The Portland City Council voted unanimously Monday to streamline the process for selling properties it has seized because the owners didn’t pay property taxes.

The new policy removes the council from the process of selling certain properties and eliminates a prohibition against selling a property if it would result in the displacement of a resident. It also would prevent an owner from entering into a payment plan after the city has acquired the property.

The goal of the program is to return nearly 100 properties to the tax rolls. The city’s inventory of tax-acquired properties is valued at $12 million, representing $500,000 in unpaid property taxes.

The new policy was implemented over the objections of Pine Tree Legal Assistance, a nonprofit law firm that helps low-income people.

Attorney Frank D’Alessandro urged the council to amend the proposal in ways that would keep low-income residents from being displaced. He noted that Portland’s housing boom has resulted in the loss of an estimated 80 units of low-income housing, which is being improved to be rented or sold at market rates. As that happens, low-income residents are being pushed out of the city.

“Given the lack of decent, safe and affordable housing in Portland, it is critical that any changes to the city’s tax-acquired property ordinance be specifically designed to ensure low-income homeowners and renters are able to stay in their homes and avoid homelessness,” he said.

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D’Alessandro asked the council to first offer low-income homeowners an opportunity to apply for a tax abatement in advance of foreclosure.

He suggested that occupied rental units should be offered for sale to the tenants, and if they cannot afford to purchase the building, it should be offered to a low-income housing provider. If none of that is possible, he asked the city to require a new owner to keep the existing tenants for at least one year and not increase rents during that period.

Councilors, however, were comfortable with the administration’s proposal, which was reviewed twice by the council’s Economic Development Committee. Councilors said they were open to revisiting the policy, if needed.

“The City Council needs to remain attuned to this so if policy adjustments are needed in the future that we do that,” said Councilor Jon Hinck.

The new rules would remove the council from sales of properties valued under $400,000 that have three units of housing or fewer. The city manager can sell those properties after an internal review by city staff, using a licensed Realtor, bid process or an auction.

The sale of more valuable properties and larger apartment units would need the council’s approval.

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The city owns 95 tax-acquired properties, including 48 vacant undeveloped parcels, many of which are too small to be developed. It also has 26 single-family homes, including a half-dozen in North Deering and four on Peaks Island, as well as 12 apartment buildings, including four three-unit buildings, six duplexes and two larger complexes with five and seven units.

The inventory makes up only a small fraction of the city’s 22,500 tax accounts.

“Fortunately in this community, most people pay their taxes,” said City Councilor David Brenerman, who chairs the Economic Development Committee.

Councilors noted that property owners receive ample notice before the city seizes a property for unpaid taxes, and that it takes nearly two years before the city can actually foreclose on a property.

The council amended the proposal to include advance notice to councilors before a property is sold, as well as an annual report of properties seized. It also was decided that profits, after expenses and back taxes are reimbursed, will go into the city’s Housing Trust Fund for at least one year. That trust fund is used to encourage affordable housing developments.

Councilor Justin Costa noted that none of the policy changes is designed to make it easier to foreclose on a property.

“What we’re focused on here is what happens at the end of this process,” he said. “I think there’s a whole host of procedural safeguards here.”

 


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