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 (about $246,000 using 2022 data). - Recent auctions returned no bidders on nearly 80% of listed low-value lots. - Staff estimated roughly $1.3 million exposure to the county (Teeter-related) and about $2.6 million in amounts that would need to be recovered from other taxing agencies; direct charges to special districts were estimated at roughly $540,000. - Average cost to process a parcel through a tax sale is roughly $500–$700, plus significant staff time.

Discussion: Sullivan and Harrington traced the origins of the problem to early 20th-century “paper” subdivisions in Nice, Lucerne and parts of Clear Lake where parcels remain undeveloped, often on steep or inaccessible slopes with no roads or utilities. They said auctioning many of those small lots produces deficit sales: to attract a buyer the county sometimes reduces minimum bids and must forgo interest, penalties and third-party direct charges (for example, sewer or special district fees), leaving a shortfall.

Board members and staff discussed several response options. Sullivan asked for direction to pursue a low-value ordinance that would remove a class of very low-assessed-value parcels from the tax roll so the county stops billing those parcels. In plain terms, Sullivan explained to the public that a low-value ordinance “removes those from our rolls so that those properties no longer get a tax bill.” He and Harrington said drafting an ordinance would require additional analysis with the assessor’s office to define unsecured elements and district-by-district impacts.

Supervisors and department directors also discussed parallel approaches to get problematic parcels into entities that can manage or repurpose them. Community Development Director Mireya Turner pointed to the county’s existing paper-subdivision management plan and said options include merging lots, involuntary or voluntary mergers, rezoning some areas to open space or parks and pursuing Chapter 8 sales to transfer property to local jurisdictions or special districts. Turner cautioned most parcels are on steep slopes or lack road access, limiting how many can be merged into developable parcels.

Agency impacts and recovery: Several supervisors highlighted the likely concentration of fiscal pain on a few rural fire districts because many direct charges are flat fees rather than ad valorem shares. Harrington and Sullivan discussed possible mitigation steps, including meeting with affected taxing agencies, spacing repayments over time or recovering portions through future Teeter distributions. They emphasized the county does not expect to recover the full historical amounts and that much of the delinquency goes back decades; some delinquencies trace to the 1960s while many paper-subdivision delinquencies average 20–30 years.

Public comment: Members of the public urged action. Tom Lasik asked for an explanation of the low-value ordinance; Sullivan described the common $5,000 threshold used by many counties. Clear Lake resident Chris Jennings, who lives adjacent to paper parcels, described repeated dumping, wildfire risk, and public-safety concerns on undeveloped lots and said assembling parcels into larger holdings would be difficult without sustained county intervention.

Action/direction: The board gave staff consensus direction to proceed with drafting a low-value ordinance, to work with the assessor and affected agencies on district-level impact analysis, and to convene a broader working group to explore Chapter 8 sales, parcel consolidation options, and other remedies to get properties into “the right hands.” Officials said the ordinance will require at least two public hearings before the board. No formal motion or roll-call vote was recorded on the item at the meeting; staff characterized the outcome as board direction to return with a draft ordinance and stakeholder analysis.

What’s next: Staff said they will return with an ordinance draft and district-level analysis and will set up outreach to fire districts and other taxing agencies to discuss mitigation (including potential installments or phased recoveries). The board also signaled interest in a parallel, broader process — using the prior paper-subdivision management plan as a starting point — to identify long-term disposition options such as parks, trails, parcel mergers or Chapter 8 transfers.

Ending note: Supervisors and staff framed the low-value ordinance as an immediate, county-level tool to halt future accrual of tax-sale deficits while a broader working group develops longer-term solutions for the hundreds or thousands of undevelopable parcels that affect public safety, blight and special-district finances.