The good news: Your delinquent property taxes are unlikely to be offered up to investors at a tax sale this year if you still can’t pay them by month's end.
The bad news: There’s another property tax payment due right around the corner.
Gov. Kim Reynolds’ COVID-19 emergency proclamation, giving Iowans a reprieve on the March 2020 property tax deadline, expires Friday.
Among major properties that were behind on taxes Thursday: Merle Hay Mall.
For reasons including safety, many country treasurers like Polk County's Mary Maloney say they will seek to delay tax auctions until next year. But properties with delinquencies will be charged 1.5% interest on their outstanding balances beginning in August.
The treasurers are encouraging property owners to keep making partial payments on the overdue amounts so they don't fall too far behind. And there's another tax payment due in September.
“There’s no way I can have investors coming in to do a tax sale,” Maloney said. “At the same time, we’re getting ready to send the next tax statement.”
Typically, delinquent taxes still outstanding are subject to a county-run tax sale, where investors bid to collect interest at 2% a month until the overdue amount is paid. The taxes are offered in an open, competitive bidding process so counties can collect revenue for cities, counties, school districts and other taxing entities.
Once the taxes are sold at tax sale to another party, they are considered paid. A tax lien is then placed on the property and if the tax sale is not redeemed after two years, the certificate holder may initiate proceedings to obtain the property deed.
In Polk County, taxes on about 5,000 properties — about 2.8 percent of all the taxable land in Polk County – were considered delinquent as of Thursday. About $10.7 million was still outstanding.
Some of the top properties for which owners hadn’t paid taxes as of Thursday included Merle Hay Mall ($588,239 owed); the Ramada Inn Hotel at 5000 Merle Hay Road ($239,977); Market One LLC, owner of the FuseDSM Chamber of Commerce building at 130 E. 3rd St., in Des Moines ($159,719); and Campus Town LLC, which owns Campus Town Apartments at 1210 SW 28th St. in Ankeny. It's behind by $139,897.
Elizabeth Holland, CEO of Merle Hay Investors LLC, said the mall has been waiting to pay its part-due taxes until after the sale of several acres west of the IHOP restaurant at the mall to build 43 market-rate apartments.
The mall, she said, has struggled during the pandemic and has been renegotiating leases, and the sale of that land has been delayed. Two major tenants at the mall have yet to approve the land transfer to TWG Development for workforce housing, she said.
"Things have been slowed down dramatically in the business world," she said. "We feel horrible about this. This is not something we intended to do."
After being contacted by the Des Moines Register, Holland said she personally would float the mall the money to pay the taxes on Thursday afternoon. Once the land deal is complete, the mall will pay her back.
"This is not how we want to do business, but these are unprecedented times," she said.
Because of the governor's tax suspension, there haven't been penalties or interest for not fully paying the March payment until now.
Treasurers who want to suspend this year's tax sale will have to first seek approval from their local boards of supervisors, Maloney said.
“Each county has to have a resolution to do that,” Maloney said. “For some counties, it’s not a big deal because most (property taxes) have already been collected.”
Johnson County Treasurer Tom Kriz said he hasn’t decided yet what to do about the annual tax sale, which in a normal year is held on the third Monday in June in every county. However, he said, a sale is unlikely to happen in Johnson County this year.
Unlike Polk’s annual tax sale drawing large crowds, Johnson County only draws about 12 to 15 representatives from businesses who profit from collecting the interest on the overdue amount for investors.
“The biggest problem is finding time to do it. You have to give notice about 45 days ahead of time to property owners and then you are thrown into the new tax cycle,” Kriz said. “My guess is that there will be very few tax sales this year in Iowa.”
Mortgage companies pay property taxes for many homeowners, so the outstanding amount this year in most counties is not huge.
But Maloney said delinquent taxes could be a much bigger problem going forward if the spread of the coronavirus is not better controlled.
“The economy does not come back until you take care of the public health problem. I’m not really sure we’re doing that,” Maloney said.
Both treasurers said it’s too soon to predict how local school districts and other taxing entities will be impacted by slower collections. Many property owners put off payments until this week because there was no interest or penalty for waiting, they said.
Maloney said all tax transactions in Polk County can be handled online or by mail.
Her office is in the process of setting up an in-person appointment process for title transactions, which also are handled by county treasurers. The current system, using mail and drop boxes, has proven very inefficient during the pandemic, she said.
Lee Rood's Reader's Watchdog column helps Iowans get answers and accountability from public officials, the justice system, businesses and nonprofits. Reach her at lrood@dmreg.com or 515-284-8549. Follow her on Twitter at @leerood and on Facebook at Facebook.com/readerswatchdog. Our subscribers make the Reader's Watchdog possible.
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