Churches, nonprofits face tax lien sales for delinquent properties

More than 400 parcels in Montgomery County owned by churches and other nonprofits are delinquent in payments to the county, according to an analysis of the county tax roll by the Dayton Daily News. This includes 10 that owe more than $10,000. A church in Trotwood owes more than $100,000.

For the first time in recent history, the Montgomery County Treasurer’s Office says notices on these properties will be among letters being sent flagging property owners to delinquent payments and the possibility of being put in the county’s annual tax lien sale.

Montgomery County Treasurer John McManus said tax-exempt properties with longstanding and costly delinquencies are of particular concern to his office, and he wants to work with their property owners to reclaim past due payments.

“Our local cities and others are owed this money by those who have utilized basic services that benefit their own properties,” McManus said. “Not paying for these services is not only unfair to other organizations that pay, but it jeopardizes one’s future ownership of the property.”

Organizations like charities, faith-based groups, private foundations, political organizations and more can be eligible for a nonprofit designation through the Internal Revenue Service (IRS), making them tax-exempt.

The tax-exempt designation does not make a nonprofit exempt from paying other fees that are related to services they receive in their communities, however.

These fees, called “special assessments,” can include charges related to trash collection, sidewalk work, water, mowing and more. Separate fees can also be charged to nuisance properties, according to the treasurer’s office.

Church owes more than $100K

County tax roll records analyzed by the Dayton Daily News show that as of this week, more than 400 tax-exempt properties have some kind of delinquent balance not related to a foreclosure.

Of these properties, 54 have a balance listed as more than $1,000. More than half of this group consists of faith-based organizations like churches.

The tax-exempt property with the highest total delinquency is a Trotwood church that owes $107,726 in charges and late penalties dating back to 2002.

The treasurer’s office confirmed last week that the church agreed to a payment plan for the delinquency after the newspaper reached out to the church for comment.

Pastor Norman Scearce said Gateway Cathedral in Trotwood gave new life to a vacant building that once held another church congregation.

Public records show the property — 5501 Olive Road — was declared a nuisance in 2013 and changed hands in 2014 for $1,000 through a private sale.

Scearce said bringing the building up to standard was a costly investment, but he wanted to ensure people could worship at that location again.

Scearce said he believed Trotwood’s special assessments charged to the property would be waived when the property was purchased in 2014.

Trotwood’s development department said they weren’t aware of any agreement made with the city surrounding the Olive Road property.

The property has outstanding special assessments or late fees dating back to 2003. Late penalties and interest make up for 50% of its delinquency, according to property records.

Other nonprofits in debt

Two other properties — a Trotwood senior living facility and a Dayton-area church — also have total delinquencies higher than $30,000.

In Dayton, Covenant Orthodox Presbyterian Church acquired a building at 1501 E. Third St. in 2021 to open a church.

In turn, the nonprofit that oversees the church, called Light of the Nations, also acquired all of the debt associated with the property. This totals $31,492.

Church leaders at Light of the Nations weren’t aware of the delinquency when the newspaper contacted them last week. After calls to their county officials, they’re now on a payment plan for the charges as their tax-exempt status is pending with the state’s taxing agency.

Property bill notices were mailed to an address in New Carlisle when they should have been going to a location with the same street address in Vandalia, according to Covenant Presbyterian Church.

Friendship Village, a Trotwood senior living facility owned by Dayton Healthcare, has a parcel with a net delinquency of $33,112 and a pending tax-exempt status, according to tax roll records.

The property at 5790 Denlinger Road has two other parcels, one of which has a delinquency of $80,401. This parcel is not listed as property tax exempt.

If a nonprofit owns a parcel that is not being used for purposes that qualify for a tax exemption, that parcel will not be exempt from taxes.

The senior living facility did not return a request for comment regarding its delinquency.

Lien sales

McManus said his office is obligated under Ohio law to collect taxes and assessments, regardless of a property’s taxing status.

A total of 1,239 properties throughout Montgomery County were newly certified delinquent in August. This means property owners this year missed two rounds of payments in February and July for property taxes and other fees.

These property owners are eligible to have a lien sold on their delinquent property if they do not enroll in a payment plan or pay off their delinquencies by Dec. 29, according to the treasurer’s office.

Liens are legal claims to a property, and when a person or company purchases a lien on a delinquent property, the property owner must pay their debt to the lien holder. Lack of payment could result in foreclosure.

In Montgomery County, the treasurer’s office sells liens on a property “dollar for dollar,” meaning lien holders must pay the full price of unpaid debt to the county, McManus said.

Properties are often put up for lien sales due to delinquent taxes, but late payments on other fees can also make someone eligible for the lien sale.

Ohio law restricts how treasurers can pursue collection from delinquent properties.

“We cannot and do not sell liens on parcels that are paid in full, are currently enrolled in a delinquency contract with our office, or may be in the middle of a bankruptcy,” McManus said.

Putting a property up in a lien sale does not guarantee a lien will be purchased for that property, McManus said.

McManus said he expects the lien sale to bring in between $25 million to $27 million in delinquent payments during the open window between when properties are notified they’ll be featured in the sale and before the lien sale deadline.

Of that total amount, his office sells approximately $6 million to $7 million in liens, meaning the remaining $20 million comes from the voluntary payment of delinquent taxes before the lien sale deadline.

Special assessment delinquency

McManus said that in the two years he’s been leading the treasurer’s office, he’s seen delinquencies on the county’s tax rolls that span decades and have accrued significant totals.

“There is something inherently unfair about a longstanding delinquency on a property, especially one that is occupied, when there are so many in our community who are committed to paying their taxes and their bills on time and in full,” he said.

Prior to a tax lien sale, delinquent property owners are notified of their status and the upcoming sale. This notification comes in the form of regular mail, and again by certified mail. Owners are then given at least 30 days to pay their balance or enroll in a payment plan with the treasurer’s office.

If a property owner fails to pay their bills for water or sewer service, trash, or other property maintenance charges from their local government, that debt will eventually be sent to the treasurer’s office to collect if the local government has tried to collect the debt unsuccessfully, McManus said.

Before the debt is sent by the city to the county, though, the property owner should have received multiple bills for these direct services from their city.

Once that debt has been certified to the tax roll, it can be collected by the treasurer as any other delinquent tax debt can be collected, namely through direct payment, a payment plan, the sale of a tax lien, or a foreclosure.

While the debt remains uncollected, it accumulates both interest and penalty charges.

“No property owner is served by allowing back taxes and assessments to swell to such an amount where the only possible remedy is a foreclosure or a sale of a tax lien on their property,” he said.

The treasurer’s office has a payment plan for property owners to begin addressing their delinquencies. This requires a 20% down payment with monthly payments that follow.

“Our office is committed to working with anyone, especially a charitable, nonprofit or tax-exempt organization, who want to work with us in a good faith to resolve their unmet financial obligations associated with their property,” McManus said. “But they need to come in and work with us and meet their commitments.”

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