Phila. aims to boost volume of sheriff sales

After promising tougher enforcement for more than a year, the Nutter administration is planning a stiff run-up in the number of tax-delinquent properties to be auctioned off at city sheriff sales.

City Finance Director Rob Dubow and Revenue Commissioner Keith Richardson said last week that they expect to offer 200 tax-delinquent properties at a sheriff's sale next month, and raise the number to 600 a month by January 2012.

By comparison, over 11 years from 2000 through 2010, the city tried to sell just 100 tax-delinquent properties a month, and barely half those sales went through, according to figures provided by the Sheriff's Department last year.

"We're not trying to move people out of their homes," Richardson said in an interview. "We're just trying to get them to take seriously their responsibility to the city and School District. . . . When people start to recognize we're really serious, we'll get more people coming to us to work out payment agreements."

The two men spoke in response to The Inquirer's report last week that described Philadelphia's property-tax collection system as the least effective among the nation's big cities.

More than 110,000 Philadelphia properties, nearly one in five, are delinquent, their owners at least nine months overdue in paying their real estate tax bills.

The problem costs the city and School District millions of dollars in revenue - $232 million in unpaid taxes, penalties, and interest over the last 10 years, according to a Revenue Department report - and plays a major role in creating and sustaining urban blight.

A national authority on property-tax collection systems, law professor Frank S. Alexander of Emory University in Atlanta, described the city's delinquency levels as "astronomical."

"Those numbers tell you there is a very high rate of nonenforcement," Alexander said. "It means that the city has made a decision not to go after those properties."

In an article in this issue of The Inquirer, Dubow and Richardson say the Nutter administration views Philadelphia's legacy of tax delinquency and vacant property as "one of the biggest challenges facing the city."

They say the city has already taken steps to strengthen tax collections and is developing new policies to deal with vacant land, an effort involving multiple city agencies, community-development corporations, private developers and City Council.

In recent years, the bulk of real estate in sheriff sales has been foreclosed on by lenders after owners failed to pay mortgages. The number of properties forced into sheriff sales by the city because of unpaid real estate taxes has been relatively small - although the totals are suspect because of record-keeping problems at the Sheriff's Department, now under review by a variety of auditors, law firms, and law enforcement agents.

Records provided last year by aides to John Green, the former sheriff, put the number of tax-related sheriff sales at 128 properties in all of 2010, the lowest figure in the last 11 years.

A Revenue Department database shows 224 tax-related sales in 2010, down from 257 in 2008 and 328 in 2009, Richardson said.

Those annual figures could be matched in a single month if the city follows through with the expansion it promises.

Dubow said the small number of sheriff sales last year was attributable to two factors: the tax amnesty program that represented the city's major revenue thrust the first half of 2010, and the bookkeeping problems that consumed the Sheriff's Department toward the end of the year, prompting a scathing audit by City Controller Alan Butkovitz and a five-month suspension of sheriff sales beginning in December.

The amnesty allowed delinquent taxpayers to settle balances for the original taxes due, no penalties, and just half the calculated interest payments. The program raised $73 million, about $24 million of that being delinquent property taxes, according to the city.

As the amnesty program was ending in June 2010, the city promised tougher collection efforts against delinquents who failed to take advantage of the amnesty.

The threats included tripling the number of properties put up for sheriff sale for unpaid taxes, from 200 a month to 600.

But data suggest the city didn't even get the monthly volume up to 200.