Tax Sale in Providence
Of the five primary indicators incorporated into the early warning system (property tax lien, housing code notice of violation, environmental ticket, structure fire, and sale or foreclosure), property tax liens publicized through tax sale advertisements, may be the leading early warning indicator for fiscal abandonment in Providence. For this reason, it received the most focus of ProvPlan's early research.

There are two main reasons the tax sale is a strong early warning sign. First, the delinquency thresholds for inclusion ($1000, two quarters late) are low. Second, tax sale advertisement serves as a strong proxy for utility payment delinquency. Community partners concur that tax sale advertisement would encompass most properties that were subject to water and sewer liens.

The Process as of Summer 2004: Providence now holds a tax sale once per year in late summer. Three weeks before the auction is held, the Tax Collector advertises affected properties in the local newspaper. In the 2004 sale, 1800 properties were advertised and 330 went to sale. Over half of the sold liens had been redeemed by the original property owner the following May, with three months remaining in the 365 day redemption protection period. After one year, lien redemption can become considerably more costly and difficult. The number of advertised tax liens and the number of sold tax liens in 2004 were less than half what has been witnessed in recent years. Of the 1500 properties identified as unutilized in our survey, 25% had been advertised for tax sale in the past five years and 13% had been sold at tax sale during that time span. See timeline.

Fast Facts About the Providence Tax Sale Process

• The City currently applies tax sale law evenly, seldom exercising discretion for individual cases. This approach lends itself to effective revenue capture and less susceptibility to politically-driven exceptions.

• The number of properties going to tax sale dropped sharply in 2004.

• Two-to-five family properties are, by far, the most common type of land use at tax sale.

• Just over one-quarter of all tax-title properties have had an owner-occupant.

• Tax delinquency is down among owner-occupants but is up among elderly homeowners.

• Citywide, owners of tax-title properties have consistently redeemed at a rate of about 50%.

• 34% of the 734 properties with a tax lien sold in 2003 had a sold tax lien in at least one of the previous four years; 12% had a sold lien in at least two of the previous four years.

• A small number of buyers have dominated the tax sale:
• The top three lien buyers purchased one-third of the 734 tax liens sold in 2003, and the top eight buyers purchased over half of all liens.

• Two lien buyers spent one-third of the total $2.98 million paid for tax liens in 2003; and five buyers spent over half of the total dollars collected.

• Although the Planning Department and Redevelopment Agency have expressed interest, there has been little attempt to acquire impending tax-title properties for redevelopment/revitalization goals.

For detailed analysis, see Tax Sale Presentation

5-Point Plan to Reform Tax Sale
Toward Both Revenue and Revitalization Goals

1.Help owners return to good standing early in the process.

2.Bring greater clarity and transparency to the tax sale.

3.Hasten change of ownership on abandoned tax-title properties.

4.Coordinate collection activity on all municipal and related liens.

5.Acquire parcels of special redevelopment interest.

For detail on each of these five points, see Tax Sale Presentation