Bidding changes expected soon: Prenzler vows to begin automated tax sales system

News-DemocratJanuary 14, 2011 

EDWARDSVILLE - Kurt Prenzler won election as Madison County's next treasurer by vowing to remove conflicts of interest in county tax sales - conflicts that have sparked separate probes by the U.S. attorney for Southern Illinois and the Illinois attorney general.

Prenzler, who takes office next month, plans to make good on his promise by replacing the old system of verbal bidding on late taxes with an electronic system in which bidders remain anonymous and computers - not humans - determine the winning bids.

"The advantage is it removes any possible conflict of interest," Prenzler said of automated bidding, which he hopes to implement by the next county tax auction that is set for late February.

Automated bidding is "much better than an open outcry system," Prenzler said. "Because it's very difficult to determine, when you have people shouting bids, which one shouted first."

The investigations by the U.S. attorney and Illinois attorney general's office began in response to a series of News-Democrat stories published in late September.

The stories analyzed the county tax auctions from 2005-2009 under former Treasurer Fred Bathon, a Democrat. He retired in December and has declined requests for comment.

The newspaper's investigation showed that in Madison County during Bathon's tenure, the penalty rate was predominantly 18 percent, the highest allowed under state law. Bathon accepted political donations exceeding $140,000 from the investors - or more than half of all tax buyer donations given statewide during this period.

Prenzler, a Republican, won the Nov. 2 treasurer's race by running on a platform calling for the reform of the county's tax sale system.

Prenzler won out over incumbent Frank Miles, a Democrat, who also ran on a platform calling for reform of the tax sale system.

At least 41 of Illinois' 102 counties use automated bidding to sell delinquent taxes to investors. All costs for setting up an automated bidding a system are paid for with fees borne by the tax buyers.

Under the most popular system, the one sold by Joseph E. Meyer & Associates, of Edwardsville, tax buyers pay $50 apiece to use laptop computers loaded with special auction software, plus a $3 fee for every property whose taxes the tax buyers successfully bid on.

Even so, St. Clair County Treasurer Charles Suarez said he has no plans to replace the verbal bidding system in his county with an automated system.

"At this point, we're satisfied with the way the sale goes," Suarez said. "I don't see any particular advantage to that. Like I say, we're very happy with the way our sale goes."

In Madison County, the U.S. attorney and Illinois attorney general probes are focusing on the penalty rates that investors were allowed to charge delinquent taxpayers.

The penalty rates are determined at the tax sale, which is conducted annually by the county treasurer and, in most counties, is like a reverse auction.

Problem is, witnesses said Bathon prevented true reverse auctions from occurring, refusing to take bids under 18 percent.

Miles was appointed treasurer by the Democratic-controlled County Board in January, after Bathon had quit. Miles promoted a series of changes to the tax sale system, including the use of video-taping equipment.

But like Bathon, Miles continued to take political donations from tax buyers and he continued to rely on the verbal bidding system.

Prenzler has refused to accept campaign funds from tax buyers.

Story published 11/22/10. Contact reporter Mike Fitzgerald at mfitzgerald@bnd.com or 239-2533.

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