Treasurer: $6M in past due taxes collected

By Kevin O’Brien

Over $6 million in delinquent property taxes has been collected by Marathon County’s treasurer’s office in the past two years, according to county treasurer Connie Beyersdorf. Beyersdorf spoke to the Human Resources, Finance and Personnel Committee at its Jan. 23 meeting, which featured a lengthy discussion about continuing to improve the county’s process for seizing tax-delinquent properties and then selling them to recoup the county’s lost revenue.

Beyersdorf said her office sent letters to 38 tax-delinquent property owners last year after the county approved what’s called an “in rem” foreclosure process, which allows the county to go after multiple properties at once, instead of one at a time. Of those who received letters, she said 17 paid their pastdue taxes in full, for a total of $108,662.

The county is currently pursuing payments from another 177 tax-delinquent properties, and 39 of those owners have also paid off their debts, she noted. Before the county implemented the in rem process, it had around 400 parcels with three or more years of back taxes due.

“So, the in rem process is working,” she said. “People are realizing that the county is being very active in getting the parcels paid.”

Beyersdorf reminded supervisors that municipalities with tax-delinquent properties are reimbursed for any lost revenue every year, so “only the county is out the money.”

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Property owners need to be at least three years behind on their taxes before the county can start to pursue payments, so if they pay off two years worth of taxes, Beyersdorf said the county must stop sending past-due notices.

“We have to start over,” she said. Beyersdorft said her office is looking to “take 10 to 15 parcels per month,” but that requires a lengthy process that starts with issuing a 90-day notice to the property owner and to any lien holders and other “persons of interest.” Once the letters are sent, she said a notice also needs to be published in a local newspaper for three consecutive weeks, which is “quite expensive.”

The cost of publishing the notices is divided among the property owners, along with other fees incurred as part of the process, she said. After the initial 90-day period has elapsed, she said foreclosure notices are sent out by the corporation counsel’s office, which starts another 30-day period before a court hearing is held to seize the properties.

“We want to continue this process until all properties are resolved from tax delinquency,” Beyersdorf said. “Again, our goal is to get the people to pay their property taxes, and if they do, the county has no interest in the property anymore.”

Beyersdorf said several residents have come to her office asking for ways to pay off their tax debt, and they have been encouraged to take out a loan to settle what they owe the county. Many of them have followed through with that recommendation, she said.

Nine property owners are currently on payment plans with the county, she said, but 36 others have defaulted on their agreements by giving the county too many checks with insufficient funds in their bank accounts.

Beyersdorf said her office prioritizes its caseload by starting with the property owners who are the most number of years behind on their taxes. Supervisor John Robinson noted that the county can no longer legally pursue past-due taxes after the tenth year of delinquency.

Supervisor Gayle Marshall said the $6 million figure was “awesome,” and wondered how it affects this year’s budget. County administrator Lance Leonhard said the money could not be considered a “windfall” based on how the county accounts for taxes due in previous years.

Committee members also discussed a $150 fee levied by the treasurer’s office to compensate for the staff time involved with pursuing past-due taxes.

“It seems like that’s not enough to cover real staff time,” Marshall said, noting that corporation counsel Mike Puerner is also involved in the process.

Based on a court ruling that came out of a case in Hennepin County, Minn., the county is only allowed to keep the amount of taxes it is owed, plus interest and any incurred costs, when it sells off a seized property. The rest of the proceeds must go back to the former owner.

When auctioning off a seized property, the county’s ordinance states that the minimum bid will be set at 50 percent of the property’s assessed value, but Puerner said the HRFC committee can establish an alternative value based on the “specific nature of particular properties.” County clerk Kim Trueblood said 12 parcels are currently ready to be listed for auction.

Supervisors questioned whether the 50 percent minimum bid is enough to recoup what the county is owed while also being legally defensible under the court ruling. Puerner said he believes it would hold up in court because the county is using a public auction website to determine a fair market value.

As the county continues to work on pursuing tax-delinquent properties, Leonhard said staff will get a better understanding of how much time it takes to go through the process and what should be charged to cover their costs. Puerner said he believes data from the current batch of delinquent properties should be available by the committee’s second meeting in March.

Robinson said the county will anticipate getting a report and recommendations for fees at that meeting.

“We will continue to track those fees and charges and costs going forward,” he said.