News Column

Armstrong cost of opting out of tax lien program lower than expected

June 23, 2014

By Brad Pedersen, The Leader Times, Kittanning, Pa.



June 23--The Armstrong School District may not be selling its 2013 delinquent real estate tax liens to Municipal Revenue Services in McKean next year, but it won't cost what the district thought it would to get out of the program.

School board members were told by the district's former Business Manager John Zenone that to drop the program, they would have to pay back $3.2 million to MRS -- money it received for the sale of its liens that has yet to be collected and paid to the company.

But the company's general manager, Jim Geronimo, said on Friday that is not the case. He said if the district opts out of the program, his company will continue receiving delinquent taxes collected until the debt is off the books. Geronimo also said that the debt is $2 million, not $3.2 million.

"I don't know where their figures came from, but it all seems to be a misunderstanding," Geronimo said. "Unfortunately, that may have poisoned the district's thoughts on our company."

The school district last week voted 8-0 to opt out of the MRS program it had been using for three years. In the program, the company pays the school district for the liens at the start of its fiscal year and recoups the money as the delinquent taxes are collected. To get the money up front from the sale, the district pays the company fees.

The district paid about $559,000 in fees in the last three years, not the $1 million that Zenone had told them, Geronimo said.

Once the debt is paid off, Geronimo said the company will offer to sell any uncollected liens back to the district for 5 cents on every dollar. For example, if the remaining tax liens have a value of $10,000, Geronimo said the company will offer to sell them back for $500.

"Since they didn't renew, we're out of their business from 2013 on, but will continue collecting from 2012 and earlier," Geronimo said. "If we thought they owed us money, we'd tell them to give us our money, but that's not the case."

The contract between the district and company allows MRS to continue collecting delinquent real estate tax dollars from 2012 and earlier, through January 2017, said district Solicitor Lee Price.

"The contract says they have the right to keep collecting from previous years until they collect enough to cover their costs, or until January 2017," Price said. "If they don't have it all by January 2017, the district may end up having to pay off the final costs.

"On one hand, we won't be taking any money out of the budget to pay it off. But on the other hand, we won't have the cash infusion right up front that we would have gotten by selling the liens."

Board member Paul Lobby said he was thrilled to see the company's balance was $1.25 million less than projected.

He said the board made the right decision in moving away from the company's services.

"It was a significant expense," Lobby said. "The question is, do you need to pay for money just to get it up front? It wasn't a good move, and that's not a cost we need to incur at this point."

Brad Pedersen is a staff writer for Trib Total Media. He can be reached at 724-543-1303, ext. 1337, or bpedersen@tribweb.com.

___

(c)2014 The Leader Times (Kittanning, Pa.)

Visit The Leader Times (Kittanning, Pa.) at www.triblive.com

Distributed by MCT Information Services


For more stories on investments and markets, please see HispanicBusiness' Finance Channel



Source: Leader-Times (Kittanning, PA)


Story Tools






HispanicBusiness.com Facebook Linkedin Twitter RSS Feed Email Alerts & Newsletters