After Poughkeepsie's tax bill error, resolution could provide fix, change foreclosures
Correction: Quarterly tax payers have to pay a 1% interest charge for 2021. This was incorrect in an earlier version of this article.
When Jeff Fusaro received a notice from the city of Poughkeepsie stating his property tax payment was delinquent he was more than a little puzzled.
He's been a homeowner for more than 20 years and has always made sure his taxes are up to date, paying in quarterly installments.
The notice stated, "Some or all 2021 taxes on your property have not been paid" and asked him to call the finance department in order to "determine the total amount of taxes, fees and interest due."
"There's no due date, there's no amount, there's no calculation, nothing. That's the biggest frustration," Fusaro said regarding the delinquency notice.
Wappinger: Why Hughsonville's 1st planned gas station ignited a legal fight
LaGrange: Should LaGrange land be rezoned? As town seeks new development, some residents concerned
The city's finance department told him he owed 1% interest, since he paid in installments, in accordance with a new law the city instituted amid the pandemic allowing residents to pay in installments that differed from the quarterly structure.
"They gave me an amount when I called, but I have not paid it yet. I've actually been waiting for them to send me an actual bill," he said.
The City of Poughkeepsie erroneously sent out delinquency notices to some residents due to a problem with how the new tax law was implemented, according to Marc Nelson, the city's business administrator.
The city would not say how many residents were impacted by the glitch, but it plans to remedy the error as part of a resolution being introduced during Dec. 6 Common Council meeting.
The resolution would also change how property tax liens are handled, providing homeowners with more protection against losing their homes. But the resolution also includes language to fix the error in the implementation of its new tax payment structure passed last year.
The city plans to request a public hearing on the resolution to be set for Dec. 13.
What went wrong
The change to the tax law allows property owners to pay their taxes throughout the year in any number of installments, with the addition of a 1% per month interest charge.
Prior to this change, residents had the option to pay in four quarterly installments with the addition of a 2% late fee added to their first installment.
The citycharged those who paid in quarterly installments both the 2% late fee or admin fee and the 1% per month interest for subsequent months.
"The (2020) amendment accomplished (providing relief), but did not integrate with the rest of the existing code," Nelson said. "Someone who paid the former admin fee in order to pay quarterly is not delinquent and shouldn’t have been sent a letter at all."
The city rushed to pass the law last year to protect homeowners from delinquency and allowing them more flexibility in payment schedule. However, the city didn't take out references to the 2% penalty for quarterly payers.
The amendment introduced tonight will take out references to a late fee. It also adds that any payment made after Feb. 16 will be charged a 1% interest rate per month retroactive to Jan. 1.
No longer selling tax liens
The resolution was originally drafted to introduce a new process by which delinquent property taxes will be handled. Instead of selling tax liens to a private investor, the city will work with the property owner on getting the payment or can take the property owner to court.
That would potentially give homeowners more flexibility to pay off their debt to the city, mitigating the fear of losing their home and giving them a better chance to walk away from a foreclosure with some of the equity they put into the property.
"The benefit in doing that is that it is a softer landing for homeowners. We are not going to go into court with a little piece of paper and take someone's home," said Councilmember Sarah Brannen, who represents the fourth ward and introduced the resolution.
"Our interest in this city is to maintain strong communities and neighborhoods," she said. Brannen has been looking into this issue since taking office in 2018. She will be leaving her seat at the end of this term and will be replaced by Nathan Shook.
Tax liens are placed on a property when taxes aren't paid for the year. Those tax liens are then sold to a private investor, who gives the property owner two years to pay with a 12% interest charge. The investor collects on the interest and the overdue taxes are paid back to the city.
The investor takes ownership of the property if debt is not paid and the homeowner can be evicted, losing any equity invested in the property.
Under the new process, the city would keep ownership of the tax liens and work with the property to pay off the debt by setting up a payment schedule. If the property owner still isn't able to pay off the debt, the city can take the property owner to court and let a judge decide what action needs to be taken. If the property is foreclosed on, the owner can take back the equity minus any debt owed.
"Research also reveals that tax liens severely impact communities of color and senior citizens, particularly low-income seniors who face the potential of not only losing their home, but their home’s equity," according to the draft resolution.
Saba Ali: Sali1@poughkeepsiejournal.com: 845-451-4518.
This article originally appeared on Poughkeepsie Journal: City of Poughkeepsie tax bill error, foreclosures part of resolution
