Budget Hearing on the Office of Tax and Revenue April 30, 2012 Committee on Finance and Revenue Councilmember Jack Evans, Chairperson

Transcription

1 Budget Hearing on the Office of Tax and Revenue April 30, 202 Committee on Finance and Revenue Councilmember Jack Evans, Chairperson Testimony of Laura Newland, Esq., AARP Legal Counsel for the Elderly Legal Counsel for the Elderly (LCE) is a non-profit provider of legal services to older D.C. residents and an affiliate of AARP. For over 35 years, LCE has championed the dignity and rights of Washington, D.C. s elderly by providing free legal and social work services to those in need. LCE s staff and volunteers assist more than 5,000 elders each year. Twenty percent of LCE s cases involve housing advocacy preserving affordable housing and preventing evictions and homelessness among the District s most vulnerable residents. Included among LCE s services is the Real Property Tax Project (the Project), which handles all real property tax matters for LCE clients, including prevention of real property tax foreclosure. Through the Project, LCE has worked extensively with the Office of Tax and Revenue (OTR) to resolve real property tax issues, many in tax sale foreclosure litigation, for about 5 years. Within the past few years, OTR has improved significantly in providing accurate information in a timely way. However, there is still room for improvement. Among various other responsibilities, OTR must administer the tax sale process for thousands of properties. OTR has taken significant steps in hiring and training competent staff to handle tax issues that arise during the tax sale process, but the current staff is overwhelmed by the sheer number of cases and inquiries they must respond to every day. The real property tax foreclosure scheme in the District is complex with the potentially dire consequence of losing one s home for failure to pay real property taxes. For that reason, it is imperative that OTR have sufficient trained, competent staff to handle homeowner inquiries and resolve individual problems such as classification and tax relief issues. The vast majority of tax sale purchasers in the District are represented by counsel, compared with a very small percentage of homeowners who have counsel, meaning that most homeowners must navigate the byzantine process by themselves. It is critical that OTR have a sufficient budget to make sure that homeowners are able to resolve issues with OTR in a timely manner. If the District opts for a tax sale foreclosure process, the District must also accept the responsibility of trying to resolve the real property tax issues prior to foreclosure. LCE continues to encourage Councilmembers to attend the weekly calendar call for real property tax cases, which starts every Wednesday morning at 0 a.m., often lasting most of the day. Councilmembers would be able to see the enormity of the issues facing homeowners and tax sale purchasers, and how important it is that OTR receive sufficient funding to resolve the many varied issues that come up for the parties involved. Thank you for recognizing the importance of the work of the Office of Tax and Revenue and for funding their continued improvements. We LCE submitted written testimony for the 202 Finance & Revenue Agency Performance: Office of Tax and Revenue, outlining more specific issues homeowners must face in trying to resolve real property tax issues, which is attached and hereby incorporated in this testimony.

2 recommend continuing or amplifying funding for the Office of Tax and Revenue to have enough resources to continue to improve customer service for all District residents. 2

3 Finance & Revenue Agency Performance: Office of Tax and Revenue Committee on Finance and Revenue Councilmember Jack Evans, Chairperson Testimony of Laura Newland, Esq., AARP Legal Counsel for the Elderly Legal Counsel for the Elderly (LCE) is a non-profit provider of legal services to older D.C. residents and an affiliate of AARP. For over 35 years, LCE has championed the dignity and rights of Washington, D.C. s elderly by providing free legal and social work services to those in need. LCE s staff and volunteers assist more than 5,000 elders each year. Twenty percent of LCE s cases involve housing advocacy preserving affordable housing and preventing evictions and homelessness among the District s most vulnerable residents. Included among LCE s services is the Real Property Tax Project (the Project), which handles all real property tax matters for LCE clients, including prevention of real property tax foreclosure. Through the Project, LCE has worked with the Office of Tax and Revenue (OTR) extensively to resolve real property tax issues, many in tax sale foreclosure litigation. OTR has improved substantially over the past several years in its responsive to LCE s concerns regarding its clients. That said, however, LCE suggests that OTR improve its processes in several ways to preserve the property interests of the District s most vulnerable, elderly homeowners. In the tax sale process, OTR should balance the interests of District property owners with the interests of the tax sale purchasers. Providing a better balance would prevent the District from becoming enmeshed in costly tax sale litigation (where purchasers are suing the District for a range of issues). Achieving balance would, more critically, help District property owners preserve their homes by complying with the tax code prior to a tax sale or litigation. The current system has created a tax sale system where few, if any, of the key stakeholders, including the court, the plaintiff s bar and the defense bar, are happy with the process. This presents a wonderful opportunity for reform and greater transparency within OTR. I. OTR needs to improve the accuracy of billing information. As Roy Kauffman pointed out to the Council in his oral testimony before the Committee during the Oversight Hearing, OTR has major issues with accuracy in both billing real property taxes due and posting of payments by property owners. Many real property tax sales could be prevented if OTR was able to provide accurate billing. We have had numerous clients who received incorrect amounts from OTR s customer service. In the most extreme cases, miscalculations caused properties to be sold at tax sale, even though property owners were willing and able to pay the delinquencies. Prompt posting of payments is another major issue. There was a period of time last year when it took several months for payments to post when OTR was changing systems. Delays in the posting of payments delays resolution of real property tax foreclosure cases and can protract a lawsuit for several months while the tax sale purchaser waits for final payments to OTR to

4 clear. This is harmful to all the parties involved and wastes everyone s resources, including the court s. Delays in posting also can create inaccurate charges for property owners. For example, if a homeowner makes a payment at the end of a month, and OTR does not post the payment until the following month, OTR may (and has) assess the homeowner s interest incorrectly for the following month. Similarly, OTR assesses penalties automatically the day after the due date for the bi-annual tax bills, which includes payments made by a homeowner on the day it is due, because OTR does not process the payment on the payment date. If OTR could provide tax sale purchasers and homeowners accurate information about the amount of the tax delinquency and provide correct information about payments, it would help resolve many of the issues on the tax sale calendar pre-litigation. II. An OTR Public Advocate is essential to help District homeowners avoid unnecessary tax sale litigation and preserve their property interests. Navigating OTR can be a byzantine and difficult process even for experienced practitioners, let alone unrepresented property owners. LCE strongly encourages the Council to create and staff an ombudsman position within OTR, who can help property owners resolve seemingly intractable issues, and act as a liaison between OTR and the Department of Consumer and Regulatory Affairs (DCRA) on classification issues, which often come up in tax sale cases. Many District agencies have an ombudsman position, including the Office of Health Care and Finance, the Office of Aging, the Office of Tenant Advocacy, the Department of Housing and Community Development, and the D.C. Housing Authority. Section of the D.C. Code statutorily creates a Public Advocate position for Assessments and Taxation, but this position was never implemented by OTR. According to OTR, this position was intended to deal with assessment issues. LCE recommends that the Public Advocate position within OTR be funded and implemented to help property owners in the District resolve all real property issues, including classifications, tax relief and tax sale issues as well as assessment issues. Having a dedicated Public Advocate within OTR would reduce the amount of time it takes to resolve complicated real property tax issues. As an example of how long it can currently take to resolve real property tax issues, LCE helped one client who had been trying to resolve an issue with OTR and DCRA for nearly three years prior to requesting assistance with LCE. It took LCE another two years before the matter was resolved. OTR and DCRA eventually decided in favor of the homeowner, but the homeowner was subjected unnecessarily to multiple tax foreclosure lawsuits and years of stress. When there is a real property tax foreclosure lawsuit, status hearings are often 4-6 months apart. What this means on a practical level is that OTR prioritizes its focus on property issues that are immediate, leaving hundreds of other property owners in limbo. Having a dedicated Public Advocate within OTR would ensure that cases do not get lost and that progress is made. 2

5 III. Conclusion LCE encourages Councilmembers to attend the weekly calendar call for real property tax cases, which starts every Wednesday morning at 0 a.m. and lasts until all the cases have been called, often lasting most of the day. For LCE clients, who often suffer physical limitations, sitting in court all day can affect their health detrimentally. Councilmembers would be able to see the enormity of the problems facing homeowners in trying to resolve real property tax issues, and the difficulties that tax sale purchasers have in prosecuting these cases due to OTR inefficiencies and lack of transparency. Thank you for the opportunity to provide written testimony for the FY and FY2 Performance Oversight hearing. LCE has many other ideas for best practices (some of which were included in the Schedule H testimony in 20), and we hope that the Council and OTR will be receptive to reform ideas that are in the best interests of the District. The District needs an integrated tax policy that protects homeowners constitutionally protected property interests and encourages tax sale purchasers investment in the District. LCE looks forward to working with the Council and OTR to better serve property owners in the District of Columbia. 3