Camden retakes control of pursuing tax liens

In 2002, a state report called for new management of Camden's tax collector's office, citing it for inaccurate tax-lien calculations, lacking accountability, and being in disarray.

"In order to get services, we need to collect our taxes," then-Mayor Gwendolyn Faison said. "We just don't have the staff. We don't have the capacity to do it."

The 15-person tax department just could not handle the thousands of tax liens by itself, Faison said.

In the summer of 2001, the city had hired a private tax collection firm called Xspand, headed by former Gov. James J. Florio, to help with its delinquent-taxpayer problem. But by the time Xspand was up and running in Camden, the state's report was out.

As of Friday, the city's tax team - now down to 12 - will try again to do the liens by itself. Xspand's contract was not renewed this week.

The city's tax staff will have to begin by combing through data related to 4,100 liens that Xspand could not resolve in its eight-year partnership with the city and state.

"All the liens were supposed to be satisfied. . . . I don't think it worked out how it was supposed to," city Finance Director Glynn Jones said.

Fewer than a quarter of the 5,300 liens were satisfied by Xspand. Neither the city nor state could immediately say how much delinquent tax money was recovered by the city from the deal with Xspand.

City officials expressed confidence that they could manage the tax liens despite having an even smaller staff.

"The city has capacity to administer the liens," said City Attorney Marc Riondino. "The lien administration will be through a comprehensive approach to economic development and revenue enhancement. All city departments will be involved, coordinated by the mayor and her business growth and development team."

At a board meeting Tuesday, the state Tax Lien Financing Corp. (TLFC) - an agency created in 2003 by statute to purchase and manage tax liens to help municipalities increase their tax revenue - voted to hand back all of Camden's liens and foreclosures.

Xspand's current parent company, JP Morgan Chase & Co., declined to discuss what the company earned from the eight-year deal or how much it recovered for Camden.

Contract documents show that Xspand was to get as much as 25 percent of the proceeds of its sales.

It was not clear whether it was the city or Xspand that wanted to part ways.

Helene Pierson, executive director of Heart of Camden, a nonprofit involved in turning abandoned houses into affordable housing, faulted the TLFC for the apparent failure of the arrangement. She noted that the body met infrequently, which held up many potential transactions.

"It was a circus of not having a quorum. . . . Not a lot was accomplished," she said.

During a January 2010 TLFC meeting, as recorded in its minutes, Xspand executive Dean Reiche averred that 2010 would be a transition period for Xspand and the city, adding: "To the extent that there should be a decision to terminate within the year and the city is ready to assume all of the functions, Xspand is totally supportive of that, as we are supportive of both the wishes and intents of the current administration."

Reiche declined to answer questions both after Tuesday's TLFC meeting and when reached at his office Thursday. JP Morgan spokeswoman Jennifer Zuccarelli also declined to comment.

Camden has been the only municipality to use TLFC, to which it sold its 5,300 tax liens - valued at more than $120 million - for $2 million in 2003, with the expectation of getting future payments as TLFC and Xspand satisfied the liens. TLFC retained Xspand as its servicer.

TLFC, which had borrowed the money from the Camden Economic Recovery Board, repaid it within the first year of managing the lien redemption payment, according to the spokesman for the state Department of the Treasury, Bill Quinn.

One of the fallouts of the transition for residents is that the city will go back to having three-year installment payment plans for delinquent property owners.

However, the city will honor the plans of those residents who are currently paying off their liens over five years, a move the TLFC had approved, city Finance Director Jones said.

Jones said he was not sure what kind of tax-lien inventory the city was getting back from Xspand.

Reiche provided a clue at the 2010 TLFC meeting, where he said about four out of five liens under TLFC were "attached to either a vacant piece of land or an abandoned structure."