Danville has collected more than $1 million in delinquent taxes, penalties and interest since the city first threatened to make public the names of those who had fallen behind in their tax payments, according to Michael Adkins, the city’s Assistant Financial Director.
The city sent a letter to overdue taxpayers in July, announcing their names would be published in an advertisement in the newspaper if they did not get their taxes paid up.
“We’ve been very pleased,” Adkins said. “We’ve seen a dramatic increase in collections since the announcement.”
In July, there were 3,406 properties on the delinquent tax list; by the time the list was published Oct. 23, the number had dropped to 2,424, Deputy City Manager Lyle Lacy said last month. As of Nov. 9, almost 200 more payments had been made, cutting the list to 2,231 properties that still need to have tax bills paid.
Adkins said that since the July 1 announcement, the city has collected $784,000 in delinquent taxes, plus $139,000 in penalties and $123,000 in interest - a total of $1,046,000. That figure represents a sum more than three times what the city was able to collect a year ago.
“Last year, at the end of Oct. 2006, we had collected $224,000 in taxes, $55,000 in penalties and $32,000 in interest” for a total of $311,000, Adkins said.
Interest and penalties continue to add up for those who have not paid their bills. The advertisement the city ran on Oct. 23 said the amounts owed were compiled as of Oct. 15
and listed the owner of the most delinquent properties as local attorney Joe Garrett, either singly or in partnership with others.
His 93 properties showed an outstanding balance of taxes owed at more than $93,000; in the updated Nov. 9 list published on the city’s Web site, the total is now in excess of $94,000.
Garrett did not return a call made to his office asking for comment on the Oct. 23 article. A receptionist who answered the phone at his office Friday said that the best way to contact Garrett on the issue would be to “drop him a note in the mail.”
The single property that has the highest taxes owed on it - $24,115.07 - is listed as belonging to Paul W. Martin. A visit to the property at 700 Indian Valley Road showed it burned some time ago, as there are trees growing inside the shell of the building. The property apparently is used as a hangout occasionally, as a large pile of beer cans are mixed in amongst the greenery. Martin could not be reached for
comment.
A commercial property at 1145 Piney Forest Road shows a back tax bill owed of $5,986.30. The city list shows the owner as “Martin MC Properties LLC.” It does have a “For Sale” sign in front of it, listing First Realty as the broker. On Saturday, Geri Adams of First Realty said Martin MC Properties LLC was a local company, but could give no other information.
According to the city’s list, Martin MC Properties LLC owns a total of 16 properties that are behind on their taxes, to the tune of $24,265.47.
Thirty-one of the units in a Cherokee Court apartment complex are shown as owing a total of $1,666.43, and being owned by Nathan Carter alone or in partnership with Thornell Hancock. In addition, Carter is shown as owning six properties on Springfield Road and two on West Main Street that total an additional $7,749.23 owed for delinquent taxes. Neither owner could be located for comment.
Ultimately, delinquent taxpayers can face losing their properties to foreclosure, a process that is time-consuming and expensive for the city, according to City Attorney W. Clarke Whitfield Jr.
“Eventually we will take them to court, foreclose and apply the proceeds to their bill,” Whitfield said Wednesday, noting that the process requires many notices be filed and sent to the owners of the properties before the actual foreclosure proceedings can begin. Even then, he said, more notices must be sent and published in the local newspaper before the city auctions the property to pay the tax bills.
“We’re investigating how to do it the most efficiently and as effectively as possible, with the least amount of time and money expended,” Whitfield said.
Contact Denice Thibodeau at dthibodeau@registerbee.com or (434) 791-7985.
What happens when the city forecloses on delinquent tax properties?
Property owners who do not pay their tax bill can face losing the property completely to pay off the taxes, according to the Code of Virginia (Title 58.1, Chapters 33 and 39), which details the process that localities - such as the city of Danville - must follow to collect overdue taxes.
According to the code, a tax foreclosure sale is called a “proceeding by Bill of Equity” and every piece of property the city wishes to foreclose on and sell must go through a series of notices and court filings before the foreclosure can take place. Multiple pieces of property owned by a single delinquent owner cannot be lumped together - each individual piece of property has its own set of paperwork covering notices and must be filed individually to the court.
Delinquent property owners do not immediately face foreclosure the moment a tax bill becomes overdue; according to the code, two full calendar years must pass before a property can be sold (for instance, if a bill became past due on July 1, 2005, the property could not be sold until Dec. 31, 2007) - though in the case of condemned property, only one calendar year must pass.
The code also requires that notice be sent to the owner warning that the property will be sold if the taxes are not paid, which means the city has to make a “reasonable” effort to find the owner. Even if notices mailed to the property address and the owner’s last known address are returned as undeliverable, a search
of available public records is necessary to prove attempts were made to notify the owner of the impending sale.
A title search is done and the city has to send notices to any other parties who hold a lien, such as the mortgage holder(s), trustees or any creditor with a lien against the property. Then the city has to publish a list of the parcels beings offered for sale in a “newspaper of general circulation” at least 30 days before the Bill of Equity is filed in court. The city then has to wait 90 days to give any parties who feel they have a right to some of the proceeds of the sale of the property an opportunity to file a claim.
At this point in the process, it is still possible for the owner to make a deal with the city to pay the bill and halt the sale, which will remain on the court docket in case the owner fails to abide by that agreement. The owner can also halt the proceeding, right up to the date of the sale, by paying the tax bill - including penalties, interest, court costs and reasonable attorney’s fees.
Ultimately, the court decides whether or not a sale will be held and the order in which the claims against the property will be paid, though City Attorney W. Clarke Whitfield Jr. confirmed Friday that the city’s taxes would be paid first as it would always be in “first lien position.”
The sale is actually an auction, with the highest bidder winning the property - though even that might not be the end of the issue, because the court has to approve the sale.
“The court might overturn the sale if they do not consider it a fair sale,” Whitfield said, adding that generally only happens if the house is auctioned for considerably less than it is worth.
Since the proceeds of the sale need to pay the tax bill and other lien-holders before handing any of the proceeds over to the original owner, a court might decide to overturn the sale if all claims are not satisfied by the sale.
Contact Denice Thibodeau at dthibodeau@registerbee.com or (434) 791-7985.
There are many more examples of multiple properties listed under a single owner who has not paid his or her delinquent tax bills, and single properties that show a large outstanding debt, that will be examined in future updates of the city’s collection process. If there is an extenuating circumstance or error that has landed your property on the city’s delinquent list, we would like to hear from you before the next update is published. Please contact Denice Thibodeau at
dthibodeau@registerbee.com or (434) 791-7985.
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