News Column

City will sell tax delinquents for $480K

February 27, 2014

By Sam Galski, Standard-Speaker, Hazleton, Pa.



Feb. 27--Hazleton City will receive a $480,000 advance payment from Municipal Revenue Services in exchange for turning more than $526,000 in delinquent tax claims from 2013 over to the company.

City council unanimously approved a resolution that authorizes the city to sell delinquent real estate tax claims to the firm in an arrangement that allows the city to collect an up-front payment that is expected to generate about $332,000 in revenue for the city's general fund, another $138,000 that will be allocated for debt service payments and about $10,000 for the recreation fund, Acting City Administrator Steve Hahn said.

The arrangement ensures the city will receive an up-front payment for its delinquent tax accounts at a cost of 10 percent of the value of the delinquent accounts, according to Hahn. The up-front payment gives the city a cash-flow advantage when compared with the city alternatively collecting delinquent accounts on its own, Hahn said.

"They're basically giving us a line of credit for about 90 percent of the delinquent money," Hahn explained. "Then, they charge on top of that a 10 percent fee to put the deal together. It's a pretty hefty cost to get the money but you get it all in at one time -- in a lump sum -- rather than spread out over two years in dribs and drabs."

Council's approval ensures the city will participate in the program for an eighth consecutive year, Hahn noted.

Under the arrangement, Northeast Revenue collects delinquent taxes on behalf of Luzerne County. Municipal Revenue Services will use money collected by Northeast Revenue to pay a bank loan it secured to make the up-front payment to the city, Hahn said. Luzerne County Redevelopment Authority is also involved in the process of purchasing the tax claims.

Hazleton's delinquent property tax accounts are worth $526,853 for 2013, Hahn said. A 10 percent penalty brings that amount to $579,539.

The roughly $332,000 payment that the city will receive will be relatively close to the $338,000 in delinquent collections that the city budgeted for in 2014, Hahn said.

Council President Jack Mundie said he favors approving the arrangement for 2014 only. Council could then explore alternatives and cheaper ways to collect on the delinquent accounts in the future, he said.

"We'll just do it this year and next year we can do something different to bring in more revenue," Mundie said.

Director recognized

Council unanimously approved a resolution recognizing Corinne Chabot for serving for 25 years as director of Hazleton United Rehabilitation Services. A resolution listed on the agenda said Chabot is retiring.

"Council wishes to thank her for her dedication and passion in helping those individuals with developmental disabilities, and wishes her all the best in her retirement," the resolution reads.

Storm fee

A resolution that would've set a fee for maintaining the storm water collection system for 2014 failed after the governing body did not present it for a vote.

The resolution would've set a base fee of $25 "per equivalent runoff unit," but total rates would vary based on zoning and the percentage of pervious and impervious surface area on each property.

sgalski@standardspeaker.com

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(c)2014 the Standard-Speaker (Hazleton, Pa.)

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Source: Standard-Speaker (Hazleton, PA)


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