Maryland lawmakers are sponsoring legislation to prevent Baltimore-area residents from losing their homes for failing to pay small municipal water bills —a stunning scenario detailed in a Center for Public Integrity story.
The legislation is aimed at preventing a repeat of what happened to Vicki Valentine, a Baltimore woman who lost her family’s mortgage-free home over what began as an unpaid water bill of $362. The Center told Valentine’s story in 2010 as part of an investigation into the impact of tax-lien sales on struggling property owners.
Counties in Maryland, like many other states, sell investors the right to collect unpaid property taxes and other municipal debts of $250 or more at auctions, which often are conducted online and can draw investors from all over the world. The law in Maryland allows lien holders to charge double-digit interest rates and in some cases tack on thousands of dollars in fees. Homeowners who fail to pay may face foreclosure on their property.
But the new bill introduced earlier this week in the Maryland General Assembly would prohibit tax collectors in the City of Baltimore and suburban Baltimore County from including residential property in the tax sale when the lien “arises solely from any unpaid water, sewer and other sanitary system charges” and is less than $750 in total.
“We’re one of the few jurisdictions in the United States of America that thinks an equitable solution to not paying water bills it to take your house,” said State Sen. James Brochin, D-Baltimore County, the measure’s chief sponsor. “It’s predatory and bizarre.”
Brochin’s bill has three co-sponsors. It’s the second time that lawmakers have sought to amend the tax sale law since Valentine’s story, which was published jointly with The Baltimore Sun, surfaced.
Valentine was evicted in February 2010 from the west Baltimore home her family had owned for decades after a judge ordered her to pay more than $3,600 in legal fees and other costs—nearly ten times her original debt.
A former mental health counselor with four children, Valentine conceded that she owed the water bill, and later some taxes on the property. But she argued the fees were excessive and in any case she couldn’t afford them.
Brochin said that city officials should shut off metered water service when homeowners fail to pay, rather than subject them to the tax sale, through which investors can profit from the financial distress of others.
“People are losing homes to foreclosure for a lot of other reasons. We don’t need to add to it,” Brochin said.
A spokesman for Baltimore Mayor Stephanie Rawlings-Blake said the mayor would review the bill to study its impact on the city's ability to collect debts from delinquent property owners. He said the city had implemented several reforms in recent years to protect city residents in such matters. However, the city, in common with other tax collectors in the state, has previously opposed restricting liens that are subject to sale. Officials contend that threats of foreclosure compel some people to pay taxes and other municipal bills and that losing that leverage could aggravate budgetary problems.
Maryland’s tax sale system has drawn controversy in recent years. Three men have pleaded guilty to criminal charges in a Justice Department bid-rigging investigation, including two longtime Baltimore tax-sale investors who made more than $10 million from fees and other costs collected over a six-year period from the owners of more than 6,000 properties.