Lake County directs staff to draft low-value ordinance to address tax-defaulted ‘paper’ subdivisions

The Lake County Board of Supervisors on an item about delinquent property taxes directed staff to draft a low-value ordinance and to convene affected agencies to study how to handle thousands of small, tax-defaulted parcels known locally as paper subdivisions.

Treasurer-Tax Collector Patrick Sullivan told the board the county can no longer simply leave those parcels on the roll or avoid selling them: “we're not actually recovering those funds in auction,” he said, describing auctions that routinely draw no bidders and create “deficit sales” that wipe out interest, penalties and direct charges. Auditor-Controller/County Clerk Genevieve Harrington told the board her office spent months calculating the fiscal hit and that the work consumed roughly $600,000 in county resources.

Why it matters: County staff said the problem is growing and concentrated in lots with assessed values under $5,000, many created a century ago in subdivisions that were never developed. Because Lake County participates in the Teeter plan — under which the county temporarily fronts tax disbursements to other agencies — deficit sales reduce the county’s ability to recover certain collections and create exposure for fire districts and special districts that levy flat direct charges.

Key facts and figures discussed at the meeting: - Total tax-defaulted lots currently eligible for auction: 5,139 (staff estimate). - Parcels with assessed value under $5,000: roughly 22% of parcels but only about 0.8% of total direct charges and about 0.25% of base ad valorem taxes…