Sheriff Rochelle Bilal, Mayor Cherelle Parker trade blame over failure to sell tax-delinquent properties since 2021

Sheriff Rochelle Bilal is blaming Philadelphia’s Law Department for her office’s failure to perform one of its core functions: auctioning off tax-delinquent properties.

The mayor’s office, which appoints the city’s top lawyer, insists it’s the sheriff’s problem to fix.

City Council leaders don’t seem to know what’s going on ― or they simply aren’t getting involved.

The result: Millions of dollars in tax revenue is going uncollected, and blighted land can’t be auctioned off for potential redevelopment.

» READ MORE: Philly’s sheriff hasn’t held a tax sale in years. The city says it’s costing them millions.

As reported by The Inquirer last month, Bilal’s office hasn’t held a tax sale since April 2021, causing a backlog of properties in Common Pleas Court that would have otherwise been sold at auction.

Since January 2022 alone, the city has gone to court to secure orders authorizing the sale of roughly 1,330 tax-delinquent properties, records show. But the lack of auctions means that property owners have essentially been free to ignore the court notices, even as their tax bills grow.

Bilal had not responded to The Inquirer’s requests for comment on the matter since mid-December. In a statement Wednesday, the sheriff placed the blame squarely on the city’s lawyers.

She said they had long ago stopped sending copies of court decrees to her office, which are legally required documents signaling that a property has been authorized for auction.

“The attorneys assigned to represent the City in tax delinquent sales must submit documentation to the Sheriff Office’s for the sale to proceed,” she said. “To date, the last decrees we received for tax delinquent sales were March 2020 from the City Law Department.”

That was the same month that in-person tax auctions were initially suspended, due to COVID. They briefly resumed with online auctions in April 2021, only to be shut down again by a temporary court moratorium. Mortgage foreclosure sales have since resumed, as well as a leftover batch of properties whose tax debt was sold in 1997 to what is now U.S. Bank. But tax sales remain on hold.

A spokesperson for Mayor Cherelle L. Parker disagreed with Bilal’s assessment, saying only the Sheriff’s Office can “explain and justify why they’re not doing these sales.”

“This is wholly a matter for the Sheriff’s Office,” said Parker spokesperson Joe Grace. “They need to explain what they are — or aren’t — doing with regard to these tax sales.”

City Council President Kenyatta Johnson and other Council leaders declined to comment last week.

Councilmember Isaiah Thomas, who serves as majority whip, said only that his staff is seeking additional information to understand the problem.

“We are willing to work with all parties to figure this out,” Thomas said.

Council is likely to raise the issue during budget hearings in the spring.

The cause of the stalemate appears to be tied to a dispute over a contract that Bilal’s office announced in March 2021 had been awarded to a Maryland-based online auction company called Bid4Assets.

News of the six-year contract, which circumvented usual bidding procedures and was signed without the involvement of the city law department, caused an uproar in City Hall at the time, including by then-Councilmember Parker.

» READ MORE: Sheriff’s sales once again under scrutiny for alleged illegal contract with online vendor Bid4Assets

Competing online auction companies said they were shut out of the contract bidding process in Philadelphia. They also described the agreed-upon terms as unusually favorable to Bid4Assets, by industry standards. These included a buyer’s premium equivalent to 10% of the final auction price in Philadelphia, or about double what the firm charges in Berks County for similar sales.

Bid4Assets CEO Jesse Loomis has declined to comment on the company’s work in Philadelphia, or why tax sales here have been on hold for nearly three years.

Teresa Lundy, Bilal’s former campaign manager and current spokesperson in the sheriff’s office, has represented Bid4Assets in other jurisdictions. She said in a statement last month that “neither I, nor my firm, played any role in any contract at the Philadelphia Sheriff’s Office.”

Lauren Cristella, president and CEO of the good-government watchdog group Committee of Seventy, on Thursday said it is “unacceptable” that tax-delinquent properties haven’t been sold for years — and that city officials refuse to explain the root of the problem.

She called on the Sheriff’s Office and city officials to work together to resolve the dispute, quickly.

“Not only is the city missing out on potential revenue, but by not taking action, the city is encouraging delinquent property owners’ behavior and making this problem even worse,” Cristella said. “Issues like this damage the public’s trust in their government and continue to call into question the necessity of the Sheriff’s Office, especially one that is failing to perform one of its few core responsibilities.”

Parker, who began her first term last week, ran on making Philadelphia “cleaner and greener.” The action plan for her first 100 days in office prioritizes the “return of vacant and tax-delinquent properties to productive use,” through a review of the city’s Land Bank.

The ongoing hold on tax sales, many of which are vacant or abandoned properties, threatens to impede that broader goal. Revenue reports suggest it is already undoing significant progress that the city had made in the years leading up to COVID-19 pandemic, after struggling for decades to fight chronic tax delinquency.

Out-of-town investors and some landlords had long taken advantage of the broken system by buying up real estate and not paying taxes until property values rose and they could resell the land at a profit. But since the suspension of tax sales, property-tax delinquency has been on the rise again, increasing 2% to 8% every year since 2019, or around $5 million to $10 million a year.

» READ MORE: ‘Where is the money?’ Ex-homeowners seeking leftover funds from sheriff’s sales are being stonewalled.

Tax sales are typically a last-resort tactic, because owners are given the opportunity to pay the bill or enter into a payment plan before the auctions take place. In fiscal year 2019, for example, 7,036 new properties began the sheriff sale process, and 2,265 sold. Only 5% of properties sold that year were owner-occupied, according to city estimates.

Still, the sales themselves can generate tens of millions of dollars a year for the city. In 2017, the sheriff’s office reported turning over to the city about $64 million in delinquent taxes and fees from the sale of 7,026 properties.

The city is now owed roughly $170 million in back taxes, an increase of nearly $40 million since 2019, according to the city’s 2023 tax delinquency report.

“Without Sheriff Sales, the City cannot place as many delinquent accounts into payment agreements, leading to increases of delinquent accounts,” the report concluded.