Erie County Clerk Michael P. Kearns and the Western New York Law Center released a report produced by the Erie County Clerk’s Zombie Task Force revealing $112 million in overdue property taxes on thousands of properties throughout Erie County. (photo sent)

Mon May 16, 2022 11:55 a.m.

Urges to use US bailout funds to remedy ‘arbitrary 18% interest penalty’

Erie County Clerk Michael P. Kearns and the Western New York Law Center released a report produced by the Erie County Clerk’s Zombie Task Force revealing $112 million in overdue property taxes on thousands of properties, residential and commercial, that each owe $500 or more. Erie County.

The Erie County Clerk’s “ZOMBIE Initiative Tax Delinquency Report” was created after several visits to a number of municipalities to discuss how the initiative could help deal with “zombie” properties.

Kearns’ team said: “A clear trend emerged that while many municipalities were facing issues related to vacant homes with mortgages against them, often referred to as ‘zombie properties’, many others were facing problems with vacant and tax-delinquent properties without a mortgage. These properties have lain vacant and tax delinquent for several years without any maintenance, other than what is provided by the municipalities out of necessity.

Kearns said, “Zombie properties plague communities; this report hopes to shed light on an emerging problem we call “tax zombies”. There are currently 13,262 properties throughout Erie County that are in default of paying their property taxes, and our report provides common sense recommendations to both combat current tax zombies and prevent future ones.

Kearns’ team noted that while not all tax defaulting properties are vacant tax zombies, they all have the potential to become one. When a homeowner in Erie County falls behind on their taxes, they begin to accrue interest on their back taxes. Erie County’s tax law allows the county to levy an “excessive” 18% penalty on homeowners who are late in paying their taxes – a rate that was established in the early 1980s when tax rates preferential interest varied between 10% and 20%. Kearns’ team said: ‘This high interest rate, combined with the practice described above of only foreclosing a certain number of properties each year, is leading to owners falling behind and losing a large chunk of the net worth they have acquired over the years.

“It can also lead to divestment from a property, as a landlord is often reluctant to invest in a property that they could lose at any time due to tax foreclosure. If the property becomes too dilapidated to continue to occupy, it can lead to a tax zombie or, if the owner dies and the family does not know their rights regarding the property, it can lead to a tax zombie. There are many scenarios that can lead to a tax zombie. However, many of them are exacerbated or accelerated by the excessive interest rates charged to tax defaulting property owners.

Kate Lockhart, director of the Vacant and Abandoned Properties Program at the Western New York Law Center, said, “Unpaid taxes and high interest rates on back taxes have major long-term impacts on neighborhood stability. . By tackling current tax arrears, we can help prevent families from losing their homes while simultaneously preventing future vacant tax zombies. Additionally, prioritizing vacant properties in the tax auction can help address the need for additional housing in Western New York and eliminate the blight in our communities.

The Erie County Clerk’s Zombie Task Force is currently collecting information from municipalities about tax zombies. Kearns’ team said: “While the data in this report relates to tax delinquency as a whole, it is important to know that the majority of these properties are occupied, and a resolution to the delinquency is imperative in order to to prevent the owner from losing their property due to a tax seizure.

Kearns said: “Everyone has to pay their taxes. Our recommendations do not exempt owners from paying property taxes. It starts with reducing the arbitrary 18% interest penalty in an effort to combat today’s tax zombies and help homeowners emerge from the financial avalanche that is burying them. It’s time for Erie County to create sustainable tax policies, including negotiating payment plans to prevent the foreclosure process.

Recommendations from Kearns and his initiative fall into two categories:

• The first category is current tax zombies: replicating the expedited tax foreclosure process for vacant properties in New York State tax law and Erie County law, allowing tax foreclosure on vacant property after one year of overdue taxes instead of two; and hold a special auction for vacant and tax-delinquent properties. Allow municipalities to submit lists of properties they have verified as vacant to be put in this auction; and use federal relief plan funds to process vacant properties eligible for tax foreclosure.

•The second category aims to prevent future tax zombies: lower the interest rate on overdue occupied property taxes; expand payment plans to homeowners who do not pay their property taxes and expand outreach and education on preventing foreclosures; and using U.S. bailout funds to create a local fund to help homeowners facing COVID-19 challenges preserve homeownership.

For a copy of the Erie County Clerk’s ZOMBIE Initiative Tax Delinquency Report, go to erie.gov/clerk/TaxDeliquencyReport or call the Erie County Clerk’s Office at 716-858-8864.

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