocketing water bills. Poor families, seniors on fixed incomes and the disabled have lost their homes without compensation because of the annual tax sale. Instead of returning homes to the tax rolls, today’s predatory system has left thousands of homes abandoned, driving struggling neighborhoods into decay.
Several years ago, we formed a Tax Sale Work Group to lobby on behalf of the city’s most vulnerable residents. We implored elected officials to overhaul the self-defeating tax sale but gained only minimal relief — until this year.
The Maryland General Assembly recently passed three bills that signify a turning point in the battle to keep Baltimoreans with tax liens in their homes and stabilize their communities, while giving the city government an innovative tool to convert abandoned property for reuse.
First, this July Baltimore City will no longer be allowed to place a home (whether occupied by the owner or a tenant) or a house of worship in the city’s annual tax sale for an unpaid water bill. This noteworthy accomplishment alleviates the strain on many Baltimoreans who are challenged with steeply rising water rates and new fixed charges; old, leaky houses that send water bills soaring, and erroneous bills that exceed water use. Thanks to Sen. Mary Washington and Del. Nick Mosby, both of Baltimore City, for sponsoring this legislation.
Second, this October the city government and Maryland counties will be allowed to withhold from tax sale any vacant property with tax liens that exceed the property’s value. Instead, a local government will be allowed to seek a court ordered “in rem foreclosure” to turn the property over to the city for redevelopment. This could speed up plans to revitalize thousands of vacant buildings and parcels of land. Thanks to Sen. Adelaide Eckardt, of the Eastern Shore, and Del. Marvin Holmes, of Prince George’s County, for their sponsorship.
Third, in January the mayor and Baltimore City Council (as well as county governments throughout the state), will have the authority to pass legislation exempting from tax sale homeowners who are low income, at least 65 years old or disabled. Although the General Assembly did not abolish the tax sale system, it is a significant step forward. The state will also be required to appoint an ombudsman to assist homeowners in applying for tax credits, discounts, legal services and housing counseling to help them pay delinquent taxes. This bill also enables local governments to establish their own tax sale ombudsman. The city and counties will now be required to give at-risk property owners better notice of the sale. Jurisdictions statewide will also be required to compile an annual survey of the sold tax sale certificates to determine whom the tax sale impacts. Thanks to House Ways and Means chair, Anne Kaiser of Montgomery County, for sponsoring this legislation.
And thanks to Governor Larry Hogan for signing the water lien bill and the vacant house bill. We urge him to sign the tax sale bill as well.
Going forward, the state should immediately appoint its ombudsman and begin collecting tax sale data. We urge the Baltimore City Council to introduce legislation exempting the city’s most vulnerable citizens from the tax sale. Although Baltimore already has an employee serving some duties of an ombudsman, the city should officially appoint its own ombudsman and begin improving its notices to at-risk property owners.
The “in rem” process to help the city convert vacant properties for reuse should also be established as quickly as possible to aid in rebuilding our communities.
Dan Ellis (firstname.lastname@example.org) is executive director of Neighborhood Housing Services of Baltimore. Margaret Henn (email@example.com) is director of the Home Preservation Project within the Pro Bono Resource Center of Maryland. Joan Jacobson (firstname.lastname@example.org) is the author of Abell Foundation studies on the tax sale and water affordability.