Found Money
It’s amazing how a little creativity will provide a windfall for county coffers.
The county budget picture is brightening, and it’s doing so with no help from the county control board.
The county had hired a company to lend it money against uncollected property tax liens - a deal that was good in the short-term, but was proving to be a little costlier than maybe it was worth.
This year, the county put the contract out to bid, and the existing vendor sweetened the deal. Significantly.
The benefit to the government is significant. Officials had budgeted $8 million from its tax-lien agreement this year. Instead, it will derive a benefit of almost $40 million as 2006 liens are sold and past deals are wrapped up, officials said.
No more will it lend the county money; the company will instead pay 105% of each outstanding lien directly to the county to buy the right to pursue the delinquent taxpayer, as well as all fees and interest.
Mike In WNY Says:February 19th, 2007 at 7:37 pm
I like Mark Poloncarz’s idea to use the money for a reserve fund and paying down debt. If it ends up being used to fund further spending, it will be a waste.
BH Says:February 19th, 2007 at 8:36 pm
That a company can pay - upfront - 105 cents on the dollar for debt shows just how lucrative the collection business can be.
We may not be in the midst of an equity bubble like the late 1990’s, but we’re surely squarely in the middle of a debt bubble the likes of which this country has never seen. Negative savings rate. Home equity lines tapped out. And collection companies able to front 5% premiums for the right to collect old debt.
It should be an interesting 5 years for the American consumer. . .
Dick Kern Says:February 20th, 2007 at 8:47 am
There needs to be close analysis of the number of liens located in the city of Bflo, where MYS’s MBBA purchased liens on 1500 parcels for $4 million in 2003.
Virtually all of those properties are now derelict & most in need of demolition. Apparently MBBA has now returned 647 of those parcels to the city in a “give-back”.
Is the 2003 blunder of ’selling worthlessness’ being repeated?
Dick Kern (in Mpls)
CB Says:February 20th, 2007 at 10:00 am
The control board’s primary job is to make sure people like Poloncarz, Giambra, etc do their job properly…that is what Poloncarz is doing…
Without their oversight and questioning of county financial practices and budget figures, who knows what the powers that be may try to pull…
So they are doing their job and helping…
BuffaloPundit » Blog Archive » Approve the Xpand Deal Says:February 28th, 2007 at 7:50 pm
[…] Last week, it was reported that the county had worked out a much improved deal with the private company that handles its tax arrears and liens. It was so good, I called my post “Found Money”. Instead of $8 million, the new deal would raise up to $40 million, thus fiscally helping the county in myriad ways. […]