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

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• Reviewed internal documents 0 316 Report -Aged Parcel Detail Report 0 510 Report -Accounts Receivables Report Foreclosure Calculation Overview While unactionable parcels continue to be invoiced, they are not actively pursued for foreclosure. In these cases, either the title company has determined the title history to be convoluted and cannot fulfill the contractual obligation of a 45-day turnaround, or the division has determined that two times the upset price is more than expected at a tax sale. The county contracts with a statewide title company to pull title abstracts. RPT compiles a gross file of between 500 — 1000 delinquent owners. The title company is expected to produce 200 reports per land sale, or 400 reports annually. If the parcel is challenging to process, it is set aside and backlogged. Late payers are assessed a penalty of 10% of the net taxable value of the property. Additionally, parcels accrue interest at a rate of 1% per month or 12% per annum, calculated from one month to the next. RPT uses the following formula to determine if it will move a parcel to tax sale: Formula Picture. Tax Sale = Taxes Owed + Penalties + Fees + Interest multiply by 2, then divide by Market Value. Where Taxes Owed = TO, Penalties = P, Fees = F, Interest = I and Market Value = MV: Market valuations can be volatile, while taxes, fees, and penalties are constant. RPT calculation of time and cost cannot ensure equity because the volume ready to proceed is greater than the division's capacity. Overtime, parcels wait longer and longer to become a priority. Once a property has been in the queue for approximately ten years, it may exceed the department calculation and no longer be actionable. Cause and Condition RPT's formula and bottlenecks in the process are problematic to its foreclosure process. Effect As backlogs compound, parcels will fall more frequently into time and cost categories. Recommendation 6 Foreclosure Calculation We recommend that RPT develop a new calculation for advancing a foreclosure property, specifically to replace the 2x multiple. Due Diligence Overview RPT deals with complex, convoluted titles. Given time and cost, processing a foreclosure does not always make financial sense. RPT stated that while they have a dialogue with the vendor regarding capacity, the current expectation of 200 preliminary title searches is about the maximum the vendor can reasonably commit to. Additionally, RPT has not been able to diversify the vendor 36 Page