What the Maine Legislature

and Gov. LePage are doing

about the problem

A last minute $8,500 property tax payment by Former State Representative Adam Mack has salvaged his ownership of the former Forster Manufacturing Plant from a tax foreclosure confrontation with Wilton authorities. This dramatic development has shed renewed attention on the zombie property phenomenon. Moreover, just earlier this month, Gov. LePage himself signed into law two bills also designed to address the issue.

In Maine – as elsewhere in the country – a familiar trait of the recent foreclosure crisis has been the emergence of “zombie properties.” These are places that both legitimate property owners and foreclosing banks have simply walked away from due to both depressed market cicrumstances and deteriorated conditions.

The former Forster plant well illustrates the dilemma even though it has been at least temporarily sidetracked from lapsing into this category. When dismantling of the facility, which was once one of Central Maine’s largest employers, began three years ago, significant quantities of asbestos were encountered. Proper environmental abatement procedures, estimated at some $250,000 to $350,000, may well cost more than the site, assessed by town officials at about $184,000, is worth. (The town ascribes no value to what’s left of the buildings.)

The property thus was at risk of entering a purgatory state that nobody seems to want, except possibly resourceful squatters. Because Mack for a time was not paying the property taxes, the municipality was at risk of acquiring title. The very entity charged with enforcing code standards then would have had to turn the mirror on itself. Wilton has thus narrowly averted this fate. It was in fact poised to head off taking title by convening a special town meeting to defer enforcement of its tax liens when Mack rushed in a few hours before with his payment.

Mack’s own efforts to hold onto the property were stymied last year by a six month stint in federal prison arising out of charges unrelated to the Forster plant project. The plant may also have been haunted by the ghost of one of its previous politically well connected owners, Bernard Goldfine. Goldfine, who owned the plant during part of the 1950s – when as Wilton Woolen Company it was one of the leading manufacturers for fabrics used by General Motors for new automobiles – also went to federal prison, in Goldfine’s case for eight months in a tax evasion conviction in 1961. (Goldfine had already achieved a high measure of national celebrity as having occasioned the downfall of Eisenhower’s chief of staff, Sherman Adams, over his indiscreet gifts to Adams in what’s popularly remembered as the Vicuna Coat Scandal.)

Many communities are not as lucky as Wilton in averting ownership of a problematic property. Instead, they wind up with the environmentally infested hot potato in their lap. Besides the pressure from state and federal environmental enforcement agents and the attendant cleanup and fine costs, the town or city in such situations can also be confronted with an additional dilemma if squatters move in. This is because if it evicts them its welfare department often has to turn around and find a place for them to live, doling out rental assistance payments in the process.

According to the prominent real estate data company, Realty Trac, Maine is one of 11 states with a high incidence of vacant foreclosure properties. This is attributable in part to the longer than usual time period it takes to complete a foreclosure in Maine. Based on its experiences, the Federal National Mortgage Association allows its attorneys in Maine well over a year from the date of a last paid installment to the foreclosure sale date, giving the state the seventh longest foreclosure time in the country, twice the time, for example that it takes in New Hampshire. (The lengthy time period along with fastidious and sometimes expensive obstacles thrown up by procedures in the state’s system has also been a deterrent to the infusion of new capital. Some private lenders have become a bit skittish about providing fresh financing to home owners when the Maine foreclosure process is so costly and protracted relative to those of other states.)

Properties left vacant for lengthy periods of time are, in any event, fertile settlement grounds for squatters. Their presence are but one of the outcomes of the drawn out foreclosure process that can be an obstacle to making the properties available for new owners.

Earlier this month, Gov. LePage recognized this dilemma by signing into law two bills aimed at slightly speeding up the foreclosure process for vacant properties. The first of these, to take effect this fall allows courts to knock 45-days off the typical foreclosure time period when in uncontested cases involving foreclosures on homes, the plaintiff, typically a bank, certifies that the property meets the criteria of abandonment.

Besides this bill another measure to address the zombie property phenomenon has also just been signed into law by Gov. LePage. This one helps cities and towns speed up the process of putting abandoned properties back on the tax rolls when delinquent property tax owners – that is people who have stopped paying their taxes – can’t or won’t catch up on them. This often occurs because unlike Adam Mack they’ve already packed their bags and left town for good. It can, in some cases, also apply when banks holding mortgages on such properties also walk away from them, on grounds that assuming ownership would bring with it too many hassles in putting the buildings in decent shape to put back on the market.

This new law – like the just enacted foreclosure reforms – is designed to accelerate what has been a slow process on the road towns or cities take to bring tax-foreclosed places back to life. The present law in effect has required an action against the former owners. The only way to avoid this is if just over 17-years have elapsed after the tax bills have gone out. Though municipalities typically won’t wait that long to try to sell such places, the fact that the former owners have so much time for an action is a specter that can slow down effective marketing of them. The new law phases out the present time period. It will phase in a shorter period, one that will amount to five years after the tax lien “matures,” – effectively just over seven years rather than the present 17 after the tax bills go out – for the taxpayers to either fish or cut bait.

Neither of these two short-cuts signed into law this past week addresses the challenges faced when the property has in effect, like Wilton’s former Forster plant, become almost radioactive like and on the brink of environmental never-never land. Such properties are fairly rare and ordinarily entail commercial rather than residential premises.

Maybe it’s because most, unlike Wilton’s, are not haunted by the spirit of Bernard Goldfine, who died in 1967.

Though I do wonder if Goldfine’s ghost may have played a role xxx one should not be too quick to dismiss the prospects of Adam Mack. He was elected in 1996 to the first of two terms to the Maine legislature at 22 and quickly became a rising star in public life. He was considered a highly eligible contender for Congress in 2000 and wound up that year waging a nearly successful bid for a Westbrook-Gorham state senate seat. He also led a series of ambitious adventures in real estate development in southern Maine. To his credit he has not totally forsaken the former Wilton Forster premises. He’s still a relatively youthful 40. Neither he nor the site of the former Forster plant which he is hoping to sustain should be counted out.

 Both for his sake and the Wilton area one hopes they won’t be.

 Paul Mills is a Farmington attorney well known for his analyses and historical understanding of public affairs in Maine. He can be reached at [email protected].

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