Orange County Tax Collector Scott Randolph today announced that new rules put in place by his office have led to the most successful, fair and competitive tax certificate auction in Orange County in six years. Randolph has served as Tax Collector since 2013.

During the auction, held on May 31, the Orange County Tax Collector’s Office sold 97.9% of available tax certificates, recuperating 99.9% of the value of all available certificates – a total of $37,707,421 that will support Orange County schools and local government services.

Each year in Orange County, tens of millions of dollars in property taxes go unpaid after the annual March 31 deadline. Rather than borrowing or drastically cutting services to fill the revenue gap, Florida law requires county tax collectors to auction off the unpaid taxes on each property to investors willing to pay the delinquent bills in exchange for a certificate that is eventually paid back by the property owner with interest. Most investors receive a 5% return on their investment.

Historically, tax certificate auctions were held in person with an auctioneer – sometimes the tax collector him-or-herself – auctioning off the properties to local bidders. But in recent years, as auctions moved online and the economic downturn made certificate auctions more attractive to large investors, hedge funds began to saturate the market in Orange County and across Florida.

“The result was a less competitive, less fair and a less successful auction,” Orange County Tax Collector Scott Randolph said.

In recent years, large investors began using new automation technologies to obtain tens of thousands of Employer Identification Numbers (EINs) from the IRS to set up shell business entities. That allowed a single company to register tens of thousands of individual sub-accounts and submit bids for each available tax certificate on the Tax Collector’s auction website. With an influx of bids, most auctions began ending in ties, which are ultimately decided by random drawing.

“The more bids you have, the more likely you are to win the random drawing. And that’s how the hedge funds edged out the little guy,” Randolph said.

In 2013, Randolph’s office banned this practice, known as group bidding, to help level the playing field for small investors. Although some of the hedge funds sued, Leon County Circuit Court Judge Terry Lewis issued a ruling in May 2017 saying that counties could require large firms to submit individual affidavits for each sub-account.

In response to the judge’s ruling, Tax Collector Randolph created a new policy requiring all bidders registering under an EIN for the 2017 auction to provide a Florida Secretary of State registration number or sign an affidavit stating that the bidder is in fact a real company and not colluding in their bids. As a result, the Tax Collector’s May 31 auction, which sold 97.9% of all available certificates, was the most competitive and successful auction in recent years.

“As the Tax Collector, I have a responsibility to ensure that we recoup every single dollar to support local schools, public safety and services in Orange County,” Randolph said. “At the same time, it’s important that the process is fair and free from price-fixing collusion.”