Senate Bill 777 of 2007

1. Senate Bill 777of 2007

2. SB 777 History/Monroe County Court Ruling • On November 21, 2005, Pennsylvania Land Titles Association, Fidelity Home Abstract, Inc & other parties filed a Class Action Complaint against the East Stroudsburg & Pleasant Valley School District along with local Tax Collectors. • Class Action Complaint contained the following: - The Tax Collectors did not make any returns on school taxes for either school district to the Tax Claim Bureau for years 2002-2004. - The Tax Collectors through direction of the School District made returns directly to the School District. - The School Districts pursued the collection of delinquent taxes directly in part through filing of municipal liens in the Office of the Prothonotary of Monroe County.

3. SB 777 History/Monroe County Court Ruling - The Tax Claim Bureau is unable to provide with Certifications or access to the returns. - Requested Tax Collectors and School Districts to relinquish all records to the Bureau (refused to do so) - Claims the ability of PLTA and Fidelity to search, to examine and to insure titles to real estate in the School Districts involved has been substantially impaired. - Portnoff lien certificates takes 5 business days for standard lien request at a cost of $25.00 or up to $50.00 for an expedited request (2 days). Certifications are not signed. - Delays experienced in getting information from tax records which previously been instantly available through the tax claim bureau. Commonwealth Court Decision • On February 2, 2006, the Commonweatlh Court granted the motion for peremptory judgment and issued a writ of mandamus: 1) that the School Districts and tax collectors are to make future annual returns to the Bureau;

4. SB 777 History/Monroe County Court Ruling 2) that the School Districts are to provide to the Bureau all of the School Districts’ books and records for tax years 2002, 2003, and 2004; 3) that the School Districts also are to provide a detailed disclosure to the Bureau of the status of all real estate taxes for the applicable tax years; 4) that the School Districts and tax collectors are to make payments for the delinquent taxes shown on the returns only to the Bureau; 5) that the School Districts are to relinquish all future payments for delinquent taxes to the Bureau and to provide to the Bureau detailed property descriptions for which the payments were made; 6) that the School Districts are to file a satisfaction of liens for payments received on municipal liens; and 7) that the School Districts are to provide full tax lien payoff information in writing, at no charge, within five business days of any written request.

5. SB 777 History/Monroe County Court Ruling Commonwealth Court Of Pennsylvania Appeal On November 22, 2006, the Commonweatlh Court of Pennsylvania affirmed the trial court conclusion and added that: “After a thorough review of the record, we find that there are no genuine issues of material fact or law. Therefore, we find that Plaintiffs [PLTA and Fidelity] have established that their legal right to the relief requested is specific and well-defined by the provisions of the RETSL; that the School Districts, as public officials, have a ministerial duty to make returns of all delinquent school taxes to the Bureau in accordance with § 5860.306 of the RETSL; and the Plaintiffs [PLTA and Fidelity] have established that there is a lack of any other appropriate and adequate remedy. Accordingly, we find that Plaintiffs [PLTA and Fidelity] are entitled to peremptory judgment on the mandamus claims seeking to restore public tax records to the Monroe County Tax Claim Bureau and to insure the accurate satisfaction of municipal liens filed in the Monroe County Prothonotary’s Office.” January 12, 2007 Petition for Re-Argument is denied. August 17, 2007 the Petition for Allowance of Appeal is denied by the Supreme court of Pennsylvania

6. SB 777Bill History April 23, 2007 - SB777 is introduced by Senators BROWNE, BOSCOLA, ERICKSON, COSTA, FERLO, LOGAN, O'PAKE and ORIE. - Referred to FINANCE, April 23, 2007 - Reported as committed, April 25, 2007 - First consideration, April 25, 2007 - Re-referred to APPROPRIATIONS, May 2, 2007 - Re-reported as committed, Sept. 24, 2007 - Re-referred to FINANCE, Sept. 25, 2007 - Re-reported as amended, Oct. 15, 2007 - Second consideration, Oct. 24, 2007 - Amended on third consideration, Nov. 19, 2007 - Laid on the table, Nov. 19, 2007 - Removed from table, Nov. 19, 2007 - Third consideration and final passage, Nov. 20, 2007 (28-22) In the House - Referred to FINANCE, Nov. 21, 2007

7. SB 777Bill Highlights w/amendments • Defines “delinquent” which permits municipalities to charge interest from the date of delinquency as opposed to the date the lien is filed. • Includes garbage fees, recycling fee, landlord licensing fees and inspection fees as charges which may be recovered under the MCTLA. • Removes the intent language for “unreasonable attorney’s fees from MCTLA and maintains the language regulating the reasonableness of attorney’s fees charge in collection of delinquent taxes. • Permits tax and municipal claims cases to be tried in front of a jury or judge, instead of strictly a jury trial. • Brings the Municipal Claim and Tax Liens Act into compliance with the Pennsylvania Rules of Civil Procedure with regards to the service of original process

8. SB 777Bill Highlights w/amendments • Establishes one County Office that will be required to maintain an electronic list of all properties in the County with delinquent taxes and a list of who is collecting the delinquency. If the Tax Claim Bureau is collecting the tax claim, it will provide a binding certification of the amount of taxes owed. If the school district or local government has contracted with a third party firm to collect their tax claims, the collector will provide a binding payoff amount to anyone requesting the information. • This list will be updated within 45 days of payment. • Clarifies a municipality’s ability to use third party collection firms to use the MCTLA to collect delinquent taxes. (Section 42 of bill)

9. SB 777Bill Highlights – Today • Municipalities that choose to use the MCTLL to collect delinquent taxes must do so by passing a resolution. • Municipalities will not be required to comply with any of the procedures or provisions in the Real Estate Tax Sale law, which includes the obligation to make annual returns to the County Tax Claim Bureaus. • Provision that any 3rd party collector can only charge fees that are deemed reasonable and necessary. • The fee schedule is required to be set by an ordinance passed by the local governing body at the time it authorizes a third party to collect delinquent taxes. Prevents third party collectors from charging fees other than those set by the governing body.

10. SB 777Bill Highlights - Today • Provisions that consumers also have the ability to challenge the validity and reasonableness of the fees and penalties in court. • Provisions for a process for municipalities to report their delinquent tax information to their respective counties. • Provision for a tax certification process that will allow interested parties to request and rely on payoff information. • Amendment includes a requirement a municipality using the MCTLL to offer taxpayers benefits equal to or exceeding those in the Real Estate Tax Sale Law regarding server financial hardship or the elderly who are delinquent in payment “IF” the county itself has adopted such benefits.

11. SB 777What Supporters are saying • PASBO – Legislation Action Alert – • The Senate has passed Senate Bill 777.  This is the legislation that restores your right to use third party delinquent property tax collection services. We believe, based on significant member feedback, that your current ability to contract for the collection of delinquent property taxes is efficient and beneficial.  Without this legislation school districts may be forced to use county tax claim bureaus.  It is critical to voice your support for this legislation. Senate Bill 777 will expressly provide the option to school districts and other local governments to use third party collectors to enhance property tax collection efficiency. • I urge you to support Senate Bill 777. This legislation gives our school district the opportunity to insure efficient and effective collection of delinquent property taxes. Senate Bill 777 will allow our district to utilize third party collectors that can increase our delinquent property tax revenues and decrease our collection costs. The tax collection system has been rooted in an archaic statute and administered by the County Tax Claim Bureau. Senate Bill 777 provides us with a frequently used option that is utilized by a growing number of school districts across the state. Enactment of this legislation will benefit our district. I hope you will support it and urge the House Finance Committee to move it to the House floor. Thank you for your consideration. I would be pleased to answer any questions you may about this legislation

14. SB 777Core Issues 1. Commissions kept by County Tax Claim Bureaus 2. Timely Collections/Disbursements to Taxing Bodies 3. Time Length to complete the RETSL process.