Memorandum
Date: October 8, 2024
To: The Honorable Lake County Board of Supervisors
From: Patrick Sullivan, Treasurer - Tax Collector
Subject: Consideration of Proposed Chapter 7 Tax Defaulted Land Sale
Executive Summary:
This item represents an initial description of a proposed Chapter 7 sale consisting of 3,323 parcels. Should your Board approve this preliminary proposal, the Treasurer - Tax Collector’s office will continue preparation of this sale and return with a resolution to finalize the offering.
The tax collector is required to attempt to sell tax-defaulted property at either public auction or sealed bid sale within four years after the property becomes subject to sale, unless, by other provisions of law, the property is not subject to sale (Revenue and Taxation Code §3692(a)). If no bids are received at a tax sale, an attempt must be made to sell the property at intervals of no more than six years, until it is sold (Revenue and Taxation Code §3692(a)).
At this time, the Treasurer - Tax Collector’s office has focused previous sales on all remaining properties in the City of Clearlake that have not been offered in the last 6 years, as well as all remaining properties throughout the County with an assessed value of over $5,000.00 not offered in the last 6 years.
The attached list of parcels represents the remainder which we are legally required to prioritize. These are typically properties with an assessed value under $5,000, and are concentrated in areas deemed to be “paper subdivisions.” Going forward, if our office were to maintain the goal of taking 1,000 properties to auction annually, for the next 3 - 4 years we would generally expect no bids to be received on these properties. It is believed that the majority of these properties have been offered at a tax sale at least once in the past. The estimated cost of conducting these auctions would be approximately $500,000 - $700,000 annually to the general fund, with no anticipated revenue to offset.
Even with sales including more marketable and desirable properties, in a recent sale only 22% of properties offered received a bid. Properties worth less than $5,000 constituted:
- Approximately 22.4% of parcels;
- Only 0.8% of total tax bill (taxes and direct charges);
- Only 0.25% of base tax billed;
- A current delinquency rate of 34%;
- 74% of tax defaulted inventory eligible for sale.
If your Board rejects this proposed sale, the Treasurer - Tax Collector’s office would then have the ability to attempt sales on the more recently defaulted properties. These sales have been, and would otherwise remain, on hold to address older inventory. In the meantime, the County can continue to pursue other options to address these low value parcels, including sales to agencies and a low value ordinance.
If not budgeted, fill in the blanks below only:
Estimated Cost: ________ Amount Budgeted: ________ Additional Requested: ________ Future Annual Cost: ________
Purchasing Considerations (check all that apply): ☐ Not applicable
☐ Fully Article X. <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI>- and/or Consultant Selection Policy <http://lcnet.co.lake.ca.us/Assets/Intranet/Policy/Policies+$!26+Procedures+Manual/Ch4_2021v2.pdf>-Compliant (describe process undertaken in “Executive Summary”)
☐ Section 2-38 <https://library.municode.com/ca/lake_county/codes/code_of_ordinances?nodeId=COOR_CH2AD_ARTXPU_S2-38EXCOBI> Exemption from Competitive Bidding (rationale in “Executive Summary,” attach documentation, as needed)
☐ For Technology Purchases: Vetted and Supported by the Technology Governance Committee <http://lcnet.co.lake.ca.us/Assets/Intranet/Intranet+Forms/Information+Technology/AdvPlan.pdf> (“Yes,” if checked)
☐ Other (Please describe in Executive Summary)
Consistency with Vision 2028 <http://www.lakecountyca.gov/Government/Directory/Administration/Visioning/Vision2028.htm> (check all that apply): ☐ Not applicable
☐ Well-being of Residents ☐ Public Safety ☐ Disaster Prevention, Preparedness, Recovery
☐ Economic Development ☐ Infrastructure ☐ County Workforce
☐ Community Collaboration ☐ Business Process Efficiency ☐ Clear Lake
Recommended Action: Deny proposed Chapter 7 tax sale.