If elected, I will implement a system to make it more cost-efficient for Hamilton County to collect delinquent property taxes through the sale of so-called Tax Certificates. These certificates are purchased by investors for the amount owed on specific properties. The property owner then has three years in which to pay the delinquent taxes, with interest. That money goes to the holder of the Tax Certificate. If the property owner does not pay the delinquent taxes within three years, the holder of the Tax Certificate may foreclose on the property.

How and why it works

Tax Certificates are currently being used in Cuyahoga, Stark, and Summit Counties in Ohio. In Summit County, the program brought an additional $20 million dollars to the county budget in the first year from delinquent taxes that were previously deemed "uncollectible." This procedure reduces the demands on the county prosecutor's office, saves administrative costs for both the Prosecutor's and Treasurer's offices, and recovers a substantial amount of money to which the County is entitled. Hamilton County is one of only twelve counties in the state entitled to use this program, but it isn't being used here. Considering how much delinquent revenue the county might gain, the question voters should ask is, "Why aren't we doing this?"

Ohio House Bill 371 (1998) gives twelve counties the ability to use Tax Certificate Lien Sales to collect delinquent property taxes. This process is used successfully in approximately 30 other states across the country. The following provides a brief description of how this works.

1. What are tax certificates? A Tax Certificate transfers the State's or its taxing districts' first and superior lien on a delinquent parcel. The purchaser of a Tax Certificate only holds a lien against the property, has no legal rights of ownership, and has no contact with the property owner. The delinquent taxes are offered for sale at a verbal auction. The person bidding the lowest interest rate of return is the successful bidder. The Tax Certificate is valid for three years from the purchase date. If not redeemed or no action is taken within three years, the certificate expires and the holder of the certificate loses all rights associated with the Tax Certificate.

2. What properties are sold at a Tax Certificate sale? Any property the County Treasurer offers for a Certificate Sale must be certified delinquent. Real estate properties where the taxpayer is on a current and up-to-date payment plan will not be offered for Certificate Sale. Also, real estate properties that are currently in bankruptcy or in foreclosure will not be offered at the Certificate Sale. The County Treasurer has full discretion to select and remove a parcel or parcels set for Certificate Sale and determine the method by which parcels are sold at the sale.

3. What procedure is used for buying these certificates?

   Step 1 - All bidders register prior to the sale and deposit a $500 registration fee with the County Treasurer. If a bidder does not purchase a Certificate, the registration fee will be refunded. If the bidder is successful, the registration fee will be applied to the Tax Certificate purchase price.

   Step 2 - The first bundle of parcels would constitute a Tax Certificate Purchase Price. A Tax Certificate Purchase Price includes all delinquent real estate taxes, special assessments, penalties, statutory interest, and any other charges assessed against the parcel or parcels.

   Step 3 - Bidding would start at an interest rate of 18% and proceed downward in 1/4% increments until a winning bid is accepted. Lowest bidder wins.

   Step 4 - The successful bidder shall pay the County Treasurer a deposit of at least 10% of the Certificate Purchase Price the day of the sale in the form of cash, certified check, money order, bank draft, or electronic transfer of funds. The balance must be paid within five working days from the day of the sale.

1. If I'm a purchaser of a Tax Certificate bid of 9.5%, how is my interest applied to the Tax Certificate? The Tax Certificate purchaser would pay the County Treasurer the Tax Certificate Purchase Price. Annual simple interest is applied the first day of each month from the purchase date.

   Assume a $2700 Purchase Price :
   Tax Certificate Purchase Price	$2700.00
   Bid interest rate of 9.5%	256.50
   Monthly amount applied first of each month	21.37

   
   

   The $21.37 would be added to the Certificate Purchase Price on a monthly basis until the Tax Certificate is redeemed by the property owner or until foreclosure action is initiated. If the Tax Certificate is not redeemed within the first year, simple interest would be applied the first of each month thereafter for the life of the Certificate (three years).

2. How long will I earn interest on my Certificate? In the example above, the Certificate Holder is entitled to 9.5% interest earnings per year for a maximum of three years. Although the Certificate Holder can earn certificate interest dollars for a maximum of three years, the property owner has a right, from the day the Certificate is purchased, to enter into a Redemption Payment Plan. If this occurs, the property owner would:
   1. Appear in person to sign a Redemption Contract. Only the owner of record may enter into the payment plan.
   2. Owner of the property has only one opportunity for a Redemption Payment Plan.
   3. Payments are based on total Purchase Price divided by the eligible remaining months.
   4. Redemption must be made within one year of the Certificate Purchase Date.
   5. If the property owner redeems the Certificate prior to the end of the contract, the Certificate Holder is entitled to the interest from the Purchase Date to the Redemption Date or 6%, whichever is greater.

3. If the property owner doesn't make full redemption payment before the end of one year, what option does the Certificate Holder have? The Certificate Holder at the end of one year and before the end of three years (life of the Certificate) can request a foreclosure action on the property. The County Treasurer shall instruct the County Prosecutor to proceed with foreclosure action.

   The Certificate Holder must pay the County Prosecutor's fee along with all other costs associated with foreclosure action, as well as pay any outstanding Tax Certificates on the property and any unpaid delinquent taxes at the time of the filing request for foreclosure.

   If the property sells at the foreclosure sale, the Tax Certificate Holder will receive: Tax Certificate Purchase Price, plus the bid interest to date of foreclosure request, plus 18% interest earnings on the Tax Certificate Purchase Price from the foreclosure request date until sale of property. The same calculation applies on all subsequent and prior Tax Certificates on said property. Reimbursement for all costs paid relative to foreclosure action. If the property doesn't sell at the first foreclosure sale: The County Sheriff will conduct a second sale within a reasonable amount of time. If the property remains unsold at a second foreclosure sale, THE CERTIFICATE HOLDER RECEIVES OWNERSHIP OF THE PROPERTY.

4. What rights to the property do I have as a Certificate Holder? The Certificate Holder has no ownership rights to the property. The Tax Certificate vests the holder with the first lien of the State or its taxing authority superior to all other liens and encumbrances upon the parcel, except Federal Tax Liens.

There are obviously many additional details involved, but this abbreviated explanation is a good summary of how the program works. The benefit to the county is that additional money for needed programs is provided by collecting taxes that were previously labeled as "uncollectible." These taxes can help to reduce the burden of honest taxpayers who would otherwise be asked to pay more than their fair share for government services they expect. Doesn't that make sense? Apparently it doesn't to the incumbent. That's why it's time for a change.