Seminole tax collector criticized for profiting from system he oversees

[Baitball Blogger]

Another example of what is wrong with Republican style public governance.
This has been part of a philosophy that I have seen grow legs since the nineties. Public officials who hold high level positions believe that their government jobs should and can be used to provide profit and income to friends and cronies. As long as they spread the wealth to the right people, nobody calls them out on it.

And this, by no means, is limited to Seminole County. When you're dealing with family members and cronies, the philosophy can extend through those social networks to other areas in Central Florida.


Seminole tax collector criticized for profiting from system he oversees

Since his election in 1988, Seminole County Tax Collector Ray Valdes and relatives have pocketed thousands of dollars on real-estate transactions involving his office.

Valdes, personally and through a company he controls, has successfully bid on numerous delinquent properties put up for auction after owners failed to pay taxes on them for years. He recently sold a 5-acre parcel near Oviedo for $100,000; he purchased it for $20,000 in 1994 at a tax deed auction, according to county records.

snip

Though not illegal, these practices are drawing renewed scrutiny as Valdes runs for an eighth term as tax collector. Joel Greenberg, 31, his opponent in the Aug. 30 primary, said the transactions involving Valdes and his relatives creates the appearance of impropriety.

Valdes said his office has a policy that prohibits either him or his employees from doing personal business with his office, including covering unpaid property taxes for a profit by purchasing tax certificates at annual auctions. But records show his family members have invested more than $660,000 over nearly three decades for tax certificates that earn as much as 18 percent interest on other people's delinquent taxes.


http://www.orlandosentinel.com/news/politics/os-seminole-county-valdes-tax-certificates-20160726-story.html

[csziggy]

1. Are they properly advertising the sales of the tax deeds?

It used to be that tax certificates were a fairly decent investment. My Dad used to go to the auctions and pick up certificates on selected properties. He knew the county very well so he had a good idea of which lots were not bad investments. Most of the tax certificates he bought were paid off by the property owners. The ones that were not, he attempted to buy the certificates for following years so when the properties came up for sale he could get them effectively for less out of pocket. Few people would show up for the certificate or the deed sales.

When interest rates went up the banks got into the business of buying tax deeds and drove up the prices, making it harder for the property owners to pay the money back and less advantageous for people like my Dad to buy any. Plus there was a court case in which a man declared bankruptcy and managed to discharge his tax debt during it but keep his property. That meant that it was riskier to purchase property on tax deeds since the previous owners had a better chance of getting them back without paying off the taxes.

In Florida before that court case a deed purchased on a tax sale is not clear until 35 years after the county sells it. I am not sure if that has changed. When we bought our farm in 1978 it was 36 years since it had been bought on a tax deed, just over the line so we were safe.

Now that interest rates are low, banks may not be interested in buying tax certificates and attendance at the sales may be low again. If not enough people are at the sales that is a problem for the counties. The thing is, if the county cannot sell the tax certificates or the property that has been lost to unpaid taxes, they do not have their needed operating funds.

Whatever the situation is now for buying tax certificates or tax deeds, they must be properly advertised so that anyone paying attention can go to the auctions. It may be back to what it was before the banks got involved, few people show up to bid at all so the ones who do can get some nice deals. That may be what is happening in Seminole.

[Baitball Blogger]

2. Sounds all clean and harmless from your end.

I have seen it from the other end.

Public servants should not be involved in profiting from the misfortunes of others. I realize that is old school.

[csziggy]

3. Before a property can be sold on a tax deed taxes have to be unpaid for years

Counties cannot go that long without taxes being paid. Tax certificates are loans to the taxpayer - people who buy tax certificates give the money to the county for the taxes owed, then when (or if) the property owner can pay their taxes, they pay the taxes owed and the interest that the tax certificate buyer bid. That way the county has the money to continue services until taxes are paid.

If the property owner cannot pay the taxes for the necessary number of years, then the county has to sell the property to pay back the tax certificate buyers or the county has to pay them itself, removing money from their operating funds. If no bidders show up at property sales, the county will sun short of operating funds.

Sure, the county employees should not participate in the sales but if not enough buyers are showing up at the sales that is a major problem for the county. From the story Seminole County does not have rules against county employees or their relatives from participating in land sales. The profits listed for property that were purchased by Valdes, his company and his relatives are not unusual.

If Seminole County citizens find Valdes' actions improper they need to get a rule in place that prevents this.

While many object to government taking land, as I have indicated tax certificates and tax deed sales are needed to make sure counties have operating funds. Anybody can participate in the sales - just contact your local county tax office and ask them about the sales in your community and how they work, when they are held and where they are advertised. It doesn't take all that much cash to buy tax certificates and the return is much better than many forms of investment.

Seminole County has information on their tax sales: Frequently Asked Questions about Tax Certificate Sales and Official Tax Certificate Auction Site.

Here's the deal - someone is going to end up buying the tax certificates or the property when taxes are not paid. Most people are unaware of how the process works so there are few buyers. My Dad had an "inside" track - he'd lived in his county since he was two years old. When he first started buying tax certificates the county tax collector was a guy he'd gone to high school with and had known for decades.

The way my Dad found out about investing in tax certificates was that his friend, the tax collector, was complaining that the county was going to run short of operating funds because so many people were not paying their taxes and so few people were buying the tax certificates. Dad got into it for a while and made some decent money, starting with money left over from sending his daughters to college. Some of the properties he ended up with never sold - they are still in his estate and we are stuck paying property taxes on them, years after he bought them. So sometimes they don't pay off.

[Baitball Blogger]

4. I don't know why, but two years seems to come to mind.

Doesn't seem to be a long enough period of time for someone to get back on their feet.

And then you have the added threat from HOAs that can get your property auctioned to get their annual fees paid. A person could lose their house to someone who pays something like $3000 in HOA fees. Not a sound right to give HOAs especially when you know they are using those funds to maintain their buddy's private property.

[csziggy]

5. Well, I will never be involved in an HOA

One set of properties my Dad ended up with , at the Polk and Osceola County lines) were in an HOA. He went round and round with them - they wanted their fees and since he never signed any agreement with them he didn't think he owed them anything. I think he finally sold the lots before the HOA took him to court and the buyers (a development company) paid the fees to get caught up. Those lots had originally been sold mostly to speculators, then the bottom dropped out (in the late 1970s and early 80s) and they just dropped the properties. Dad sold them to developers when the land boom picked up in the 1990s. Now it's a huge subdivision - off of Ronald Reagan Parkway.

I think they have shortened the period before property can be sold for unpaid taxes. When Dad was doing it, I think it was six or seven years. Wait - "The purchaser or holder of a tax certificate may apply for a tax deed and request the sale of the property when 2 years or more have elapsed since April 1st of the year the certificate was issued. (Note: A tax certificate is held for a minimum of two years and a maximum of seven years.)" (http://www.polktaxes.com/propertytaxes/taxdeeds_sale.aspx)

When Dad was doing it, he'd try to buy seven years of tax certificates on the same properties before he applied for the deed. Only if no effort had been made to pay the taxes in those years would he do that, though. Once the first certificate was due to expire, he would apply for the deed or he would lose his money. 90% of the tax certificates he bought were paid off by the property owners - either they were temporarily short of money or the bill for their taxes had fallen through the cracks.

When you look at the listings available on the Seminole County site, those are the ones that did not sell at the auction. The money that is owed on those properties is money that the county does not have to operate. That is a lot of money the county probably needs for services.