Facing an increasing difficulty attracting bids at tax sales for properties with unpaid taxes, the Washington County Board of Commissioners discussed Tuesday whether to increase the redemption rate that the property owner must pay to redeem the property from the winning tax sale bidder.
Treasurer Todd L. Hershey suggested increasing the redemption rate from 6 percent per year to 12 percent, a rate more in line with other counties in the state, but the commissioners voted against the idea 3-1.
Commissioners President Terry Baker led the opposition to the idea, saying it would add to the hardship on families fighting to keep their homes during circumstances such as unemployment or divorce.
Washington County holds a tax sale each June, just before the close of the fiscal year, in which properties with unpaid taxes are put up for bid, Hershey said. The minimum bid is the amount owed to the county plus fees associated with the tax sale, he said. The winning bidder receives the right to foreclose on the property in the future, but in the meantime, the owner may redeem the property by paying the winning bidder's purchase price plus the redemption rate — currently 6 percent per year. About 90 percent of the properties sold at the tax sale are redeemed, he said.
In the June 2011 tax sale, the county was unable to secure a minimum opening bid for 38 of the 351 parcels in the sale, or 11 percent, Hershey said.
The previous year, 14 did not attract their minimum bids, and the year before that, four did not attract their minimum bids, Hershey said.
Hershey said the reason it is difficult to get bids might be that people bidding on tax sales generally borrow money to do so, at interest rates of 5.5 to 6 percent, so the county's 6 percent redemption rate offers little to no return on their investment in the event that the property is redeemed.
Washington County is one of only four counties in the state with 6 percent redemption rates — the lowest in the state, Hershey said. The average redemption rate throughout the 23 jurisdictions is 12.26 percent.
The party redeeming the property is not always the original owner, Hershey said. Often, the financial institution holding the mortgage redeems the property from the tax-sale buyer, he said.
Nevertheless, Baker said he was uncomfortable supporting the request.
"We do have families out there that are going through hardships that do want to buy their properties back," he said. "They're down on their luck, they want to buy their home back, and doubling the percent here is making their hardship even worse."
Commissioner Ruth Anne Callaham was the only commissioner to vote in favor of the increase. Commissioner John F. Barr was attending another meeting and was absent for the vote.