Dear Philly: Postpone Tax Lien Auction

On June 11, we joined leaders of several organizations in sending a letter to Mayor Michael Nutter requesting that the City of Philadelphia postpone a tax lien auction scheduled for June 17, 2015.

A tax lien is a legal claim against a property for unpaid real estate taxes or other fees. A lien goes into effect on a property on January 1st the year after payment was due.

In 1997, during the Rendell Mayoral Administration, 30,000 tax liens were bundled together and sold to US Bank, a private corporation. Philadelphia community leaders are calling for the City to delay this auction until a public investigation is done into the impact of the 1997 tax lien sale as to avoid negative consequences.

Doubt remains about the ability of the City, much less third-party buyers of tax liens, to collect a large proportion of property taxes and fees. The sale is unlikely to generate projected revenue and instead may hurt the City’s ability to collect future debts, particularly if priority is given to liens held by the private lien holder, as was done in 1997.

There is also major concern about the impact of the impending auction on neighborhood revitalization. State legislation enables Philadelphia’s new Land Bank to acquire the kinds of vacant and tax-delinquent properties that are to be placed in the auction. Selling tax liens will create significant added barriers to acquiring and putting properties back into productive use.  At the same time, lien sales have been shown to be ineffective in bringing the property owner into compliance, exacerbating vacancy and hindering redevelopment of those parcels for years to come. Leaders adamantly express in the letter that re-using these properties is the best way to create revenue to fund the school district–not a tax lien sale.

The letter cites the failure of tax lien sales conducted by the City of Rochester, which has since ceased its own tax lien program. In sum, the letter urges the City to recognize that the best means of settling these delinquent accounts is to make them available property owners who can handle their tax liability and put the properties back into productive use.

Click here to read a copy of the letter.