The mayor's office and a city councilor square off over tax collections.
SYRACUSE, N.Y. - Threatened with tax foreclosure on two of his 15 rental properties, landlord Daniel McMahon scrambled to sell them before the city could seize them for back taxes.
He got some help from a sympathetic city councilor, real estate attorney Kathleen Joy, who delayed several council votes on whether to seize McMahon's parcels.
That gave McMahon time to find a buyer with a clean tax record who could qualify for a tax trust, or monthly repayment agreement, something McMahon could not get without paying off more than $30,000 in delinquent taxes.
Joy said she believes the city should work with landlords who make an effort to address their back taxes. But Joy's efforts to help McMahon, who owed taxes going back six years, so irked the mayor's office that administration officials abruptly issued a new rule in April excluding landlords from eligibility for tax trusts.
Five months later, Joy and the administration are still arguing about the issue.
Joy sponsored a new local law that passed the council 5-4 Monday, re-establishing the right of landlords to enter the payment plans. Voting with Joy were councilors Jean Kessner, Nader Maroun, Chad Ryan and Jake Barrett.
Councilor Kathleen Joy
Joy said Mayor Stephanie Miner's administration has pursued a confrontational approach that discriminates against landlords and passes up partial tax payments.
"They would rather rip a property away from someone than work with them,'' Joy said.
Tim Carroll, director of mayoral initiatives, said Joy's legislation would enable landlords to continue gaming the system rather than paying off all their back taxes. "What surprises us is that Councilor Joy seems intent on making it easier for them to do that,'' Carroll said.
Miner will hold a public hearing on the proposed local law Tuesday. She has 10 days to veto, which she is expected to do.
Unless Joy can find another supporter on the council, she will lose the argument. It takes six votes to override a veto.
What's at stake? Consider two properties McMahon sold.
The first McMahon property threatened with tax foreclosure was a single-family house at 310 Hier Ave., where a delinquent tax bill of roughly $22,000 had piled up since 2007.
The Syracuse Common Council held off voting to seize this tax-delinquent house at 310 Hier Ave. for back taxes, giving the owner time to sell it.Tim Knauss
Joy postponed several council votes authorizing the city to seize 310 Hier, beginning in October 2013, after McMahon told her he intended to sell the property.
In December, real estate investor Rene Vergara paid $5,000 to buy the house, which is assessed at $45,000, from Daniel and Diann McMahon. In February 2014, Vergara established a tax trust by paying 10 percent down plus the first monthly payment of $486 -- a total of $2,913. The city canceled plans to seize the house.
A tax trust on the same property would have cost McMahon more than $35,000 up front, city officials say. Here's why:
McMahon owned seven tax-delinquent properties at the time, with a past-due balance of roughly $100,000, Carroll said. At the time, city policy allowed a landlord to put no more than three properties at a time into tax trusts.
McMahon would have had to pay off $28,420 in back taxes on four properties, to bring them current, just to start a tax trust on the other three. His 10 percent down payment on the remaining three would have added at least $7,000.
To which Joy responded: So what?
Neither McMahon nor Vergara has been relieved of any tax debts, Joy said. City officials can still seize their properties if the owners fail to keep up with the payments. In the meantime, the cash-strapped city is once again collecting taxes at 310 Hier Ave.
When the city forecloses, it writes off the back taxes and gives the property to the Greater Syracuse Land Bank, which keeps any proceeds from resale.
City officials said they often delay tax foreclosures to help owner-occupants avoid losing their homes. But Miner's staff was appalled by the leniency shown to the investor owners at 310 Hier Ave. Finance Commissioner David DelVecchio responded by declaring that henceforth only owner-occupants would be eligible for tax trusts.
"This policy change has been made necessary by the fact that certain tax-delinquent owners of real property are using tax trusts as a vehicle to evade their responsibilities,'' DelVecchio wrote.
The new rule changed the outlook at 701 Catherine St., the second McMahon property targeted for seizure by the city.
AMD Management LLC, a company controlled by McMahon, sold the three-family house to Vergara for $5,000 in February 2014. The property is assessed at $50,000.
Unable to obtain a tax trust, Vergara sold the property in May for $5,000 to BDR Properties LLC. A few days after the sale closed, BDR Properties paid $29,565 in back taxes on the property.
McMahon said he fell behind on tax payments because of a failed business venture, and he is trying to catch up. He recently sold an out-of-town property to pay off roughly $20,000 in back taxes on a Syracuse house he owns at 970 Bellevue Ave.
McMahon currently owes $42,800 in delinquent taxes on four properties, city officials say.
"I'm going to make my best attempt to pay,'' McMahon said. "I'm not trying to play games with anybody.''
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