Philadelphia officials are planning to go ahead Wednesday with an auction of city tax liens despite the concerns of housing advocates.
City official hope to raise millions through the sale of about 1,400 liens, but critics say the auction could end up moving the properties into a new tax limbo.
“The city is sending to this tax lien sale a number of properties that are vacant, and although significantly tax delinquent, it will be difficult if not impossible for the purchaser of the lien to collect on those taxes,” said Beth McConnell, head of the Philadelphia Association of Community Development Corporations.
A tax lien auction is basically a debt sale, McConnell said. When you buy a tax lien, you win the right to collect that debt — or seize the property through foreclosure.
In theory that should help move some tax delinquent properties back onto the market. But in practice, McConnell said, buyers have just as much trouble collecting debts as the city, and foreclosure proceedings can take years to resolve.
She said the city of Rochester tried tax lien sales and soon found they weren’t worth it.
“They did an evaluation of it and found that the sale of tax liens created these limbo properties, that the public and city couldn’t get access to in order to redevelop them. So they actually eliminated and ended their program,” McConnell said.
Among her concerns is that properties whose tax liens have been purchased won’t be eligible for inclusion in the city’s Land Bank. McConnell’s organization recently sent a letter to Mayor Michael Nutter, requesting a halt to the auction. Similar requests came from the Public Interest Law Center and Councilwoman Maria Quiñones-Sánchez, who wrote that “it is crucial for us to have more time to review any liens proposed for sale.”
A spokesman for Mayor Michael Nutter said the sale will proceed as planned, but added that officials will review the list and remove any properties that would be best kept under city control.