Bill targeting tax chief’s profits in limbo

House Bill 819 is a direct result of that reporting.

This year, the AJC revealed how Ferdinand’s quick sales of delinquent tax bills, before the county collected a 10 percent penalty, handed as much as $20 million in potential revenues to Vesta Holdings, the biggest lien buyer, with a corresponding $20 million loss to taxpayers.

Another investigation revealed he has been earning an extra $22,000 to $31,000 per year by taking 50 cents every time he sells a tax lien to a collector or a taxpayer pays off a lien themselves.

The AJC also revealed that Ferdinand dipped into his office budget to buy a $39,000 take-home SUV. And it broke the story last year that Ferdinand personally intervened after a tax debt owed by Atlanta Mayor Kasim Reed’s real estate holding company, Cascade Investors, was sold to Vesta.

The Tax Commissioner’s Office got the debt transferred back to the county, then later filed documents asking the Superior Court Clerk to remove all liens filed against Cascade from the record. The Fulton County Board of Ethics found no cause to investigate.

Legislation to protect homeowners and stop Fulton County’s tax chief from profiting off their debts could go belly up this session, just as similar proposals have done in past years.

House Bill 819 seeks to keep bill collectors from profiting off late taxes that property owners may not know they owe. It also would keep Fulton County Tax Commissioner Arthur Ferdinand from pocketing 50 cents every time he sells a delinquent tax bill or a taxpayer settles a lien. That fee has boosted his pay by tens of thousands of dollars per year in what critics call a major conflict of interest.

But the bill has already been weakened as a result of heavy lobbying by Vesta Holdings, whose network of companies buys most of Fulton's tax liens. And with crossover day looming Monday — the deadline for a bill to pass from one chamber of the state Legislature to the other — the measure hasn't been approved and isn't scheduled for a floor debate.

The bill’s backers, mostly north Fulton Republicans, said they are confident they can move it on to the Senate and make revisions later. Even after crossover day, lawmakers can maneuver and horsetrade to get language added to other bills.

“The path taken by a bill from beginning to end has many turns in it,” said Rep. Wendell Willard, R-Sandy Springs, who has tried repeatedly to curb Ferdinand’s practices and beef up taxpayers’ rights.

Provisions in HB 819 were proposed to end practices exposed in several investigations by The Atlanta Journal-Constitution.

One investigation last year found that Ferdinand is apparently the only Georgia tax commissioner using an old state law to personally collect 50 cents every time a tax lien gets paid. As a result, the state’s highest-paid elected official has been pocketing roughly $22,000 to $31,000 extra per year, boosting his pay to about $383,000.

Ferdinand did not respond to a request for comment about this story.

In its original form, HB 819 also would have prevented Vesta and other companies from turning a quick 10-percent profit profit when a tax bill is 90 days late.

Last year, the AJC discovered that Ferdinand’s quick sales of delinquent bills — before the penalty kicked in — resulted in the loss of millions of dollars in potential county revenue from late fees. Over an 11-year period, the county handed as much as $20 million in potential profits to Vesta, with a corresponding $20 million potential loss to taxpayers.

In some cases, Ferdinand sold the bills a day or two before the penalty would have applied.

Vesta representatives argued in committee meetings that loss of the 10-percent fees would undermine its profit incentive, causing small bills to go uncollected, forcing the county to foreclose on homeowners and slowing revenue collections for cities, school systems and the county.

The bill’s chief sponsor, Rep. Chuck Martin, R-Alpharetta, removed that provision, saying changes must be made to how the penalty applies and which governments would be able to keep it.

“Some of the representatives sitting there were torn,” said Dan Ray, executive director of the Georgia Association of Tax Officials, “because they represent some of those cities and school systems.”

A lobbyist for InVesta Services — one of Vesta’s associated companies — said lawmakers thought better than to create problems for local governments just to enrich Fulton County with the 10 percent penalty.

“These local governments only stand to lose waiting on delinquent taxpayers to pay up,” lobbyist John Walraven said in a written statement.

That speaks to another problem with Fulton’s system that HB 819 would address.

For the past three years, the AJC has reported how residents have nearly lost their homes because of tax bills they claim they never received.

If taxpayers don’t know about the debts, the collection firm racks up more interest, and it can eventually auction a home to settle the debt.

The House bill would require tax commissioners to try to find taxpayers through Internet searches and people-finder databases, among other records, before selling a lien.

The current process, if nothing else, creates plenty of ill will toward the county. Condominium owner Robert Lynn said he had to pay InVesta about $500 to get rid of liens. He said he didn’t know he had more to pay after dropping his tax appeal, and he would have appreciated a certified letter telling him.

“My perception is that they relish the opportunity to take advantage of people, through the technical, legal setup the way it is now,” Lynn said. “I think they actually look forward to people like me, and then it’s like, ‘OK. We got one, we got one, we got one.’”

Ferdinand sells more liens than any other commissioner in the state, a practice he has defended as a guaranteed way to boost collections. Other counties that do not sell liens boast similar collection rates, but they take longer to reach them.

The tax chief has said repeatedly that privatized collections don’t harm taxpayers because they owe the same sum in taxes, penalties and interest either way. He has also pointed out that private investors, unlike counties, must wait a year to foreclose.

However, an AJC investigation found that, through so-called “super liens,” some lien buyers have been able to circumvent legal safeguards to quickly foreclose on homes and pocket the equity.

Martin, the state lawmaker, said he’s looking for a way that both lien-buyers and local governments and school systems can collect penalty fees.

He also said liens might be better sold through a bid system. Currently, the tax commissioner may sell liens to whomever he wishes, and some investors have complained of favoritism for Vesta.

“I think open, honest competition for this business, if there’s a business of collecting these fees, is not a bad thing,” Martin said. “We’ve got a little bit of an upside down, inverse business model here. You collect more if you don’t try to collect.”