The city’s aggressive foreclosure effort is costing far more than expected, Corporation Counsel John Polster said.
The estimated cost to foreclose on more than 100 tax-delinquent buildings is $70,000. The city didn’t budget any money for that.
Polster proposed a contract change that would save the city $54,000, with the savings being used for foreclosures. “We’re still a bit short,” he told the City Council at Monday’s committees meeting.
They have no plans yet for how they’ll come up with the last $16,000 needed.
But by agreeing to a new contract with Girvin & Ferlazzo, a law firm that handled their police union grievances, they can save most of the money they need.
The council approved in committee a contract in which Girvin & Ferlazzo would accept a flat $3,000 fee per month for grievances, instead of $200 an hour. Under the hourly contract, the firm earned about $90,000 a year, which was the amount budgeted for this year. The new contract would cap costs at $36,000.
The total foreclosure costs still aren’t known. The Law Department is reviewing files for 750 properties, and may foreclose on hundreds of them.
“That will be culled down as we get more information,” Polster said.
The city may not foreclose on properties owned by nonprofits, for instance, he said. City officials might also set aside properties that are polluted or are bogged down in estate hearings because the owner has died.
The final foreclosure list should be complete in three weeks, he added.
But as city officials prioritize each property, some are pulled from the list because the owners suddenly pay their long-overdue taxes.
“We have a lot of people who are paying,” Polster said.
Mayor Gary McCarthy said the city is receiving about $10,000 a month in unexpected revenue from owners who are finally paying their taxes.
Some of them are paying after being dragged to court through the city’s new get-tough policy.
The estimated $70,000 in unforeseen foreclosure expenses includes publicizing addresses, mailing letters to the owners, and hiring title companies to determine who holds the title to each property.
Pay for park workers
In other business Monday, the council dealt with yet another cash-flow problem. The long-awaited improvements at Steinmetz Park were in jeopardy because the city needs to have enough cash on hand to pay workers while waiting for the state to reimburse expenses through a grant.
Council members said they didn’t want to take out another loan — which would bring interest expenses — just to float money for two or three months. They reluctantly agreed to use leftover money in the snow plowing budget, which they had hoped to use for something else.
There’s $580,000 left in that budget line, but they were unhappy to learn that Commissioner of General Services Carl Olsen had signed two purchase orders to spend $382,000 of it already.
He signed orders for salt and plowing, anticipating that there might be heavy snowstorms in November and December.
That decision left the council with just $160,000 to use for cash flow.
Councilwoman Leesa Perazzo said she’d hoped to use that for an unspecified project, but Finance Commissioner Ismat Alam said the money should first be used for cash flow for the park project.
“The council can still make those decisions [to spend the money] in October when we get the money back,” Alam said.
The city will essentially loan itself $160,000, using it during the park project, and then repay itself when the state reimburses the city. The state is covering the cost of the park improvements.
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