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Foreclosed, but not forsaken.

June 6, 2012

On a quiet, tree-lined street in Melrose’s family-friendly Lincoln School neighborhood, the disheveled appearance of the Cape Cod-style home was demoralizing. The roof leaked. The paint was peeling. The side stairs were in disrepair and falling off the neglected house.

Neighbors had long complained – even pleaded with the homeowner – to make repairs. The police became frequent visitors, trying to quell concerns about alleged drug deals and other illicit activity at the house. In June 2008, the city stepped in and took possession of the Pleasant Street property after a lengthy legal battle that followed a 2005 foreclosure. The homeowner, an absentee landlord, had not paid real estate taxes in more than a decade.The house was sold at public auction in August, snapped up by siblings able to look past the home’s troubles and see the value of the land.

Lisa Doucette Bynum of Methuen and her brother John Doucette, a Melrose contractor, paid $153,000 for the property, then razed the house and had a three-bedroom, 2.5-bath Colonial built in its place.

“We got into this because we wanted to get our feet wet in the real estate business and saw the property as an amazing opportunity,” said Bynum, who grew up with Doucette in Melrose Highlands. “But after talking to the neighbors and seeing how much it means to them to have this property once again reflect their values, we are just really happy to have had a part in revitalizing it.”

As cash-strapped cities and towns face steep cuts in state aid and dwindling local revenues, several communities north of Boston are heeding the advice of the state Department of Revenue and becoming more aggressive in their efforts to collect the taxes they are owed.

Some, like Melrose, are hiring private law firms to walk them through the tax title process.

“This is a crisis beyond proportion,” said Melrose Mayor Robert J. Dolan. As president of the Massachusetts Mayors’ Association, he has been fielding calls from other municipal leaders grappling with a growing number of tax scofflaws as more homeowners fall victim to an ailing economy. “In some cities, property owners are saying, ‘I owe $100,000 more [in mortgages] than my house is worth, so I’m locking the door and walking away.’ “

For years, Gerry D’Ambrosio, a Boston attorney, has been helping communities collect the back taxes they are owed.

In recent months, his list of municipal clients has swelled as local leaders seek to plug budget gaps. To date, five area communities – Chelsea, Everett, Newbury, Revere, and Saugus – have retained his services.

“In many communities, the tax title process is being used to take a blighted area and make it more attractive,” said D’Ambrosio, noting that Revere has had great success with the process.

After seizing a waterfront parcel in land court, city officials turned the property over to a developer who transformed it into the Surfside Lofts, an upscale condominium complex that was completed in 2007.

“Abandoned properties are a negative force within neighborhoods,” said Revere Mayor Thomas G. Ambrosino. “We try to aggressively deal with them. Our goal is to get the properties cleaned up and back into the hands of a vested owner as quickly as possible.

“It’s about quality of life, not just taxes.”

Last year, Revere filed 133 cases in land court, prompting many property owners to write checks. The result: More than $1 million was added to the city’s coffers, money that will help Revere survive the emergency cuts that Governor Deval Patrick made to local aid in January. This year, Revere is expected to file about 140 cases, D’Ambrosio said.

The uptick can be attributed to the housing and economic crisis that has caused stock portfolios and real estate prices to plummet, D’Ambrosio added, noting that the swooning economy is prompting many communities to adopt a hard line when it comes to collecting unpaid taxes.

Among them: Everett and Newbury. D’Ambrosio began working with Everett in November, and over the past five months has helped the city recoup $515,000 in back taxes and returned 70 properties to the active tax rolls. Newbury also retained D’Ambrosio last fall and has since collected $330,000. Today, the town is in the process of foreclosing on eight properties owned by seven tax delinquents who collectively owe the town about $200,000. The longest delinquency dates to 1990.

“Prior to 2006, nothing had been done in probably 20 years to collect back taxes,” said Charles E. Kostro, who was named Newbury’s first town administrator in February after serving as the community’s first finance director, a position he had held since September 2006.

As a town leader, he has made collecting back taxes a top priority, and is optimistic that the homeowners who now face foreclosure will return their tax title accounts to good standing before the town is forced to seize them.

In Melrose, recently hailed by Boston Magazine as one of the 10 Massachusetts communities most likely to “take off first” when the housing market recovers, Bynum and Doucette invested $410,000 to buy the lot and build the new house. Today, it is on the market for $499,000.

A second Melrose property, sold at the same auction, will soon be torn down to make way for new construction, Dolan said.

He noted that the city made $250,000 on the two properties, cash that allows the city to weather the governor’s emergency budget cuts without issuing pink slips.

“These are the first two properties to be taken by the city in 20 years,” said Dolan. “In both cases, there were absolutely no options left. The owners would not work with us. At the end of the day, cities and towns don’t want to be in the real estate business, but when there is no effort by a property owner to enter into a payment arrangement, we are left with little choice.”

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