• News
  • Celebrities
  • Finance
  • Crypto
  • Travel
  • Entertainment
  • Health
  • Others

Unpaid Property Taxes A Boon For Florio

Image has not been found. URL: /wp-content/uploads/2008/09/florio.jpgFor former New Jersey Gov. James Florio, vacant lots and foreclosed properties turned into a lucrative business venture that have made him the kingpin of collecting unpaid property tax liens for struggling cities and towns.

But now, with the mortgage crisis hitting communities hard with blight and abandoned homes, Florio and others who have profited from tax liens are coming under fire.

The business of collecting unpaid tax liens, once an obscure government function that few paid much attention to, is gaining a higher profile.

The Washington Independent last week wrote about Dan Kildee, the treasurer of Genesee County, Mich. and chairman of its Flint land bank. Kildee travels around the country pushing the notion that cities and towns can create land banks to buy and manage foreclosed properties and empty lots. He extolls the idea that local governments - not private investors or firms like the one Florio founded — should take control of tax foreclosures and delinquent tax liens, so they or their land banks can benefit from the money brought in.

Debt-150x150_4709.jpg
Debt-150x150_4709.jpg

Illustration by: Matt Mahurin

There’s a lot of stake — despite the bureaucratic-sounding nature of this debate. Beginning in the 1990s, cities in dire financial straits began selling off their delinquent liens to private firms and investors, in return for a quick cash infusion. Florio, a one-term Democratic governor who left office in 1994, jumped into the business in 2000, founding Xspand, a Morristown, N.J., based firm that buys, finances and collects real estate tax liens. Xspand grew quickly into a $200-million firm, signing up cities, towns and school districts from New York to Los Angeles. It established itself as an industry leader and captured Wall Street’s attention as it packaged and sold liens to investors. Bear Stearns, a global investment bank, bought the firm in April 2006.

Kildee calls the firms “government-supported speculators” who take advantage of desperate cities.

While Florio and private firms like his prospered, not all cities fared as well with these transactions. Sometimes, city properties were so deteriorated the firms couldn’t collect on the liens, so houses or lots sat in limbo, creating even more civic blight. Or towns discounted the liens too much, and the firms cashed in on market-rate properties that could have turned profits for the cities. In other cases, investors demanded high prices for properties that cities needed for redevelopment. Kildee calls the firms “government-supported speculators” who take advantage of desperate cities. With more foreclosures on the way, he says that controlling tax liens will become a more contentious issue.

Florio – fairly or not, since he sold his company – has become the public face of the private sector’s role in tax liens, due to his high-profile success. This week, he talked with The Washington Independent about the tax lien business, saying he still believes that private firms are helping communities — not taking advantage of them — by doing a better job collecting the unpaid liens. Florio discounts any charges that he cashed in on his government service and contacts to build the business, and he remains unapologetic about his accomplishments.

Neither he nor Bear Stearns disclosed Xspand’s sale price at the time, and Florio still won’t discuss how much he made from the sale. “We were very successful,” he said yesterday, “and it worked out well for everybody. I sold it because it was a great offer.” He said with a laugh, “It’s helping to get my mortgage paid.”

Florio emphasized that he’s now just an informal consultant to his old firm, Still, he follows the industry and doesn’t think critics of the private sector have much merit.

“Towns have a hard enough time as it is collecting taxes,” Florio said. “Tax offices close at 4 p.m. generally. They’re not able to do a lot more. But if you sell to the private sector you get an advance on the money. And there are fairly sophisticated new ways of providing for securitization. Plus there are ways nonprofits and cities can make sure they control some of the revenue and some of the liens. It doesn’t have to be either-or.”

Alan Mallach, a visiting scholar at the Federal Reserve in Philadelphia and a senior fellow at the National Housing Institute, isn’t as convinced. Cities, on the whole, he said, come up short on these tax lien arrangements.

“The city gets a quick financial hit,” Mallach said, “but it’s often less than it ought to be. The cities are not getting these great deals. The financial infusion into the city’s treasury is fast, but the problems take a while to show up.”

“Basically, when people want my opinion, I say, “Don’t bundle them, don’t sell them in bulk, don’t discount them significantly.

Mallach, who has known Florio for some time, said he believes that Florio is genuine when he says he believes private firms can help towns in trouble. Florio often says he assists towns in improving their tax collections. But Mallach still doesn’t agree with his approach.

“I think he feels he’s doing God’s work,” Mallach said, “and that he’s doing something that’s basically in the interest of the communities. I think if you do this, you can rationalize you’re doing a service for the community. But, ultimately, I don’t think it’s positive. It’s sort of like being an enabler. Some of these cities are desperate.”

Others are more critical.

As this story from the Asbury Park Press explains, Florio’s firm had no clients until the New Jersey assembly passed a bill in 2001 allowing private companies to collect taxes for distressed municipalities. Florio had lobbied two administrations for the bill. It ultimately was sponsored by Joseph Roberts, D-Camden, a former congressional aide to Florio.

That’s how it works in Trenton. You leave government and cash in on your service. It’s like a revolving door.

After the bill passed, Xspand won a no-bid contract worth potentially up to $2 million from the city of Camden, one of the poorest in the nation, to collect $103 million in back taxes. Xspand collected more than it anticipated, and Camden officials noted last year that the firm’s contract was eventually worth nearly $5 million.

Florio calls the Camden experience an example of his firm’s overwhelming success. But Assemblyman Richard Merkt, R-Morris, doesn’t see it that way. He opposed the bill that opened the door to Florio’s firm — and he still believes it was wrong.

“It felt, smelled and sounded like an inside job,” Merkt said, “and that’s what it was. That’s how it works in Trenton. You leave government and cash in on your service. It’s like a revolving door.”

Referring to Florio’s business accomplishments, Merkt said, “I think the whole thing is obscene.”

Florio, however, discounts any suggestion he cashed in. “I started a business and I was successful,” he said. “I don’t know how anyone can say I cashed in. I wasn’t the mayor of one of these towns.”

There’s a bit of irony to Florio being involved in another controversy over taxes.

Florio, 70, lost a re-election battle for the governorship to Republican Christine Todd Whitman after a huge tax hike he approved in office sparked a grass-roots revolt. In 2000, he lost an expensive Senate primary race to investment banker Jon Corzine. Currently, Florio works as a lawyer and lobbyist and sits on the board of directors of Trump Entertainment Resorts.

His executive biography at Hoovers.com, a business information service, describes Florio as having more than 30 years of public experience, and adds, “Governor Florio understands the budget pressures that governments face and created Xspand to generate revenue from delinquent property tax liens.”

As far as using his government background to procure business while at Xspand, Florio counters with this:

“Nobody forces anybody to invest in the liens. It’s a contract. Local municipalities agree to the terms, and set the terms. Nobody’s forcing anybody to do this.”

Pressed further on whether he felt he had profited from both his public service and from cities in dire straights, Florio said, “I don’t respond to criticism.”

There is one thing he and Kildee might agree on: With more foreclosures coming, cities and towns are going to face more problems. But to Florio, it represents an opportunity for the private sector, and he predicts the tax lien collection business will only grow.

“It’s going to get more complicated,” Florio said. “With more economic difficulties will come more tax liens, and less revenues. And cities will be looking for ways to maximize those revenues any way they can.”

Discussion & Comments (0)

    Recent Articles

    • Things You Should Know about North America

      Things You Should Know about North America

      Get to know more about North America.

    • Eurovision 2010 Paula Seling Unpredictable Contest

      Eurovision 2010 Paula Seling Unpredictable Contest

      Paula Seling's experience on the Eurovision stage led her to declare that "Eurovision is an unpredictable contest". Which may explain the success of the young Lena from Germany, about whom the predictions before the event did not offer much chances for victory.

    • VIPRow.me - The Best Sports Streaming Website Today

      VIPRow.me - The Best Sports Streaming Website Today

      Have you ever contemplated creating a user-friendly site dedicated to sports-related free live streaming channels?

    • Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      Learn How To Download, Install, And Use The Xnxubd 2022 Frame App

      XNXUBD 2022 Nvidia users are able to watch thousands of videos and other contents online. XNXUBD 2022 Nvidia New is a piece of software that enables people to watch videos online without having to pay for memberships. On a graphics card, the XNXubd also provides some of the best gaming and virtual reality experiences.

    • Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      Xvideostudio Video Editor Apk Free Download For Pc Full Version In 2022

      A new edition of the Video Editor Apk for xVideostudio.Video Studio has all the latest features, including support for multiple video download formats in HD, FHD, and even 4K resolutions.

    • 9 Best Lotion For Masturbation - Popular Choice For 2022

      9 Best Lotion For Masturbation - Popular Choice For 2022

      Masturbation is a common activity for men and women. It's a natural and risk-free way to explore your body, experience pleasure, and release sexual tension.

    • Reasons Why You Need To Stop Watching Movies From Sflix

      Reasons Why You Need To Stop Watching Movies From Sflix

      Without having to sign up or pay anything, you can watch movies online for free with SFlix. It has more than 10,000 movies and television shows.

    • Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Mom And Dad's Family History & Wife, Explained

      Coi Leray Collins (born May 11, 1997) is a rapper from the United States. Leray started publishing songs to SoundCloud in 2014, and in 2018 she released her breakthrough track "Huddy" as well as her first mixtape, Everythingcoz.

    • Listen And Download Music On MyFreeMP3 For Free

      Listen And Download Music On MyFreeMP3 For Free

      Are you in a bind and looking for a place to obtain free mp3 songs? Never again will you need to bother, since this article has everything necessary to obtain your solution. Download free music from MyfreeMP3.com, one of the world's most popular websites.