“Pay your taxes”
An observation about balance sheet assets and liabilities– When you owe the bank $10,000 and don’t have the payment, you have a problem; when you owe the bank $10,000,000 and don’t have the payment, the bank has a problem. Applying this observation to Wilkinsburg real estate tax– when one property owner doesn’t have the money to pay their property tax, that individual has a problem; when close to one-half of Wilkinsburg properties have collection accounts with the delinquent rela estate tax collector, we all have a problem.
We– that is, those of us who have a stake in Wilkinsburg– do have a problem. I began to keep the tax delinquency list in a database in year 2006. The database has the balances due of borough and school district real estate collection accounts as reported quarterly for every year beginning in 2007. I requested the borough and school district to request the reports from Portnoff Law Associates, the now-former delinquent tax collector, as of April 30, July 31, October 31, and January 31 and loaded the data into a database each quarter. During the years 2007 through 2014, both borough and school district taxes receivable increased by about 250 percent. The total delinquent tax increased steadily, did not go up then down then up again.
Our elected officials did nothing to address this problem. The borough manager dodged the efforts of one council member, Paige Trice (1st ward) to review the borough’s contract with Portnoff, refusing to acknowledge that the firm’s excessive fees caused people to walk away from modest properties. There has been an escalation of moral outrage with an absence of analysis and effective action. The solution starts with taking seriously the principle “taxes are the price we pay for a civilized society.” That is, the local government is supposed to deliver a standard of service to the taxpayers. That is, services that support property value must be delivered to all neighborhoods– else half the bargain has failed.
The individual members of borough council who seem to think saying “pay your taxes” should solve the problem do not seem to notice that many properties now tax delinquent and abandoned were the homes of long-time residents who did pay property tax without fail for many years. Owners of typical Wilkinsburg houses did continue to pay while one house, then two, then more on their blocks were abandoned. Some of these owners spoke at council meetings, asking the borough to address the problem of the abandoned, collapsing house next door making it impossible to sell their house. Persistent complaints resulted in a few demolitions of abandoned houses, but most people went home with no results. Eventually, they disappeared from their neighborhoods, their houses unsold and now abandoned and tax delinquent.
An aging homeowner no longer able to maintain their house or pay the property tax who is willing to sell but can’t get a price above a few thousand dollars has a life-changing problem. Wilkinsburg has a problem because hundreds of long-time homeowners have experienced that problem.
All along, the borough has had the legal right to maintain abandoned properties– cutting grass and fixing gutters that dump water on the next-door houses– and lien for costs of services after diligent notice to owners. All along, the borough government could have been keeping an account on each distressed property and taking it to tax sale when delinquent tax and municipal liens reduced owner equity to less than zero (“underwater”). I think a local government, understanding real estate tax is its major source of revenue, should treat the real estate tax base like a business owner treats inventory. Why did Wilkinsburg allow blight to spread in its inventory, taking away property value from so many owners and creating a problem for Wilkinsburg as a whole?
Part of the answer to that question is– council members who “serve” without seeing every street in their ward. Another part of the answer is– bad advice from professionals who would not live in Wilkinsburg or invest a cent here. I remember in particular a borough solicitor who advised council that taxes “due and owing” eventually would have to be paid. The man had no understanding that physical depreciation of property is real. He actually expected that someone (didn’t matter who, not him) would pay a tax ten years delinquent on a property that now has a collapsed house. He was also wrong about the law, advising the council the law requires taxes to be made current for sale of a property. Note: Mortgage lenders require clear title; the law does not. A buyer who can pay the entire price of a property with a cash advance on their credit card may not pay taxes at the time of purchase. The former borough solicitor, living in a neighborhood of above-average and appreciating property values, had no concept of typical neighborhoods in Wilkinsburg. He advised council to repeat “due and owing” until that solved the problem.
Here we are. The count of accounts with a balance due the borough transmitted by Portnoff Law Associates to Maiello Brungo & Maiello, the new delinquent tax collector, on August 18, 2014– 21,932. An account is generally one year of delinquency on one property. Note that the count of taxable properties in Wilkinsburg is presently 6965. The oldest account “turned over for collection”– year 1990. The total amount of this delinquent list as receivable to the borough — $14,713,874. Note this amount exceeds the borough budget for one year, and is 3.5 percent of the borough taxable value of $422,205,455 as of September 26 .
Useful, current data published by Allegheny County– [Municipality Map] — accessible from the county’s home page.
Our elected council must be reminded of the principle “property tax is based on property value. ” Where there is no value, (eventually) no tax is paid (even by owners who paid faithfully for decades). The borough’s effort on behalf of people who do pay property tax to Wilkinsburg– I am one of such people– should not be to compel owners of property that has no market value to pay tax based on market value before blight robbed them. The effort should be to restore value to neighborhoods, starting with tax sale of abandoned properties for actual market value, with judicial free and clear orders that remove the delinquent tax that has been on the books, ignored for years.