The state Legislature has passed a bill that would stop American Tax Funding from foreclosing on a dozen Schenectady churches.
The bill was on the governor’s desk Monday. If he signs it, the tax liens ATF bought on those churches will be null and void.
That means ATF won’t be able to collect on those liens and will not be able to foreclose, Schenectady Assistant Corporation Counsel Frank Salamone said.
It’s not clear whether that would undo the foreclosure ATF already filed against the Hindu Temple. But Salamone noted that ATF has not yet filed the deed, and thus does not technically own the temple yet.
Still to be determined is whether the city would reimburse ATF for the liens, which the city sold to ATF in a series of mistakes.
Salamone said the question of payment is a matter of litigation.
But, he said, the legislation should take the churches out of the equation.
“It should fix the problem of the tax-exempt properties,” he said.
Until now, ATF has threatened to foreclose on the churches if negotiations break down between the agency and the city. The issue has been a nightmare for churchgoers, who for years have not known whether they will lose their church. In most cases, the tax bill and accumulated interest is beyond what the congregation can afford to pay.
The problems dates back to 2008, when many tax-exempt churches were taxed because their operators failed to file a simple form affirming that the property was still used for tax-exempt purposes.
The assessor then chose to change those churches’ status to taxable, and they all got tax bills. Many owners refused to pay, arguing that they had committed a slight oversight and should not be penalized to the tune of thousands of dollars.
Making matters worse, the city was in the middle of a bulk sale of all unpaid tax liens to ATF. City officials bundled up all of the unpaid liens and offered them to ATF, which refused some properties but took almost everything.
Somehow, no one noticed the churches among the hundreds of liens. In fact, the confusion still isn’t fully resolved — officials interviewed for this story are not even certain how many churches are involved, only that it is about a dozen.
By the time the City Council learned of the issue and tried to correct it, ATF already owned the liens. No realizing that, the state Legislature voted only to eliminate the tax bills of each church, refund any paid taxes and retroactively restore the tax-exempt status — not to nullify liens.
That would have been enough if ATF hadn’t been involved. But ATF wanted its money — and negotiations of how much, exactly, the city would pay the company have bogged down.
At times, in frustration, city officials have said they should refuse to pay ATF anything at all. At other times, they said it would be fair to pay back what ATF paid for the liens — which was pennies on the dollar. ATF has, at times, asked for the full current amount owed, including years of 21 percent interest. The two sides are also now fighting over control of 215 other properties that owe taxes to both ATF and the city. The entire issue may only be resolved in court.
ATF officials did not return a call seeking comment for this story.