Vulture Capitalism Hits Maplewood (NYTimes front-page story)

If the law is changed I doubt there would be many buyers of tax liens, not that this is a bad thing. I'd imagine the draw is the possibility of being able to get an equity windfall off of the investment. 


the18thletter said:

If the law is changed I doubt there would be many buyers of tax liens, not that this is a bad thing. I'd imagine the draw is the possibility of being able to get an equity windfall off of the investment. 

it can easily be changed to still be profitable for vultures.  Maybe 1/3 of the equity after costs goes to the vulture .  


The vulture is allowed to charge up to 18% interest on the tax lien.  A decent investment even if the equity is not prey to their claws.  


Tax liens sell in every state, and most protect equity

the18thletter said:

If the law is changed I doubt there would be many buyers of tax liens, not that this is a bad thing. I'd imagine the draw is the possibility of being able to get an equity windfall off of the investment. 

No. The tax laws are bid. If I recall, the buyer of the tax liens can bid for no interest or even pay a premium to buy the tax lien.

In some states, the law allows bids up to 18%. The home owner pays the interest and principle if/when the lien is repaid. If the homeowner can't come up with the money, the property goes to auction and the homeowner keeps the equity after debts are paid and the lien holder is made whole, plus interest.



max_weisenfeld said:

Tax liens sell in every state, and most protect equity

Hopefully NJ is able to change their law to protect equity as well. 


The thing that no one mentions here is the problematic issue of taxes and consolidation.

The taxes on my $550k home in MAPSO were $16,550 (USD) a year.  My home in Edmonton is of similar value but the taxes are only $2,500 (USD) a year.  Those taxes pay for superior services PLUS massive expenditures on snow clearance. It all comes down to economies of scale.  Paying for SO to maintain all the trappings of a civic government for a population of less than 20,000 people is an act of fiscal insanity. The same problems apply to MW as well, although the scale is slightly larger.


What trapping should be reduced or eliminated?


Formerlyjerseyjack said:

What trapping should be reduced or eliminated?

I think you missed my point.  You don't need to eliminate trappings, you need to increase the taxable that is providing them. Maintaining hundreds of tiny municipalities, each with its own costly government, is insanity.


GoSlugs said:

Formerlyjerseyjack said:

What trapping should be reduced or eliminated?

I think you missed my point.  You don't need to eliminate trappings, you need to increase the taxable that is providing them. Maintaining hundreds of tiny municipalities, each with its own costly government, is insanity.

Agreed. I moved to South Orange from Montgomery County, MD (population over a million; home to Bethesda, Silver Spring, Rockville, and multiple other municipalities). Most services are managed at the county level. Before that I lived in several large U.S. cities where services were managed by the city. I was gobsmacked to realize that each tiny hamlet in NJ has its own full municipal government that handles all of its own services, including a school district! It seems shockingly redundant and wasteful. 


GoSlugs said:

I think you missed my point.  You don't need to eliminate trappings, you need to increase the taxable that is providing them. Maintaining hundreds of tiny municipalities, each with its own costly government, is insanity.

You are advocating for regionalization, something that has been discussed on this board for years.  What is standing in the way is the New Jersey residents' insistence on home rule. They want to maintain control, fearing loss of service if other jurisdictions are sharing the resources.  We already have a regional school district and a regional fire department. We have a consortium looking to reduce energy costs through a larger purchasing pool.  This puts us ahead of many municipalities in the State.  More is needed.  However, what is driving our real property taxes is not the size of our municipal budget; but, the way in which public schools are funded in NJ.  


Originally posted in another thread by mistake:

I believe NYC's interest ceiling is 12%. It also has speed bumps in place before the owner even gets to the point of being liable for a tax lien. I don't know why Maplewood has hung on to such a harsh law without providing the social services to help before things go too far. I wonder how many people have lost their equity because of this law over the years.

https://www.nyc.gov/site/finance/taxes/property-lien-sales.page

NYC allows people to file a request for a payment agreement:

Payment agreements

are available whether or not your property has been noticed for a tax

lien sale. Any property owner who is interested in paying their property

taxes in installments may apply.

If your property has been noticed for a lien sale, entering into a payment agreement or bringing an existing payment agreement up to date will remove your property from the lien sale list. Use our payment agreement estimator to help you estimate what you will owe for each installment.

The

NYC Department of Finance recognizes that an unexpected event or

hardship may make it difficult for you to pay your property taxes. If

you qualify for the Property Tax and Interest Deferral

(PT AID) program, you can defer your property tax payments so that you

can remain in your home. The Property Tax and Interest Deferral program

removes properties from the tax lien sale once an application is

complete.

If you have defaulted on a property tax payment agreement, you may be eligible to file an Extenuating Circumstances Payment Plan Reinstatement Request.



GoSlugs said:

Formerlyjerseyjack said:

What trapping should be reduced or eliminated?

I think you missed my point.  You don't need to eliminate trappings, you need to increase the taxable that is providing them. Maintaining hundreds of tiny municipalities, each with its own costly government, is insanity.

it's actually a result of racism. 


Replying to responses from the other thread here:

Dan Dietrich:  "to be fair, I don't think this issue occured because of a lack of assistance or outreach. I think many states have better laws than NJ for equity protection and that we should fix ours, but I'm not ready to blame towns for not having a safety net in place."

I wouldn't be surprised if the decision to hire a social worker last year occurred in part because of this situation. 

Joan Crystal:

"NYC's municipal government has resources far beyond those of the
Township of Maplewood or the The Township of South Orange Village. Our
towns simply do not have the budget or the staffing to provide a
comparable program here. What we can and should do is identify existing
resources at the County and State level, available through not for
profit organizations, and in the private sector that can provide
counseling and support, and make that information readily available to
municipal tax payers. What we can't do is support deferral of property
taxes and interest without raising everyone's taxes even higher."

More latitude should be built into the budget to give people in economic distress a bit more breathing room.  A tax debt could be listed on the budget sheet as unrealized funds, and the tax collector has the authority to delay the tax lien sale until the end of the following year.  NYC has a billion dollar deficit, but it keeps these provisions in place, in part, no doubt, to ameliorate the homeless crisis, but also to prevent greater tragedies.  





joan_crystal said:

You are advocating for regionalization, something that has been discussed on this board for years.  What is standing in the way is the New Jersey residents' insistence on home rule.

That, and as ml1 pointed out above, a big dose of racism. No one in MAPSO wants to be rubbing shoulders with the good people of Irvington.  Given the choice, they would much rather pay tens of thousands of dollars in property taxes each year.



[I accidentally posted this in the wrong thread - so moving it here]: 

There is powerful work being done on eviction at Princeton University. It focuses more on renters than owners, but both types are highly consequential:

https://evictionlab.org/


Thank you, Sprout.  I'm interested in whether the organization Just Shelter, referenced on that website, would want to engage in an effort to get NJ to change its onerous tax lien law.  


joan_crystal said:

We already have a regional school district and a regional fire department. 

Calling those "regional" seems pretty funny to me. The combined population of M/SO is about 40,000. The school district I attended (the largest of about 17 in San Antonio) has a population of 642,000, with 12 high schools, 21 middle schools, and 81 elementary schools. The San Antonio Fire Department serves a population of 1.45 million. It's hard for me to believe you don't get significant cost savings at that scale.

I agree that racism is behind "home rule." I suspect M/SO would be happy to merge with Millburn or Livingston, but they would refuse to merge with M/SO. 


kthnry said:

Calling those "regional" seems pretty funny to me. The combined population of M/SO is about 40,000. The school district I attended (the largest of about 17 in San Antonio) has a population of 642,000, with 12 high schools, 21 middle schools, and 81 elementary schools. The San Antonio Fire Department serves a population of 1.45 million. It's hard for me to believe you don't get significant cost savings at that scale.

I agree that racism is behind "home rule." I suspect M/SO would be happy to merge with Millburn or Livingston, but they would refuse to merge with M/SO. 

I can do you one better.  The municipality where I grew up had 31 school districts.  There were 2,000 students in my high school graduation class and the one high school had a larger student population than the student population in the entire South Orange/Maplewood school district.  In NJ, as others have pointed out, the scale is much smaller.


joan_crystal said:

GoSlugs said:

I think you missed my point.  You don't need to eliminate trappings, you need to increase the taxable that is providing them. Maintaining hundreds of tiny municipalities, each with its own costly government, is insanity.

You are advocating for regionalization, something that has been discussed on this board for years.  What is standing in the way is the New Jersey residents' insistence on home rule. They want to maintain control, fearing loss of service if other jurisdictions are sharing the resources.  We already have a regional school district and a regional fire department. We have a consortium looking to reduce energy costs through a larger purchasing pool.  This puts us ahead of many municipalities in the State.  More is needed.  However, what is driving our real property taxes is not the size of our municipal budget; but, the way in which public schools are funded in NJ.  

Exactly, the school funding formula is driving most of our taxes locally.  

Another factor that is hindering consolidation is opposition from powerful unions (teachers, fire, police, etc). They don't want to lose jobs. Look at what the local fire union did to fight against the merger of our two fire departments.  Now multiply that by hundreds of towns.

Throw on top of that the redundancy between county and local government.  Such much fat could be trimmed.


I'll come back to this.


Accidentally noticed this thread pop up again, and decided to add some historical background to the topic.

Back in the ‘70s, the Maplewood/South Orange school district faced declining enrollment, deteriorating school buildings, and state-ordered desegregation. The district closed First Street, Montrose, Fielding, and Newstead. Much hated (at the time) busing began for those students living a specified distance from their schools. 

Lots of family wagons headed west — our family moved to a bigger house a few blocks away to accommodate the needs of our four Tuscan School students. I recall taxes were a staggering $7K!

Our district’s role model at the time was Montclair, which managed to maintain an excellent reputation within upper Montclair and Montclair. 


yahooyahoo said:

Exactly, the school funding formula is driving most of our taxes locally.  

Another factor that is hindering consolidation is opposition from powerful unions (teachers, fire, police, etc). They don't want to lose jobs. Look at what the local fire union did to fight against the merger of our two fire departments.  Now multiply that by hundreds of towns.

Throw on top of that the redundancy between county and local government.  Such much fat could be trimmed.

In 1998 I bough my house on Valley St for $117k which was within my budget.  It was in need of much repair, and over sixteen years I did all of them.  I bought it so that I could live the rest of my life there.  I had to add a bedroom for my mom when she got sick with Alzheimer and the kitchen had to be torn down and rebuilt from scratch.  Eventually my taxes were more than my mortgage.  

I looked carefully at the school budget increases at the time and wrote about it on this website as well as the News Record, but all I achieved was getting flamed.  I was accused of making up information when I quoted members of CBAC's Education Committee as saying "you can sell and make a profit" when I complained about the sky rocketing costs.  It was a conscious decision to drive anyone who no longer had children in the school system.  The justification I read from the opposition was that if you had three or more children, it was easier to pay the taxes than private school tuition.  The Township Committee never spoke up against the tax increases. 

Eventually I had to sell my house, since I could not keep up with the taxes.  That is the reality that I lived which is similar to the reality of this woman.  The town wanted gentrification, and they got it.  They drove everyone off who could not keep up.


mtierney said:

Accidentally noticed this thread pop up again, and decided to add some historical background to the topic.

Back in the ‘70s, the Maplewood/South Orange school district faced declining enrollment, deteriorating school buildings, and state-ordered desegregation. The district closed First Street, Montrose, Fielding, and Newstead. Much hated (at the time) busing began for those students living a specified distance from their schools. 

Lots of family wagons headed west — our family moved to a bigger house a few blocks away to accommodate the needs of our four Tuscan School students. I recall taxes were a staggering $7K!

Our district’s role model at the time was Montclair, which managed to maintain an excellent reputation within upper Montclair and Montclair. 

FWIW, if this google info is correct, it sounds like your house's taxes in the 1970's were relatively higher than they would be now?:

"$7,000 in 1975 is equivalent in purchasing power to about $39,142.75 today (2023)."


sprout said:

mtierney said:

Accidentally noticed this thread pop up again, and decided to add some historical background to the topic.

Back in the ‘70s, the Maplewood/South Orange school district faced declining enrollment, deteriorating school buildings, and state-ordered desegregation. The district closed First Street, Montrose, Fielding, and Newstead. Much hated (at the time) busing began for those students living a specified distance from their schools. 

Lots of family wagons headed west — our family moved to a bigger house a few blocks away to accommodate the needs of our four Tuscan School students. I recall taxes were a staggering $7K!

Our district’s role model at the time was Montclair, which managed to maintain an excellent reputation within upper Montclair and Montclair. 

FWIW, if this google info is correct, it sounds like your house's taxes in the 1970's were relatively higher than they would be now?:

"$7,000 in 1975 is equivalent in purchasing power to about $39,142.75 today (2023)."

I think the comparison needs to be made with Maplewood taxes as of the 70, and I believe in that in 70s the reputation of Columbia High School was better than the Montclair High School reputation.  

The increases in the school budget were made when they increased the teaching staff for learning disabled students.  They hired over 20 teachers, and they added assistants and new technology.  I forget what the increase was from one year to the next, but I vaguely recall that it was around 27% of the total budget.  I have never disagreed with additional resources, but the size of the increase was staggering. I forget the name of the guy who did this, I believe he was he president of the school board along with his buddy. 

Anyway, it is done.  My point above was that the influx of new residents into Maplewood stimulated and supported the increases in the budget, and it was justified by saying:  your house is worth more now.  Sell.  Leave.  But not everyone wanted to leave.  This woman grew up in the house, and she resented being forced out.  I also never wanted to leave, but I was also forced out.  You miss a step, in my case the Great Recession, and I had to leave.  I didn't have anything to do with either issue, but I paid the price.  That is gentrification. 


The increases in revenues to the schools did not go to the entire population, I recall only seeing increases in spending in services to the special Ed students: new teachers with a TA in every classroom. Who would criticize that? I suggest that a study be conducted to determine what were the results of that massive intervention which forever increased the budget by more than 25%, if my memory serves me well. I would also want to know if the intervention resulted in increasing the number of special Ed students in the school system, and if so, by how much in comparison to other similar school systems. If it did help, then it can be argued that it was the right thing to do.


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