Suffolk bill could cut county revenue from auctioned homes

A new bill passed by the Suffolk County Legislature would require the county to notify former owners of homes auctioned for unpaid taxes that they are eligible to recoup profits from the sales.

The legislation, which if signed by County Executive Steve Bellone could cut into a lucrative revenue stream for the county, would require the Suffolk Department of Economic Development and Planning to make “reasonable efforts” to notify former owners that they could collect surpluses from the sale of their tax delinquent homes.

A rarely used 2004 county law allows former homeowners to get proceeds from sales after delinquent taxes, debts and county expenses are paid. The law doesn’t require Suffolk to notify owners they can recoup the money, and officials say few property owners have applied to get the surplus.

Bellone is reviewing the bill, passed unanimously Dec. 19, and awaiting responses from a public hearing scheduled for Tuesday, county spokeswoman Marykate Guilfoyle said.

Suffolk County, which is facing a $163 million budget deficit, has received millions of dollars from selling tax delinquent properties, including homes and vacant land.

In 2016, the county auctioned off 184 parcels for $16.6 million, county spokesman Jason Elan said. In 2017, it auctioned off 115 parcels for $11.9 million.

The county had no estimate of how much revenue it could have to give up by returning surpluses to former homeowners.

Elan said it was “extremely rare” for money to be returned to homeowners, but could not provide an exact figure. Legis. DuWayne Gregory (D-Copiague), the bill’s sponsor, said he believed the county has never given proceeds to a homeowner.

Gregory, the legislature’s presiding officer, said in many cases, people had paid off their homes only to lose them for nonpayment of taxes after an illness or family tragedy.

“Regardless of our financial situation, we shouldn’t be relying on this money,” Gregory said of the county. “We shouldn’t be taking advantage of people like that. That’s not what government is for.”

Director of real estate Jason Smagin, at committee meetings this month, had raised concerns about the bill and requested an evaluation of the county’s costs before the bill was passed.

The 2004 law sought to eliminate “the gross unfairness that occurs when a residential owner-occupied property is sold by the County for a large sum with small sums being due for unpaid taxes,” according to the resolution.

To qualify for the sale proceeds, the prior owner had to have lived at the address for at least five years.

The legislation passed this month would require the county to send a notice in writing to the prior owner that he or she can apply for payment of surplus sale proceeds.

Gregory said the requirement would only apply to homes auctioned off in the future.

By David M. Schwartz

dschwar1@newsday.comschwartznewsNY

David Schwartz covers environmental issues. A native Long Islander, he's worked at Newsday since 2013.