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Mahoning County Treasurer John Reardon Hits Double Jackpot
ByDennis LaRueYOUNGSTOWN,Ohio -- Because the Mahoning County Treasurer's office negotiateda property tax lien sale with American Tax Funding LLC, TreasurerJohn Reardon could announce Friday that some 6,000 deadbeatshave paid $10 million in overdue taxes since last October.Morethan $42 million in delinquent taxes from 24,000 accounts hadgone uncollected for decades, much of it dating to the late 1970s,he said, when the steel industry retrenched. "Today, onbehalf of the citizens of Mahoning County, we are selling over17,000 delinquent tax liens to American Tax Funding of Palm Beach,Fla.," he said.AmericanTax Funding was the winning bidder at $8.5 million of the eightcompanies that submitted bids to assume the liens. Low bid was$1.3 million. The winning bid was higher than he anticipated,Reardon added.NeilJ. Harreveld, vice president of American Tax Funding, said theagreement with Mahoning County "allows us to transfer titleand put [vacant and abandoned] properties into productive use.Our plan is to transfer liens to interested parties and put landback into productive use."Amongthe interested parties are Youngstown State University and itsefforts to acquire more properties in Smoky Hollow, and St. PatrickChurch, Youngstown, which could use vacant lots to build playgroundsand provide more parking. AmericanTax Funding has the "same rights and privileges as the treasurer'soffice," Reardon said, in satisfying liens, and beginningMay 1, 2005, "they can begin to foreclose" on the properties.Oncethey begin to foreclose, American Tax Funding can settle forless than is owned (and still make a profit) and transfer titlesto community and neighborhood associations who would improvethe lots and make them productive.Thecompany could do the same for someone who wanted to profit fromtitle to the property, Reardon said. Theagreement with American Tax Funding should also allow MahoningCounty to improve its credit rating, Harreveld said, and allowmarkets to set lower interest rates when the county seeks toissue bonds. Markets penalize political entities that carry substantialbad debt on its books, which the tax delinquencies are.Beforethe negotiated agreement with Tax American Funding, MahoningCounty could not, unlike private companies, write down or writeoff uncollectible debts. Technically, it still can't, Reardonpointed out, but the effect of the negotiated agreement is justthat."Today,"Reardon said, "we literally clean up decades worth of accrueddelinquency, delinquency that was holding this county back."Beforeits agreement with American Tax Funding, the county held conventionallien sales that allowed buyer to cherry pick. "They werevaluable for the county," Reardon commented, "but theyoffered only limited opportunity. A typical conventional salewould be 300 to 500 liens. But we were always left with the remaining24,000 that nobody wanted to buy."Achange in the state law, which Lisa Antonini of his office lobbiedfor in Columbus, allowed Mahoning County to join Cuyahoga Countyin entering negotiated tax lien sales. Antonini, he pointed out,is also chairwoman of the Mahoning County Democratic Party. Ohio'sother 10 most populous counties can also enter negotiated taxlien sales. Thechange, Reardon said, "has saved the county almost $4 millionin needless costs." That encompasses foreclosure proceedingsuch as assigning properties to sheriff's sales, the paperworkfor which comes to $1,000 to $1,500 per parcel.Oncethe law was changed and having reached an agreement with AmericanTax Funding, the treasurer's office sent letters out warningthe deadbeats their failure to respond would lead to their propertiesbeing subject to streamlined foreclosure. Those letters resultedin the $10,043,400 that has been divided among county politicalentities.Justover 5,000 delinquent parcels have been paid in full and 1,109have made arrangements to pay their back taxes, Reardon reported.Entitiesreceiving $100,000 or more:YoungstownCity Schools, $2,448,300BoardmanLocal School District, $920,800CanfieldLocal School District, $785,100AustintownLocal School District, $572,700PolandLocal School District, $349,200MillCreek Metro Park, $320,000MahoningCounty General Fund, $320,000BoardmanTownship, $269,600ChildrenServices Board, $261,900Jackson-MiltonLocal School District, $252,200WesternReserve Transit Authority, $250,000CampbellCity School District, $228,400SouthRange Local School District, $218,500AustintownTownship, $185,400SpringfieldLocal School District, $126,100WestBranch Local School District, $116,700MentalHealth Mental Retardation Board, $101.800.The superintendent of Poland schools, Robert Zorn, said $102,507of the $349,200 his district received will go to pay for teachers'salaries negotiated in their last contract. Then he added, "OhioEdison informed me at 8 o'clock this morning of a one-time chargeof $28,000 to move utility poles." Pending school boardapproval, the funds will likely help pay Ohio Edison, he indicated.Thetax lien sale will also allow Poland schools to spend $42,000on a new computer lab at Poland Middle School, which in turnallows the district to secure a $170,000 grant from the countyCareer and Technical Center for computer labs. The remainder,Zorn said, will go for improvements at the Union elementary school"and for other projects we lost" for lack of funds. His counterpart in Canfield, Dante Zambrini, had time only tooffer his school system's share would go toward the deficit it'sincurring.Thecounty's ability to collect back taxes, Zorn noted later, merelycompensates for the Ohio's 3% cut statewide in school fundingannounced last January.Reardonsaid he and his office intend to devote efforts the next fiveto six years "to transferring liens to interested parties"through companies like American Tax Funding who can negotiatetax payments.Uponreceiving notice from the treasurer's office, Harreveld reported,a woman who owed $2,600, accompanied by her lawyer, went to Reardon'soffice. Because he was there and had bought her lien, Harreveldtold her to make him an offer, which she did. She will pay AmericanTax Funding $1,500 over three installments.Howdid the county find itself in a situation where it couldn't collectback taxes? The lack of response to repeated notices promptedthe treasurer's office to assume many owners were dead. His staffwas surprised to learn that many of the 6,000 who paid, or arepaying, what they owe were indeed alive.Whathappened in many cases is that, with penalties and interest,a vacant property that might sell for $100 has $25,000 in backtaxes dating to the 1970s. If it cost $1,000 to go through foreclosure,it doesn't make economic sense for the treasurer's office tobegin proceedings.Howdid a property that might fetch $100 accrue such a high tax burden?At one time a house sat there. Once the owner died or moved andno one moved in, it sat empty and neglected. If a city razedthe structure, the demolition expense was tacked to the tax obligation.ContactDennis LaRue at [email protected]"