MEMORANDUM

KENAI PENINSULA BOROUGH

FINANCE DEPARTMENT

TO: Tim Navarre, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Mayor

FROM: Jeffrey Sinz, Finance Director

DATE: April 4, 2001

SUBJECT: Ordinance 2001-11, Amending 5.12.260

For the purposes of real property tax collection, according to AS 29.45.320(a), the municipality shall enforce delinquent real property tax liens by annual foreclosure, unless otherwise provided by ordinance. KPB 5.12.260 requires that the borough foreclose on any real property subject to foreclosure without reference or regard to the amount of the balance due.

At present, there are nearly 200 accounts scheduled to enter foreclosure that have a balance due of less than $10. Our experience with such accounts is that the fees assigned through the foreclosure process quickly exceed the balance due. We also find that these accounts are almost always paid before we take clerk's deed. Therefore, the foreclosure process becomes a complicated and costly form of delinquent tax collections for real property accounts with a balance due of less than $10.

If approved, the attached ordinance would allow borough finance to exclude real property accounts with a balance due of less than $10 from going into foreclosure. We would still send delinquent notices to the taxpayer, and the accounts would still be subject to penalty and interest. If the taxpayer failed to pay the balance due before the next year's tax billing cycle, the balance would show as an unpaid prior balance. In almost all cases the account would go into foreclosure during the second year if it remains unpaid.

We believe this change will allow for a more rational approach to delinquent tax collections without compromising our ability to ultimately collect through the foreclosure process. Hearing on shortened time is requested so that this amendment can apply to the pending tax foreclosure.