Tax deadbeats to forfeit properties
City set to seize lots, Buildings to recoup $2.3M in unpaid levies
The City of Windsor may soon become the reluctant owner of seven properties for which the unpaid taxes add up to $2.3 million. The list ranges from the former Thunder Food Court on Wyandotte Street West, for which a whopping $1.6 million in unpaid taxes and penalties are owed, to a vacant Elgin Street lot for which $4,735 is owed, probably because the owner discovered it was in the middle of a swamp — a provincially significant wetland — and thus ineligible for development and worthless. A report going to council on Monday recommends that all seven properties be vested, which means the city would take ownership. It’s a last resort for the city when property taxes have gone unpaid for at least six years and efforts to recoup the money through a tax sale are unsuccessful. A separate city report identifies 57 properties eligible for tax sale this year, before which the owners still have the chance to pay up. Most of those properties are vacant because the buildings were demolished. The others include dilapidated structures that will likely end up being torn down. On many, the taxes owed are more than the properties are worth.
The taxes and penalties owed on the Thunder Food Court property are almost three times its assessed value of $597,000.
A vacant lot at 2720 Richmond St., where the house was demolished in 2014, has an assessed value of $5,200 and a tax debt of $135,634. A small apartment building at 601-623 Chatham St. E. has an assessed value of $249,000 and tax arrears totalling $246,590.
But if the city takes possession, it will likely demolish the “derelict” building at an added cost of $160,000.
There are many reasons properties end up on the list, said deputy treasurer Janice Guthrie. “Each one has its own story and each one is a very difficult story, but at the end of the day, everybody has to pay taxes.”
The takeover of properties is a “very difficult part of my job,” she said.
“It’s not something we want to do. We’re not in the business of taking people’s property and trying to resell them, but when you don’t pay your taxes, that is the end result.” Properties sometimes don’t sell at tax sales because the city is required to sell them for at least the value of the taxes owed. When they’re vested, the city can fix up or demolish buildings and sell the properties even at a loss. That west-side swampland on Elgin Street won’t be sold. It’s a $4,735 writeoff. Other properties will sell for more than what’s owed and some will sell for less, Guthrie said. Hopefully, in the end, the city can come close to breaking even. Structures on three of the seven properties being considered for vesting will likely have to be demolished, increasing the total cost from $2.3 million to $2.6 million. The arrears on a property can add up quickly when taxes aren’t paid for years, Guthrie said. The city charges 15 per cent annually for unpaid taxes plus penalties. There are more charges added whenever the city has to board up windows or issue orders for property standard complaints.
Of the 57 properties eligible for a tax sale this year, 29 are residential homes, eight are commercial buildings and 20 are vacant commercial or residential properties. The actual addresses aren’t made public until the tax sales are advertised in the Windsor Star. “We don’t want to publicly shame people or let people know that, hey, your neighbour’s not paying his property taxes,” Guthrie said.
She said that once that final notification goes out to the property owner, with news that the address is about to be put up for sale, at least 25 per cent pay the outstanding amount in full.
The city takes the first step toward a tax sale in the fourth year of outstanding taxes, when it registers a tax arrears certificate (a lien) on the property. The owner then has a year to pay all that is owed. If not, the city can proceed with a tax sale, which usually involves potential buyers making sealed bids that are then opened on the day of the tax sale.
The city is expecting to hold two tax sales this year, one in the late spring and the other in the summer.
The city is owed about $34 million in outstanding taxes and has liens on 105 properties. In some cases, owners have set up payment plans to clear their debts.
Each one has its own story and each one is a very difficult story, but at the end of the day, everybody has to pay taxes.