2022-05 Department of Finance Real Property Tax Division Revenue Cycle Management

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To leverage tax-delinquent properties for these purposes, municipalities should consider what goals they desire through the foreclosure process and add procedures to achieve them. Ideally, each unsold tax-delinquent property would be screened in advance of a sale to determine the appropriate disposition. Best Practices for Tax Collection Programs • It is important that when multiple government entities are involved, they align their policies and priorities to minimize potential conflicts. In the case of Hawaii, county and state actors have overlapping interests in property which create obstacles and nuances that complicate procedures and affect outcomes. Both can advance their interest by adopting policies in concert with one another that strengthens cooperation and understanding. • Add delinquent parcels back to the tax rolls by establishing criteria to allow the sale of delinquent tax property for less than the upset price. • Enable municipalities to have more discretion on how to deal with tax-delinquent properties. For example, a tax sale at a public auction is an option, rather than a mandatory step, to be considered alongside other alternatives, such as retaining the properties for public use or conveying them to a land bank for management and disposition. • Create plans to establish priorities in the disposition of tax-foreclosed properties. Disposition plans lay out a preferential order for sales and conveyances. The top three are as follows: 1. Convey to the County for public use 2. Sell back to previous owners in cases of financial hardship 3. Sell to adjacent property owners • Take steps to ensure that properties are maintained during the process and don't contribute to property value decline or safety risks. • Ensure the equitable treatment of residents, including a periodic review of foreclosure data to see if specific categories of residents are foreclosed upon more often than others. Analysis should consider impacts on different socioeconomic groups, seniors, people with disabilities, and low-income homeowners. Analysis should answer whether their property assessments are fair, especially for owners of lower-value properties. • Keep homeowners in their homes using property tax abatement or deferral programs. Programs structures should consider income eligibility requirements that, when met, may reduce the amount of delinquency and offer repayment plans to pay back taxes. • Property tax exemption and relief programs reduce the likelihood of a homeowner becoming delinquent on their taxes, to begin with. Property tax relief programs can cap the property tax homeowners must pay as a share of their income. 15 Page