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City owed $7.6m in property taxes

Beth LaMontagne Hall - New Hampshire Union Leader

MANCHESTER — Property owners owe the city more than $7.6 million in outstanding property taxes, sewer charges and interest accrued in the past five years.

Real estate developers and commercial real estate companies hold the largest outstanding charges, which city officials blame in part to the depressed real estate market and down economy.

The largest unpaid bill for a property owner belongs to Brady Sullivan Plaza on Elm Street, which owes about $341,000. It is followed by Brady Sullivan Millworks mill condos on the West Side, and which also house the Manchester School District Offices. Stalled developments on Hackett Hill account for more than $300,000 in unpaid property taxes and interest, and Northern New England Telephone Operations, the former Verizon holdings that were merged with FairPoint Communications, owes about $132,000. Fairpoint filed for bankruptcy in 2009.

The Tax Collector’s Office posted liens on May 4 for all unpaid city taxes and sewer fees that were outstanding as of the end of 2010. This year, the city placed 1,200 liens on city properties, a decrease from last year according to Tax Collector Pat Harte. In 2009, there were 1,353 liens placed on city properties and in 2008, there were 1,172 liens.

While property tax liens decreased, the number of delinquent sewer bills increased. While many people pay their property taxes through their monthly mortgage fees, sewer bills are not, she said, and is likely why some people have stopped paying it.

To make sure property owners pay up, the city has a 12 percent interest fee charged for delinquent payments. Placing a lien on a property kicks it up to an 18 percent interest charge on the outstanding balance.

“The reason why they’re as high as they are is that the state Legislature over the years has recognized that these bills ought to be paid first,” said Robert Gagne, chairman of the Board of Assessors.

The $7.6 million in property liens also includes thousands of filings going back to 2006. The Tax Collector’s Office is now “deeding” the properties, or starting the seizure process, for properties where the taxes have not been paid since 2006 and 2007. Harte said these properties are not typically left on the books unpaid for this long, but due to short staffing the seizure process has been slower than usual in the past year.

“We’re trying to get people to pay,” said Harte. Part of that process is tracking down the owners, next of kin and others who might be able to take over payments. “We’re trying to collect the money so we don’t have to deed the property. The city is not in the real estate business.”

Although liens have decreased since last year, Gagne said he’s seen an increase in tax abatements, or requests to lower a property’s value on the tax rolls.

“The numbers were up but they were not necessarily more successful requests than in other years,” said Gagne. “When the economy is such as it was, people are looking in all directions from relief from expenses.”

Because the real estate market fluctuates, the state Department of Revenue sets up a formula that determines if a property assessment is within a reasonable range of fair market value.

Sometimes an assessment is lower than what a property can sell for, and sometimes it is higher. Although property owners have complained to Gagne that they can’t sell at the assessed value, Gagne said as long as it is within the set range, an abatement is not warranted.

Gagne said multifamily homes and low-end condominiums have been hit the hardest in the real estate slump. Developers rushed to convert apartments to condos in recent years, he said, but they have yet to pay off.

As for Brady Sullivan’s big outstanding balance, Gagne said it is not surprising given the poor economic climate.

“They own so much property, if their name didn’t appear on the list that would be more surprising than anything else,” Gagne said.