Chapter 5.30 Collections and Foreclosure Process

This Chapter establishes a process for collecting delinquent liens and foreclosing delinquent liens on properties.  The emphasis of the collection program will be to maintain good communication with property owners.  However, the City bears responsibility for recovering its costs associated with collecting delinquent liens. Incentives and penalties are established to encourage payment.  In addition, special payment plans are provided for persons having difficulties paying liens.  Foreclosure should be used as a last resort in most circumstances, to protect the interests of bondholders and taxpayers of the City, and to recover costs incurred by the City in providing services.

1. The terms used in this Chapter shall be defined as provided in this Section, unless the content requires otherwise.
2. A.  “Adjusted Prime Rate” means the interest rate as calculated by the higher of either the prime interest rate set by the City’s bank on December 31st of the previous year plus 300 basis points (3%), or twelve percent (12%) per annum.
3. B.  “Bonded lien” means a lien which has been financed under the provisions of state law, City Code or City Charter.
4. C.  “City lien docket” means the official City record maintained by the Revenue Division for the entry of fees, charges, penalties or assessments as authorized by state law, City Code or City Charter.  The fees, charges, penalties or assessments include, but are not limited to, costs related to the construction of economic or public improvements or for other improvements or purposes authorized by state law, systems development charges, costs of sidewalk repairs, costs of nuisance abatement, penalties assessed by the Code Hearings Officer and fees associated with code enforcement.
5. D.  “Collection costs” means the costs associated with the collection of liens, including but not limited to staff, mailing costs, billing and rebilling fees.
6. E.  “Delinquent lien” means a bonded lien that is unpaid more than 30 days after the installment payment due date, or an unbonded lien which has not been paid within 30 days after entry upon the city lien docket.
7. F.  “Foreclosure list” means a list of properties for foreclosure sale.  The list contains, at a minimum, a description of each lien and a description of the property on which the lien is assessed.
8. G.  “Foreclosure sale” means the legal process of selling real property, which allows the City to foreclose and to dispose of a delinquent lien through notice and sale.
9. H.  “Lien” means an entry upon the city lien docket in favor of the City of fees, charges, penalties or assessments as authorized by state law, City Code or City Charter.
10. I.  “Open lien” means a lien that has not been or cannot be financed, and that requires payment in full.
11. J.  “Redemption” means the right of the property owner or any person with an interest in the property, excluding the purchaser in a foreclosure sale, to repurchase the foreclosed property by payment of the redemption price during the redemption period.
12. K.  “Redemption period” means one year from the date of a foreclosure sale, commencing on the day after the sale and ending at 5:00 p.m. (PST) on the 365th day thereafter, unless the 365th day falls on a Saturday, Sunday or legal holiday specified in ORS 187.010 (2001), in which case the last day for redemption shall be 5:00 p.m. (PST) on the next working day.
13. L.  “Redemption price” means the sales price plus redemption interest and redemption penalties accrued during the redemption period.
14. M.  “Sales costs” means all costs, direct and indirect, associated with a foreclosure sale by the City, including but not limited to: county recording fees, title reports or other means of identifying persons with interest in the property, title insurance, service and notification, publication and advertising, posting, sale, and staff salaries, including benefits and overhead.
15. N.  “Sales price” means a sum equal to or exceeding the greater of:
    1. 1.  The amount of the lien principal plus, interest and penalties, together with all collection costs and sales costs associated with the foreclosure sale; or
    2. 2.  Seventy-five percent of the total assessed value of the real property, as determined by the assessor of the county in which the land and improvements are located.

1. A.  The provisions of this Chapter apply to delinquent liens.  This Chapter shall not apply to delinquent Sewer Safety Net liens, which are governed by Chapter 5.31.
2. B.  The City shall not be limited to the foreclosure process in this Chapter.  The City may elect to use other methods for foreclosure or sale of properties as authorized by the Charter, City Code or state law.

1. A.  The Revenue Division shall maintain the City lien docket; maintain the records related to liens; process bonding contracts; and bill and collect open and bonded liens.  As set forth elsewhere in this Chapter, the Revenue Division is also responsible for processing and approving or denying applications for the Catch-up Payment Program and the Hardship Payment Program; administering the foreclosure process; preparing foreclosure lists; and transmitting the foreclosure lists to the City Council for its review and approval.
2. B.  The City Treasurer shall administer the foreclosure sale process; withhold or withdraw property from foreclosure sale for purchase by the City; administer the redemption process; and execute deeds conveying the property sold. As provided under Section 3.08.030, the City Treasurer may delegate this authority or such other authority as may be assigned under this Chapter.
3. C.  Unless otherwise specifically directed by Council, the Division of Asset Management shall manage, maintain, rent or market for sale properties purchased by the City under this Chapter.

1. A.  The Revenue Division shall establish a collection process for delinquent liens and shall be authorized to:
   1. 1.  Establish written rules and procedures to carry out the provisions of this Chapter;
   2. 2.  Establish fees, including a billing fee and rebilling fee, to recover billing costs and the costs of collecting delinquent lien amounts; and
   3. 3.  In addition to the penalties and interest otherwise provided in this Section, establish increases in penalty amounts and the interest rate to encourage early payment of delinquent liens.
2. B.  The Revenue Division shall impose a penalty each month until the delinquent lien is brought current, paid in full or the property owner signs a payment plan.  The penalty will be calculated as follows:
   1. 1.  Open delinquent liens shall be charged a penalty equal to one-quarter of one percent (.0025) of the total outstanding principal balance.
   2. 2.  Bonded delinquent liens shall be charged a penalty equal to five percent (5.00%) calculated on the total amount of the installment that is delinquent.
3. C.  The Revenue Division shall add interest to delinquent liens based on the following methods:
   1. 1.  For a delinquent open lien, interest shall be assessed at the adjusted prime rate, calculated on the unpaid balance from the assessment date.  The annual interest rate shall not be less than 12% for an open lien, except in the Hardship Payment Program. Lien payments made during the 30-day period following the assessment date shall not be charged this interest.
   2. 2.  For a delinquent bonded lien, interest shall be calculated daily based on the amount of the unpaid principal balance and the interest rate set by the installment payment contract.
4. D.  As liens become delinquent, the Revenue Division shall provide notice of the delinquency to the property owner.  Notice(s) shall be sent by registered or certified mail.  Notice(s) shall identify the property, the amount owing (principal, interest, penalties and collection costs) and estimate the sales costs that will be charged to the account.  In addition, the notices shall identify the type of the delinquent lien account and the fact that the property will be placed on the foreclosure list unless the property owner elects to pay under the Catch-up Payment Program or brings the account current.
5. E.  The Revenue Division may waive interest, penalties and collection costs on delinquent liens under the following conditions:
   1. 1.  A delay in receiving payment or installment payment contract which is caused by a documented oversight, omission or error by City staff;
   2. 2.  A one-time failure in making a payment by the property owner which is caused by a documented financial emergency; or
   3. 3.  The sale or transfer of a property that is subject to a delinquent lien to a non-profit organization or government program satisfying the goals of an expressed public purpose.

1. A.  The Revenue Division may evaluate individual delinquent open liens to develop recommendations on revising the payment amount of the lien and the payment terms.  The Revenue Division’s recommendation shall be based upon the factors set forth in Subsection 5.30.060 D.  Delinquent bonded liens may not be reviewed or adjusted.
2. B.  The Collections Committee shall be comprised of four members, consisting of a representative from two members of the City Council, one representative from the Bureau of Development Services and one representative from the Office of Management and Finance who does not work in the Revenue Division.  These four offices shall each designate their representative to the Committee.
3. C.  The Committee shall meet from time to time, as necessary, to review and consider the Revenue Division’s recommendations.  The Collections Committee shall make a written determination accepting, revising or rejecting the Revenue Division’s recommendations on adjusting the delinquent open lien payment amount and terms.  The Collections Committee’s written determination shall be based upon the factors listed in Subsection 5.30.060 D.  The Revenue Division shall notify the property owner in writing of the Collections Committee’s determination.
4. D.  The factors to be considered when adjusting the payment amount and terms of delinquent open liens include, but are not limited to, the following:
   1. 1.  Whether the property owner has committed any prior City Code violation, or has other delinquent liens, regardless of whether any administrative, civil, or criminal proceeding occurred;
   2. 2.  The history of the property owner in taking all feasible steps or procedures necessary or appropriate to correct the violation or resolve any delinquencies;
   3. 3.  The property owner’s financial condition;
   4. 4.  The gravity and magnitude of the violation;
   5. 5.  Whether the violation was repeated or continuous;
   6. 6.  Whether the violation was due to unavoidable accident, other conditions or circumstances beyond the property owner’s reasonable control, negligence, or an intentional act of the property owner;
   7. 7.  The opportunity and degree of difficulty to correct the violation or resolve any delinquencies;
   8. 8.  The economic or financial benefit accrued or likely to accrue to the property owner as a result of the violation;
   9. 9.  The property owner’s cooperativeness and efforts to correct the violation for which the lien was assessed;
   10. 10.  The costs to the City of investigation, enforcement and correction or attempted correction of the violation;
   11. 11.  The total costs to the City for principal, penalty, billing, interest and collection charges; and
   12. 12.  Any other relevant factors.
5. E.  If the property owner accepts the Collections Committee’s determination on adjusting the delinquent open lien amount and payment terms, the owner shall enter into a written agreement prepared by the Revenue Division that contains the adjusted delinquent open lien amount and payment terms.
6. F.  If the property owner rejects the Collection Committee’s determination, the owner may appeal the determination on adjusting the delinquent open lien amount and payment terms to the Code Hearings Officer as provided for in Chapter 22.10.  However, if the owner has previously appealed the lien or the related code violations to the Code Hearings Officer, there shall be no right of appeal.

1. A.  Under the Catch-up Payment Program, a property owner is allowed to bring a delinquent bonded lien current or pay in full by the end of an established period by increasing the monthly amount, or to pay a delinquent open lien in full by the end of an established period.
2. B.  Qualifications.  Any property owner with a delinquent lien may participate in the Catch-up Payment Program.
3. C.  Administration.
   1. 1.  For a delinquent bonded lien, the minimum monthly payment must be equal to the scheduled regular payment, plus an amount necessary to repay the arrears by the end of the individual payment plan.  At the conclusion of an individual payment plan, the Revenue Division shall bill any property owner who has a bonded lien and has complied with the individual payment plan, but has not paid the account in full, according to the Revenue Division’s standard billing procedures.  The maximum period under this Program shall not exceed five years.
   2. 2.  For a delinquent open lien, the minimum monthly payment must be equal to an amount necessary to pay the account in full by the end of the term of the individual payment plan.  The maximum payment period under this Program shall not exceed five years.  Interest shall be calculated at the prime interest rate set by the City's bank on December 31st of the previous year plus 300 basis points (3%) per annum.  The recalculated interest rate shall be applied to each individual payment plan on the first billing date following December 31st of each year.
   3. 3.  A payment for the specified amount in the Catch-up Payment Plan Agreement (CPPA) must be received in the Revenue Division with the signed CPPA.
4. D.  If a property owner fails to make any monthly payment before the completion of an individual catch-up plan, the Revenue Division may place the property on the foreclosure list in accordance with the priorities in Section 5.30.100. 

1. A.  Under the Hardship Payment Program, a property owner may pay only interest and billing charges for a period not to exceed 12 months.
2. B.  Qualifications.  A property owner may qualify for the Hardship Payment Program if they meet all of the following criteria:
   1. 1.  The property must be a single-family residence, occupied by the owner;
   2. 2.  The property must be subject to a delinquent lien; and
   3. 3.  The property owner is temporarily unable to make monthly payments due to catastrophic financial circumstances.  These circumstances may include illness, loss of income or a temporary disability.
3. C.  Administration.
   1. 1.  The Revenue Division shall administer the Hardship Payment Program.
   2. 2.  Applicants must complete a written request form and provide sufficient written documentation to support a determination that the applicant is experiencing catastrophic financial circumstances.  Documentation may consist of records such as a lay-off-notice, proof of unemployment or other evidence of loss of income.
   3. 3.  The Revenue Division shall review and approve or deny applications for individual payment plans under the Hardship Payment Program.
   4. 4.  If the Revenue Division determines that a property owner is qualified to participate in the Program, the Revenue Division shall allow the qualified property owner to make a minimum monthly payment equal to the monthly interest accruing to the delinquent lien, plus the monthly billing charge.  Interest shall be calculated at the prime interest rate set by the City's bank on December 31st of the previous year plus 200 base points (2%) per annum.  The recalculated interest rate shall be applied to each individual payment plan on the first billing date following December 31st of each year.
   5. 5.  The Revenue Division shall periodically review each individual payment plan to verify the qualifications of the participant.
   6. 6.  At the conclusion of an individual payment plan, the Revenue Division shall bill any property owner who has complied with the individual payment plan, but has not paid the account in full, according to the Revenue Division’s standard billing procedures.
   7. 7.  A payment for the specified amount in the Hardship Payment Plan Agreement (HPPA) must be received in the Revenue Division with the signed HPPA.
4. D.  If the property owner fails to make a monthly payment before the completion of the plan, the Revenue Division may place the property on the foreclosure list, unless the Revenue Division finds there is an additional or continuing emergency.  In that event the Revenue Division may authorize a new plan or reinstate the existing plan.

1. If the Revenue Division declares a bonded lien payment contract void prior to the property being placed on the foreclosure list, the property owner and the Revenue Division may negotiate new installment payment arrangements.  If the Revenue Division offers a new installment payment contract, the terms and conditions must protect the City’s financial condition and assure the repayment of associated municipal bonds.  The Revenue Division shall set the interest rate on the negotiated contract at a rate greater than or equal to the interest rate of the original installment payment contract.  The Revenue Division shall prepare a form of agreement for negotiated installment payment contracts.

1. A.  The Revenue Division shall be responsible for preparing the proposed foreclosure list. No property shall be placed on the proposed foreclosure list unless:
   1. 1.  It is an open lien which is at least 60 days past the due date; or
   2. 2.  It is a bonded lien which is at least one year past the installment due date.
   3. 3.  The City has provided the property owner or their predecessor in interest at least two written delinquency notices within a three‑month period prior to the sale.
2. B.  The Revenue Division shall prioritize which delinquent liens to include on the proposed foreclosure list.  Priority shall be given to properties that have the potential to significantly reduce the delinquency rate or help to solve a City public health, safety or welfare objective. Priority may also be given based on factors including, but not limited to, the total amount of delinquency; property owners with multiple delinquencies for one or more properties; or multiple nuisance abatement action by the City.
3. C.  The Revenue Division may determine the number of properties to be placed on the proposed foreclosure list based on current City staffing resources, complexity of accounts, and time and resources necessary to complete timely processing of foreclosing the delinquent liens.
4. D.  The Revenue Division shall:
   1. 1.  Submit the proposed foreclosure list to the Council for Council action;
   2. 2.  Submit a report to the Council that identifies the properties recommended for purchase by the City from the proposed foreclosure list.  The report shall identify the property and the source of the funds to be used to purchase the property; and
   3. 3.  Determine whether any properties on the proposed foreclosure list are also delinquent in the payment of property taxes. The Revenue Division shall identify those properties which are likely to be foreclosed upon by the County prior to the City’s foreclosure sale and shall make a recommendation to the Council regarding whether any of these properties should be purchased and removed from the foreclosure list.

1. A.  The Council shall decide which properties to include on the foreclosure list and which properties should be purchased by the City.  The Council shall approve the foreclosure list by ordinance.  The ordinance shall state the provisions for redemption of properties by the prior owners, as provided by state law or City ordinance. After the foreclosure list is approved by Council, the only payment option is to make payment in full.
2. B.  The foreclosure list shall be transmitted to the City Treasurer by the Council Clerk.

1. Upon Council approval, the City may purchase any property on the foreclosure list for the amount of the lien principal plus interest and penalties, and may do so before, during, or after the sale subject to the following conditions:
2. A.  Money for purchase has been transferred to the proper City fund for payment of the delinquent lien amount;
3. B.  In the case of property purchased before the sale, any person having an interest in the property is given an opportunity to pay the lien in full including collection and sales costs, and thereby remove the property from the foreclosure list as provided by Section 5.30.150; and
4. C.  Any person having an interest in the property may redeem the property as provided by Section 5.30.210.

1. A.  The City Treasurer shall record a notice of foreclosure sale for each property listed on the foreclosure list in the County records in which the property is located after ordering a foreclosure report and before giving notice as required by Section 5.30.140.  The recorded notice shall contain the ordinance number approving the foreclosure list; the address and legal description of the property; the time, date and place of the sale; the types and amounts of liens; and, that the property will be sold unless the account is paid in full including all interest, penalties, collection costs and sales costs to date.  The recorded notice shall also state a contact name, address and phone number for obtaining additional information from the City.
2. B.  Any property which is an asset of a bankruptcy estate shall either be removed from the sale or the City Attorney shall be requested to first seek relief from stay in the Bankruptcy Court. 

1. As provided below, the City Treasurer shall provide notice to all persons known to have a recorded interest in the properties on the foreclosure list.
2. A.  Individual Notice.
   1. 1.  The City Treasurer shall mail a notice of foreclosure sale to all persons known to have a recorded interest in the property and to all persons having recorded a request for copy of notice of sale.  Notice shall be sent at least 60 days prior to the sale by registered or certified mail.
   2. 2.  The mailed notice shall state that a foreclosure sale will be held and it shall specify the date, time and place.  It shall contain the following information: the names of the owners of the property; the legal description of the property; the street address; the amount of the delinquent lien stating both the principal and interest due as well as any penalties and collection costs; the type of the delinquent account; and, the name of the City Treasurer and contact information.  The notice shall also state that there shall be an additional charge for sales costs to date.
3. B.  Newspaper Notice.
   1. 1.  The City Treasurer shall have printed in a daily or weekly newspaper of general circulation a notice of foreclosure sale once a week for four successive weeks.
   2. 2.  The notice shall contain the information required in Subsection 5.30.140 A.2.
   3. 3.  A copy of the first of the four published newspaper notices shall be sent to the owner and to the occupant by registered or certified mail.
4. C.  Posted Notice.
   1. 1.  The City Treasurer shall have notice of foreclosure sale posted on the property at least once, no less than four weeks before the sale.
   2. 2.  The posted notice shall contain the information required in Subsection 5.30.140 A.2.
5. D.  Other notice.  Notice shall be given to the Internal Revenue Service by registered or certified mail, at least 25 days prior to the sale if a federal tax lien was recorded more than 30 days of the scheduled date of the foreclosure sale.

1. At any time prior to the foreclosure sale, a person with a recorded interest in the property may remove the property from the foreclosure list by paying in full the amount of the delinquent lien with penalties, interest, collection costs and sales costs incurred to date.  If requested, notice that the property has been removed from the foreclosure sale shall be recorded in the County records in which the property is located.

1. A bidder purchases the property “as is.”  The City will not provide an opportunity for on-site inspection of the land or buildings.

1. A.  The City Treasurer shall prepare rules governing the conduct of the foreclosure sale.  The rules shall be available at least 60 days prior to the foreclosure sale.
2. B.  Each property shall be sold separately for its respective sales price.
3. C.  Only bids in the amount of the sales price for a property are acceptable. If more than one bid equals or exceeds the sales price, the real property must be sold to the highest bidder.
4. D.  If the sum received for the sale of the property under this Section exceeds the lien principal amount, plus interest, penalties and the cost of conducting the sale, the City Treasurer shall apply the proceeds of the sale as follows:
   1. 1.  To the costs of conducting the sale.
   2. 2.  To the unpaid lien principal plus interest and penalties.
   3. 3.  To any persons with recorded interest in the property, in order of their priority.
   4. 4.  To the debtor or the debtor’s heirs or assigns.
5. E.  Property which is not sold may again be offered for sale.  The steps in Sections 5.30.130 through 5.30.240 shall be followed.

1. A.  The City shall not bear any responsibility or liability for damage or waste to the property or to any structures or fixtures during the redemption period.  The purchaser shall assume all risk of such damage or waste.
2. B.  Purchaser may make improvements to or perform maintenance on the property during the redemption period. If the purchaser incurs costs for maintaining or improving the property during the redemption period and if the property is redeemed, the City Treasurer may reimburse all or part of the redemption penalty paid by the person redeeming the property to the purchaser.
3. C.  In the event the property becomes a public nuisance, the City may enforce any applicable nuisance abatement regulations.  Nuisance abatement may result in additional assessments against the property, which may become the liability of the purchaser.
4. D.  The property may also become subject to special assessments.

1. A.  After a foreclosure sale, the City Treasurer shall promptly deliver a certificate of sale to the purchaser.  The certificate of sale embodies the right to own the property at the end of the redemption period.  The holder of a certificate of sale holds the certificate of sale subject to the rights of all persons having an interest in the property to redeem it, the right of the City to place additional liens on the property and the right of another unit of government to foreclose upon the property.  All liability remains with the persons having an interest in the property until the City issues a deed at the end of the redemption period.
2. B.  The certificate of sale shall include the following information: a description of the delinquent account for which the property was sold; a description of the property; a statement of the amount for which it was sold; the redemption interest rate and the amount of the redemption penalty; the name of the purchaser; and, a statement that the property is being sold subject to the right of redemption within one year from the date of the certificate of sale.
3. C.  The City Treasurer shall send to the property owner and all persons known to have a recorded interest in the property a notice of the sale by registered or certified mail, within 10 business days after the sale. The notice shall contain the following information: the name of the purchaser; the right of redemption; the date the redemption period expires; the redemption price; and, the basis for calculating interest and penalties during the redemption period.
4. D.  It shall be the responsibility of the purchaser to maintain a current address on file with the Revenue Division.   

1. A.  The City Treasurer shall return to the Revenue Division the foreclosure list with all collections and sales noted on it within three business days after the sale.
2. B.  The Revenue Division shall enter the collections and foreclosure sales in the City lien docket.  Thereafter, no transfer or assignment of any certificate of sale is valid unless such transfer or assignment is reported to the Revenue Division and recorded in the City lien docket.  

1. A.  Only persons having a recorded interest in the property, or their legal representative, may redeem the property within the redemption period.  Purchasers have no redemption rights.
2. B.  Property which has been sold at a foreclosure sale is not eligible for installment payments or a payment plan.  Property may be redeemed only by payment in full.  Redemption shall be subject to the payment to the City Treasurer of the redemption price.  The only acceptable form of payment shall be United States legal currency or cashier’s check.
3. C.  The City Treasurer shall issue a receipt to the person redeeming the property and shall report the redemption to the Revenue Division.  Redemption discharges the property from the effect of the sale.
4. D.  If redemption is made by a lien creditor, the amount paid for redemption shall thereafter be deemed a part of the judgment, decree, mortgage or tax lien and shall bear like interest and may be enforced and collected as a part thereof.
5. E.  Upon receipt of the redemption price, the City Treasurer shall issue a check for the sales price amount paid by the holder of the certificate of sale as shown on the lien docket plus any accrued redemption interest and all or a portion of the redemption penalty.  The check shall be delivered to the address provided to the City by the purchaser or any transferee or assignee.
6. F.  The interest charged during the redemption period shall be set by ordinance.  The redemption interest rate shall be set at a level which attracts bidders.  The penalty charged during the redemption period shall also be set by ordinance.  The redemption penalty shall be set at a rate to encourage payment by delinquent property owners.
7. G.  If a property is redeemed at any time during the redemption period, the redemption period automatically terminates. 

1. A.  Upon expiration of the redemption period, the City Treasurer shall execute a deed conveying the foreclosed property.  The deed conveys to the grantee the legal and equitable title in fee simple excepting only the liens of the City or of other persons or entities which were not included in the foreclosure sale or other liens as provided by state law.  The deed, however, shall not guarantee free or clear title.
2. B.  The deed shall contain the following information: a description of the property; the date of sale; a statement of the amount of the delinquent account for which the property was sold; that the account was unpaid at the time of sale; and, that no redemption has been made.
3. C.  The grantee shall be entitled to immediate possession upon delivery of the deed.

1. Property subject to delinquent property taxes may be sold by the County at a sheriff’s sale.  In the event the property is sold, the purchaser may lose all interest in the property.  Any purchaser of property having delinquent property taxes may elect to pay the property taxes.  There shall be no reimbursement from the City in the event of redemption by the property owner.

1. A.  Any property purchased by the City from the foreclosure list may be sold as directed by the Council in the manner provided by Charter, Code or State law.  Proceeds from the sale shall be used to reimburse the fund from which the property was purchased, any liens paid or other expenses incurred.  Any remaining proceeds shall be placed in the assessment collection fund unless otherwise designated by Council.
2. B.  In selling property as described in Subsection 5.30.240 A., except in situations where the purchaser agrees to accept a quit claim deed, the City Treasurer shall purchase title insurance as a precondition of sale and shall pay the cost of the policy.