Housing Advocates Warned DC Mayor Last Year About Tax Lien Practices

DC Mayor Vince Gray says the first time he heard that the office of the city’s chief financial officer was selling low-dollar property tax liens to investors who then foreclosed on the houses of hundreds of poor and elderly residents was when he read about it Sunday in the Washington Post.

But it turns out Gray’s office received a letter from a housing advocacy group warning of the very same subject back in April 2012, nearly a year and a half before the Post’s series ran. Only due to the way mail is sorted at city hall, neither the mayor or his policy advisers ever saw the letter.

The mayor’s office says a clerk in charge of sorting the mail saw that the letter referred to activities going on in the CFO’s office, directed it there, and considered it a closed matter. Not also forwarding it to the mayor’s legislative was a minor error.

“In any given week we get thousands of pieces of correspondence,” says Gray’s spokesman Pedro Ribeiro. But Ribeiro notes that the letter was also addressed to Council member Jack Evans, who oversees the DC Council’s finance and revenue committee, as well as several other city officials, including CFO Natwar Gandhi.

On Monday, after reading the Post’s first article about seniors losing their homes over sometimes minuscule tax bills, Gray demanded Gandhi’s office impose a moratorium on lien sales and said he would offer legislation reforming the practice. The CFO’s office, which is independent of the mayor’s office, is refusing to impose a moratorium unless the Council passes legislation.

What the mayor didn’t know is that OFCO is selling $174 tax liens of 70-year-old veterans.

Like most property tax-collecting municipalities, DC conducts tax lien sales as a way to collect delinquent payments. But what the Post’s series uncovered was a trend of selling off low-value liens issued against elderly and sometimes ill homeowners who wind up finding themselves being tossed from their houses after a lien snowballs into a massive legal bill.

“What the mayor didn’t know is that OFCO is selling $174 tax liens of 70-year-old veterans,” Ribeiro says, referring to one subject of the Post’s investigation.

The tax lien sale system has been reformed a bit in the past few years. The CFO’s office no longer auctions off liens worth less than $1,000—most of the cases spotlighted by the Post date from before 2008—but Gandhi’s critics are asking for a full stop for now while the entire program is reviewed.

But that could be a tricky goal to reach in the short term. The CFO’s office, independent of both the executive and legislative branches, is a 1,000-employee agency tasked with maximizing the District’s revenue, and one city official said it can sometimes make numbers more important than the people behind those numbers. Said one city official, the CFO “is like a fourth branch of government.”