Lee County is experiencing a property tax shortfall due to a surplus of delinquent tax certificates – a lien for delinquent taxes on real estate – and East County Water District (ECWCD) is lending a hand for those interested in the investment opportunity.

ECWCD’s office will house a list and a map of properties with county held tax certificates that are still available for purchase. The sale of County Held Tax Certificates is intended to attract potential investors to purchase the remaining tax certificates which were not sold during the tax certificate sale.

“Individuals need to do their own research before investing, but we are happy to provide access to information for our residents who may have an interest in this opportunity but may not have access to the internet or cannot get downtown,” said Dave Lindsay, ECWCD district manager.

“The property adjacent to your home may have a delinquent tax certificate and you may not be aware.”

As of a few weeks ago, 16,283 tax certificates remain delinquent and are available for purchase in Lee County. If all of the remaining tax certificates were to sell, the taxing authorities could stand to collect at least $7,640,247.51 in back property taxes.

According to Tammy Harrison, Lee County tax collector, the interest rate potential for these certificates, if purchased – from the county, is a minimum of 5 percent – if the property owner pays the taxes before three months or 18 percent per annum of the face value. Tax certificates increase at a rate of 1.5 percent per month during a 12-month period.

When taxes and non ad valorem assessments become delinquent the tax collector is required to sell tax certificates on or before June 1, each year. On May 21, Lee County collected $88,102,539.35 in property taxes from its initial tax certificate sale. At that point in time, 43,508 properties had delinquent taxes.

Under this system, delinquent taxes are paid by an investor who earns interest on those taxes at a rate up to 18 percent per annum. Two years after the initial investment, if the tax certificate has not been redeemed (paid), the investor may apply for a tax deed based on the property described in the tax certificate.

If a tax certificate is not redeemed or a tax deed application is not made, after seven years, the tax certificate is invalid and the investor would lose his/her investment capital .

Tax deeds can be applied for on April 1, after two years have elapsed from the certificate sale; more information can be found at www.leetc.com. The application opens the auction process for that parcel.

In order to make an application for a tax deed, the investor must pay the amount of any outstanding taxes and any other certificates against the property. The opening bid at the tax deed sale will be the amount that the investor has paid to call the property to sale.

Once the auction process has started the investor has the potential to recoup their investment to or to obtain the property.

In Lehigh Acres, the delinquent tax certificate totals for some of the area’s agencies are:

ECWCD:$314,726.33

Lehigh Fire District: $406,581.28

Special Districts and other taxing authorities use these tax and assessment dollars to fund operations and maintenance. When there is a shortfall in collections, these governing authorities may turn to tax increases to offset the loss.

ECWCD budgeted use of reserve funds to balance the FY2009, while accounting for a 3.5 percent in uncollectible assessments.

According to Lindsay, the District’s uncollectible assessments are at a higher percent than what was budgeted for the fiscal year. ECWCD expects a shortfall in tax assessments of approximately $150,000. The FY2010 budget will have to account for a 6.5 percent uncollectible assessment to cover the increase in delinquent taxes. As a result, the District will have to increase assessments and/or reduce operating expenses, Lindsay said. According to ECWCD budget documents, the District accounted for 12 percent uncollectible rate in the early 2000s.

“The District is making every effort to cut costs in order to make up the loss of revenue from these delinquent tax certificates,” said Lindsay. “The purchase of tax certificates may not be right for everyone and it does take a lot of research; however, if every certificate sold it would reduce the rate we need to increase assessments,” said Lindsay.

Investors interested in purchasing County Held Tax Certificates are directed to visit www.leetc.com for more information.