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Pittsfield Looks to Hold Tax Lien Auction This Fall
By Andy McKeever, iBerkshires Staff
01:00AM / Friday, June 22, 2018
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The City Council's Finance Committee heard the annual audit on Wednesday.


Director of Finance Matthew Kerwood said the plan is to hold the auction in late fall.
PITTSFIELD, Mass. — The city will look at holding another tax lien auction later this fall.
 
According to Director of Finance Matthew Kerwood, the city intends to host the auction in late fall to recoup some back taxes. The auctions essentially sell off liens on delinquent taxpayer properties to the highest bidder, which then takes over the rights to collect from the property owner. 
 
Kerwood said there is some $5.8 million uncollected and an equal amount of interest. However, he does not know how many of those will go to the auction block. The liens will be sorted through by a vendor to determine which ones have value at the auction and which ones don't.
 
Already, Kerwood said there is about $900,000 worth that is worthless and will never be collected.
 
This will be the second time the city has gone through such a process. In 2015, the city had about $10 million in back taxes and started a process and ultimately the process brought in just short of $2 million in uncollected revenue. Kerwood said he doesn't know quite yet how many, or the value, of the liens to hit the auction block this year.
 
The first step is to notify homeowners of the pending auction. Kerwood said those who set up payment plans will not have their lien on the auction block. In 2015, that process was one of the biggest drivers taking in $1.2 million worth of back taxes from the property owners themselves.
 
The city's vendor will then host the auction. In 2015, $667,000 worth was sold by Strategic Auction Alliance. The liens were for a total of 54 properties and had seven private companies bidding.
 
Ward 4 Councilor Christopher Connell has repeatedly urged the city to take on an auction. He is hoping to use more free cash to offset the tax rate this year -- a practice routinely discouraged by the city's independent auditor Thomas Scanlon -- but replenish it through the auction. The administration, however, doesn't want to change the amount of free cash going to offset the budget but does want to go to auction to increase revenues.
 
"No one disputes that a tax title auction is a valuable tool," Kerwood said.
 
On Tuesday, Scanlon agreed that the city's amount of uncollected is starting to trend above average and he encouraged the city to take some time of action to collect it. 
 
Scanlon also reported that the annual audit went well. 
 
"We made no significant adjustments to the balance sheets," Scanlon said, later emphasizing that is the most important piece of the audit.
 
Scanlon also credited the city's financial team for a lengthy effort to close out special project accounts. Scanlon said the city had a number of accounts that weren't being used the way they once were intended or were stale and the city cleaned those up.
 
The auditor also continued to say he'd like reserves increased. He said the city has about 6 percent of its annual budget worth of reserves. He also repeated his recommendation that the city avoid using free cash to offset the tax rate.
 
"You are right in the average, above average. I'd like to see it in the 10 percent," Scanlon said.
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