Each year, during the annual property tax sales that Madison and St. Clair counties conduct, investors buy the right to pay residents' unpaid property taxes. The investors make money by charging a penalty to the property owners. If the property owner doesn't pay the taxes and the penalty, the investor can take the property.
In most counties, the tax bills are sold in a reverse auction, where the investor offering to take the lowest penalty rate is the winning bidder. However, witnesses say Fred Bathon - who stepped down as Madison County treasurer in December - conducted the tax sale like a bid opening, where investors were not allowed to undercut each other or "bid down" the penalty percentage.
All the bidders would shout an opening bid; the one who shouted the lowest bid first was the winner.
In the last three years of Bathon's tenure, the average penalty rate was 17 percent, 18 percent and 18 percent. At the auction held in March, under new Treasurer Frank Miles, the average fell to 9 percent.
At Madison County's auction in 2008, where 2,568 tax bills were sold, the winning bid was 18 percent on all but eight pieces of property.
Story published 10/03/10.