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Schenectady may seek to settle lien dispute with former partner before going to trial

Tuesday, January 21, 2014
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— Schenectady and American Tax Funding have been asked to attend a settlement conference before their federal case can proceed, city officials said.

The federal court system often requires litigants to try to settle before they go to trial.

ATF and the city have been at odds over 214 properties, mostly abandoned houses on which the owners have not paid taxes in many years. ATF bought the tax liens for those properties, giving it the right to foreclose and sell the houses if the owners didn’t pay.

But in recent years, the city stopped selling its liens to ATF because ATF lowered its payments. That left the city holding the more-recent liens for the same properties, giving it the right to foreclose as well.

The city tried to foreclose in 2012 and ATF sued to stop the foreclosures because it held an interest in those properties.

Now, Mayor Gary McCarthy is hoping ATF will negotiate.

Tonight, the City Council will meet behind closed doors to discuss its settlement strategy.

“We’ll update people, take their temperature,” McCarthy said. “Hopefully we will be able to resolve this in an amicable manner.”

He added that details would be kept secret until ATF agreed to a settlement.

“I’m not going to publicly negotiate a deal,” he said.

The issue might come down to dollars. City officials say ATF has long offered to sell the liens back to the city, but for a price the city could not afford.

At the same time, public comments from City Council members ranged from agreeing that some payment would be fair to a refusal to pay anything at all.

Now, council members must decide what the city can offer during the settlement conference.

Councilwoman Leesa Perazzo said paying ATF something would be fair.

“I think we’re trying to do the right thing,” she said, “It’s tough. We have no money, and round and round we go.”

Councilman Vince Riggi said the council had agreed to a payment before going ahead with the foreclosures, but ATF wouldn’t accept it.

“We tried to do this before we went to court,” he said.

He, too, indicated he would be willing to negotiate again. But he acknowledged that the city can’t afford much.

“We’ll have to see what’s reasonable,” he said.

ATF did not return a call seeking comment for this story. But in court documents, the company indicated that it too is in financial trouble.

The company wrote that letting the city foreclose on the 214 properties would “have a catastrophic effect” on ATF, “resulting in the complete destruction of ATF’s business.”

ATF also complained that the city was pressuring those owners to pay their current tax bills to avoid foreclosure.

The city sent out letters warning owners that they would lose their property if they did not pay up at once. ATF said some owners had been following payment plans with ATF, apparently while not paying current taxes to the city, and gave up the ATF payment plans to pay the city.

“By now attempting to foreclose out ATF’s interests in the sold tax liens, the city is interfering with ATF’s payment plans, in that many taxpayers are being forced to pay the city on the subsequent tax liens rather than ATF on its tax liens,” court documents said.

 
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