Commissioners create new overdue tax fund

March 28, 2011
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For the second year in a row, Kent County commissioners authorized County Treasurer Kenneth Parrish to borrow up to $42 million for the delinquent tax fund.

That’s the same amount commissioners approved last year, when Parrish issued $35.5 million in general obligation tax notes to buy the delinquent real property-tax payments from the taxing units in the county.

“We make all taxing units whole at 100 percent,” said Parrish of the notes’ purpose. Parrish added that the actual issue would fall below $42 million and likely be closer to $36 million.

The county will sell the tax notes to raise capital for the fund. The notes will carry an interest rate that won’t exceed the short-term market rate, and large financial institutions will buy the notes because of the county’s Triple-A short-term rating.

Parrish will use the revenue from the tax-note sale to buy the delinquent property taxes from the cities, townships, libraries, school districts, Grand Rapids Community College and the Interurban Transit Partnership. The county has been doing this since 1973.

All overdue 2010 property taxes moved from the originating taxing jurisdiction to the county on March 1. The county notes are normally sold in April, and Parrish pays the units in May. Property owners then pay the county their delinquent tax amounts.

Parrish said his department collected 75 percent of the 2009 delinquent taxes during the last calendar year, and normally collects around 99 percent of the overdue taxes each year once the annual process is completed. He said the county has a $27 million payment on the notes coming up May 1, and he had enough funds to cover it.

Parrish said the county normally collects more tax revenue than it borrows for the notes each year when the interest from the delinquent taxes is included. The county charges property owners that are behind in their taxes 1 percent for each month their taxes are overdue; it also adds a 4 percent administrative fee to each bill.

Commissioners also gave the county Bureau of Equalization the green light last week to enter into a data-sharing agreement with the U.S. Department of Housing and Urban Development. HUD wants to collect parcel-level data on residential areas in counties that receive federal Neighborhood Stabilization Program grants, as Kent County does, and use that data to track housing trends, home sales, foreclosures, tax assessments and to evaluate NSP grants.

Equalization Director Matt Woolford said Kent was one of 60 counties nationwide that HUD approached to participate in the data-collection endeavor. In return for cooperating, HUD will give the county access to all of the data.

Commissioners also agreed to set the general fund’s fund balance at 40 percent. The move is part of being in compliance with the General Accounting Standards Board Rule 54.

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