Image Credit: SUBMITTED/B.C. Assessment

The City of Penticton has no intention of repaying a vulnerable woman whose house it forced her to sell at a tax auction so it could collect $10,000 in unpaid taxes.

Following a damning report into the City of Penticton's actions over the sale, the B.C. Ombudsperson recommended the woman be compensated $140,922, equal to half the value of the equity in her property.

However, the City of Penticton disputes the woman is owed a penny saying it disagrees with the report's findings as they relate to the City.

READ MORE: City of Penticton sells vulnerable woman's home over $10K unpaid tax bill

"The City of Penticton fully recognizes the seriousness of the situation and the impact the loss of ‘Ms. Wilson’s’ home through the tax sale process had on her," City of Penticton chief administrative officer Donny van Dyk said in a media release. "This is a most unfortunate situation but... City staff were unaware that Ms. Wilson was a vulnerable person in need of support or assistance until after the conclusion of the tax sale process."

But B.C. Ombudsperson Jay Chalke dismisses the City's argument, saying it doesn't stand.

"All they needed to do was make a phone call," B.C. Ombudsperson Jay Chalke told iNFOnews.ca. "The City did not take steps to alert Interior Health that Ms. Wilson maybe someone that needed assistance and that in and of itself was a serious issue."

This phone call from the City to Interior Health, which is mandated to assist vulnerable individuals, could have resulted in an entirely different outcome, the Ombudsperson said.

City of Penticton Mayor John Vassilaki refused an interview while he figures out what to say.

"I just got that information this morning, I have to look it over and digest it and come up with what it is I'm going to say to the media," the mayor said, adding that this may take him two days.

When pushed on the matter, the mayor replied saying he had to be "very, very careful" to what he said because he had "responsibilities when it comes to the City."

The mayor added that the scathing report was just the Ombudsperson's "opinion."

The B.C. Ombudsperson released a report yesterday, Dec. 8, outlining a multitude of mistakes made by the City of Penticton when it used provincial legislation afford to municipalities to force the sale of her home to cover $10,000 in unpaid property taxes. The Ombudsperson found the process used by the City to sell the vulnerable woman's home was "inadequate" and "inaccurate" and made the entire process unfair. Her home had a value of roughly $420,000 but was sold for less than half that price through the tax sale — all because the woman lacked the capacity to understand her obligations and the City didn't bother to find out. The City's actions robbed her of $280,000 in the value of her home.

The Ombudsperson pointed out that after a property goes to auction the homeowner has one year before it’s transferred to the new owners. This gives the homeowner a final chance to sort out the unpaid taxes.

Chalke reiterated there are multiple options available to the city that doesn't force people to lose their homes, including a provincial property tax deferral available to some people.

In Penticton over the last 30 years, 152 properties have gone to a tax sale but only two other homeowners failed to sort the issue out before the property was sold.

Chalke said the fact that so few properties actually get this far in the process should have been a "big red flag" for the municipality.

"It's relatively rare that someone doesn't come forward... particularly when the property is sold for something significantly less than its assessed value because that obviously raises concerns," he said.

According to the report, the City made only one phone call to Ms. Wilson and she told them she would sort the situation out.

When she didn’t sort the situation out, the City failed to follow up with another call.

According to the report, the 60-year old woman referred by the pseudonym 'Ms. Wilson' had "personal challenges" and although she had the funds, didn't pay her taxes.

"Like many vulnerable adults, she just needed some help to take the necessary steps to resolve the tax debt and avoid the tax sale," the report states.

Ms. Wilson had lived in the home with her mother for years until her mother died in 2013. She owned the house outright and stopped paying her taxes in 2015.

The City then forced the sale of her home, selling it for $150,000 way below its market value of $420,000.

The report states the police were then called to help remove Ms. Wilson from her home once the title was transferred to the new owner.

The Ombudsperson's report, A Bid for Fairness: How $10,000 in Property Tax Debt Led to a Vulnerable Person Losing Their Home, outlines six recommendations, five of which have been accepted by the Ministry of Municipal Affairs.

The sixth recommendation was that the City of Penticton compensate Ms. Wilson.

"We endorse the position of the Ministry of Municipal Affairs in their response. We look forward to working with the Ministry and other stakeholders as they engage in consultation about the development of best practice guidelines and amendments to the tax sale legislation," van Dyk said in a media release.

The report says that the City should not have just seen the unpaid taxes as a collection effort.

"Staff should have recognized that the tax sale could leave a person without a home or financial security," the report reads. "The City should have done more to ensure that the use of this extraordinary power was scrupulously fair."

The report slams the City of Penticton in its handling of the case, criticizing its written communication which contained multiple errors, including incorrect deadlines and inaccurate references to the Local Government Act.

The report states the situation only came to light when Ms. Wilson's sister became aware of what was going on after the property had been sold.

The sister then reported the matter to the B.C. Ombudsperson.

Along with recommendations requiring plain language in correspondence sent to taxpayers, the Ombudsperson is also calling for amendments to the Local Government Act regarding the starting price at auction.

Current law in B.C. requires local governments to list the property price at auction at the amount of tax arrears plus fees. In this situation, Ms. Wilson's property went up for auction at a starting price of $10,000. It sold for $150,000, although the fair market value was $420,000. The report states the property since sold in 2020 for $498,000.

The report recommends that the starting price at auction reflects the assessed value of a property, as is the law in Alberta.

"Our report isn't suggesting that there not be a mechanism by which properties can be sold for the purpose of collecting taxes, but when that happens appropriate safeguards are built for vulnerable people," Chalke said.

The B.C. Ombudsperson said due to privacy it wouldn't say where Ms. Wilson was now living.

No one from the Ministry of Municipal Affairs was immediately available to comment on the report.

However, the ministry said in a reply to Chalke on Oct. 6 that it accepts the recommendations “in concept” and will consult widely, but could not determine the timing of the government’s legislative agenda.

“The ministry believes that the actions to be taken on the recommendations from the report will assist to further reduce the already rare occurrence of loss at tax sale of a primary residence owned by a vulnerable person,” it said in the statement to Chalke.

— With files from The Canadian Press

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