40. Delinquent Taxes Should be Waived - The Rationale for Conservatorships

Question: When should a municipality, school district and county forgive back taxes and other government liens on an abandoned and blighted property?

Answer: Yes. When the abandoned and blighted property is rehabilitated or demolished by a conservator.

Why? As the Abandoned and Blighted Property Conservatorship Act provides for a plan of remediation supervised by the County Court of Common Pleas, a petitioner for a conservatorship should have tax forgiveness and forgiveness on all other local government liens upon completion of a conservatorship and sale of the property to a new owner.

The emphasis is upon NEW owner. The responsible owner for the abandoned and blighted property should not be rewarded with having perpetuated a public nuisance. The conservatorship law holds the owner responsible for taxes and government fees owed up to the end of the conservatorship.

Another reason : Forgiving back taxes and fees incentivizes the energy and creativity of private investment. Eliminitaing the the government liens places the conservator in line as the first lien holder without the cloud of government liens ahead of his /her efforts. A sale is then likely to return the costs of the conservatorship without that shadow of government liens ahead of the private money invested. So, insistence upon maintiainting the government liens eliminates an incentive. In fact, it discourages the risk to the petitioner in understatking the project. It is government perpetuating abandoned and blighted properties.

The control for the governments involved is the oversight of the conservatorship by the County Court of Common Pleas. The result is the elimination of blight and the returning of a property to usefulness and future ongoing tax and fee payments.

In the case of  depopulated municipalities returnning properties to usefulness means of attaining tax revenue into the future. This is all the more important for municipalities that have lost residents in maintaining a tax base.

A policy and  practice to incentivize private investment  for rehabilitation and improvements by local government is a logical course of action.

The focus has been upon an individual being a petitioner. The conservatorship law can be used by a municipality, a school district, a county or a nonprofit based in the municipality or a church etc. Regardless of the petitioner, all petitioners will be subject to the oversight of the Court of Common Pleas assuring that the job will be done.

Fundamental to all of this is that the abandoned and blighted owner is responsible for all government liens owed. As such, their other properties are subject to a lien. Only the conservator benefits from the waiving of governemnt liens as a method to benefit the community. There are no windfall profits for a conservator upon sale as the law specifies that the conservator is limited to  20% of the costs or 20% fee of the sale price whichever is higher.

What about private liens? All private lien holders were notified in the petition for conservatorship. It is that notice that allows a private lien holder to exercise or not exercise their rights under the Act. If the private lien holder decides not to act to rehabilitate / demolish under the Act then their normal lien order remains after the first lien holder, the conservator.