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City attorney wary of property tax amnesty program

A proposed tax amnesty program to waive the penalty fees on back property taxes may not become a reality because it could cost the city $500,000 and pose a legal liability.

That was the word late last week from Assistant Corporation Counsel Thomas O'Donnell.

Some City Council members wanted to begin such a program in response to resident backlash of their approval to waive late fees for a Pine Avenue property owner who asked Councilman Lewis Rotella for help.

"I discussed a number of reasons why we thought it would not be a good idea," O'Donnell said. "We have a high level of collections and on-time payments we receive. For the 2005 city tax as of Dec. 31, approximately 95 percent have been either on time or paid the penalty."

The Council voted last year to forgive interest and penalties for Peter Marra's former Lefty's tavern at 2701 Pine Ave., as long as the outstanding tax bill was paid within two weeks. Council members were set to vote last month on a case involving Gagster's restaurant at 710 19th St., near Pine Avenue, but decided to study the matter further.

City records show that Dana Gagliardo owes $6,500 in late fees on the 19th Street property. Marra was forgiven more than $7,000 on his Pine Avenue property.

The city has included $500,000 in projected revenue in this year's budget for late property fees and fines, and it could be a liability to approve a program that may result in a budget deficit.

O'Donnell said the Council put the city at risk for lawsuits when it forgave Marra's penalties last year. The city has not been sued regarding the Pine Avenue waiver, but several residents have threatened to do so at Council meetings.

Recently, other residents have told the Council they think it's unfair to forgive one property owner's penalties when others have paid theirs, while some have simply asked how they can have their own penalties waived.

Councilman Robert Anderson Jr. introduced the idea of a one-time tax amnesty program last month because he said he wanted to be fair to all property owners. A proposed plan from the Council would waive penalty fees on back taxes for up to three years, provided the property owner pays the back tax within 30 days.

O'Donnell rejected the proposal. He said Council members keep citing examples of other amnesty programs that don't apply to the city's situation. Other programs include forgiveness on penalty fees for unsecured sales and on unpaid corporation, business and personal income taxes, but not property tax.

Currently, property bills can be paid in two installments per year, and penalties must be paid in full. O'Donnell said he is discussing a measure with the Council that would allow monthly payments.

Councilman Sam Fruscione said he thinks that plan makes sense, but insisted he does have examples of amnesty programs for property taxes and wants to keep working on that issue.

"It's really a tough situation. We think we're trying to do the right thing," Fruscione said. "If we don't do it and we collect nothing, we only get a building [through foreclosure]. I'm trying to figure out how to get that other 5 percent."


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