In an effort to provide property owners respite from back-to-back large tax bills the city will not sell tax liens on properties that miss the fourth quarter tax payment, according to city council finance committee chairman Kenneth Morris.
The city is also searching for a way to waive the high interest that begins to accrue when a homeowner misses a tax payment, said Morris on Thursday evening. Business administrator Nellie Pou on Tuesday said mayor Jose “Joey” Torres’ administration is working with the state to dismiss the high interest that begins to accrue or give taxpayers an extension on their bills.
“Folks want to pay their taxes,” said Morris on Tuesday evening. “They don’t want to lose their homes. They just need to have time to pay.”
The third quarter tax bills were due on October 6th, 2015 and the fourth quarter bills are due on November 1st, 2015.
“You’re looking at a double hit, very close, within 30 days,” said Julio Tavarez, 5th Ward councilman.
Both quarters’ bills are larger than what property owners are accustomed to seeing due to the retroactive application of new assessment values and a 4.108-percent tax rate. The previous tax rate was 2.90-percent.
The new assessments and rate adjustment led to tax bills that added in some cases $1,000 to $3,000 per quarter for some homes, according to property owners. In many cases property owners have to come up with $6,000 to $7,000 in a very short amount of time, said Morris.
Some property owners saw deep discounts in their third and fourth quarter tax bills because they overpaid in the first two quarters, said Morris.
“I don’t know how these people are going to stay here,” said Laura Lo Manto. “This has a big effect because the people that want to stay and help rebuild Paterson are being driven out financially.”
Lo Manto, who lives in the Eastside section, said she has been a homeowner for more than 40 years. She said many of her neighbors, who once had two family incomes, have become single income household, making tax hikes difficult if not impossible to stomach.
“It’s just fair if we’re capable of providing an extension,” added Tavarez. He wanted the city to extend the due date for the November 1st, 2015 bill to a future date.
Tavarez also worried about homeowners who pay their taxes through a bank escrow fund. He said banks use the last two quarters bills as benchmark to calculate the amount of money a homeowner needs to have in escrow to pay their bills for the next year. With large bills in the last two quarters homeowner may see large fluctuations in their monthly escrow payments.
Morris said the city offered a grace period for the third quarter bill because the municipality mailed those bills late. He said that was not the with the fourth quarter bills. “If it were not for state statutes this council would be more than willing to extend the payment of the bill,” he said.
City officials said state law bars them from offering an extension to the fourth quarter bills. “Someone from the administration should go down to Trenton because we’re in dire need, we’re at a bad situation,” said Ruby Cotton, 4th Ward councilwoman. “We can’t say November payment is due December 30th.”
“We started the conversation with the state for some kind of a relief,” said Pou. She said the penalty interest charges may be something the city can do something about. Delinquent taxpayers accrue interest at eight-percent for the first $1,500 due and 18-percent for any amount over $1,500, according the state’s division of local government services.
Pou said a resolution to dismiss the penalty interest rate will likely be before the council during its workshop session on Tuesday evening.
Morris also warned property owners who saw discounts in their bills in the last two quarters of 2015. The small bills resulted from over-payment in the first and second quarters; however, those credits won’t exist in the first quarter of 2016.
“You will see an increase when it evens out,” he said.
The tax lien sale is usually held in May prior to the end of the fiscal year on July 1st. Putting off a tax lien sale will grant property owners months of respite.