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Wednesday, May 11, 2022

Flipper scores a “Win” but who actually benefits?

Charlestown state Rep wins a battle to protect the rights of out-of-state hedge funds

By Will Collette

On Tuesday, Charlestown’s peripatetic state Representative Blake “Flip” Filippi, a man of few identifiable principles or convictions, got to crow about dealing a setback to a House bill sponsored by former Charlestown assistant solicitor Bob Craven (D-North Kingstown).

Craven’s bill would have required bidders to show up in person at municipal tax sales on properties in default, ending the domination of hedge funds and out-of-state investors who bid on-line. The main supporter of Craven’s bill is Rhode Island historian laureate (yes, that’s a real title) Dr. Patrick Conley who, by his own count, has snapped up over 140 properties at tax sales.

Filippi prevented Craven’s bill from being voted on which resulted in the bill being sent back to committee. Filippi scored his win by smearing Conley and other Rhode Island tax sale aficionados as predators while casting the hedge funds - also called "vulture funds" - as a benign force that levels the playing field and prevents cronyism.

Neither Filippi nor Craven actually address the underlying issues of why people fall into arrears and lose their homes for tax delinquencies. For a family going through hard times or a senior citizen who forgets to pay, whether a local academic or a New York hedge fund takes control of their property is a distinction without a difference.

Under current law, the tax-delinquent original owner has one year to come up with the money to buy back their property. Some do. Most don’t.

Conley was the only person to testify in favor of the bill and argued that blocking out of state predators would be better for the state because those banks and hedge funds generally do nothing with the property except collect 16% interest on the tax lien – a very attractive rate of return – and let the properties fall into ruin.

Rhode Island-based buyers, Conley argued, are more likely to maintain the properties and in some cases, convert them into new affordable housing. I could not find any evidence to back up Conley’s claim in any of the extensive coverage given this issue by the Providence Journal.

Bill supporter Rep. Charlene Lima (D-Cranston) argued:

"If you get an out-of-state person or out-of-state bank, that house ends up falling apart, boarded up, delinquent with drug addicts living in there, and you try chasing down that bank from out of state ... it is impossible."

Filippi countered, without evidence, that Craven’s bill would protect cronyism and bid-rigging:

"I don't want a few people who are all friends who show up at every tax sale and they promise not to bid against each other so they all get 100%."

In my humble opinion, both sides in this debate are full of shit, posturing for their favorite special interest making claims without evidence.

However, if poor people are going to lose their homes to predators, I’d prefer them to be local predators. That way, we know where they live.

But what we really need is an examination of why tax defaults occur and what can be done to prevent them. For starters, an increase in truly affordable housing stock would help.

We know that factors like job loss, medical debt, soaring energy prices and rising food prices force many households to try to prioritize which bills they can pay and which they must postpone.

We are emerging from an economic crash caused by the COVID pandemic and now face high inflation arising from that pandemic and its effects on the global supply chain and workforce, not to mention Russia’s invasion of Ukraine and the resulting disruption of energy supplies.

It’s no wonder that people fell behind on their bills, including their property tax. Putting them out on the street or making them negotiate for their home with Dr. Patrick Conley or Wells Fargo Bank or Vulture Hedge Fund is not in the public interest.

And with all the troubles we have, I have to wonder about Flip Filippi’s priorities. Not only is he the champion of vulture hedge funds, but he’s decided to back Elon Musk 100% on his lame-brained schemes for Twitter, attacked a bill with no chance of passage that would make COVID vaccination compulsory. He also trashed a bill Teresa Tanzi sponsored at the request of local high school students to make the trilobite the state fossil.

Just check Flip’s Twitter feed to see what’s bothering him. Almost none of Flipper's gripes are remotely important to House District 36. 

Fortunately, there are two Democrats who have declared their intention to oppose Filippi in the November election – Tina Spears and Victoria Gu. Either one of them would be a huge improvement over Flip.