|abandoned properties: overview » introduction » reduce barriers|
|Click on the links below to learn more about reducing barriers to the reuse of abandoned properties:|
Photo credit: Donald Stasenka, courtesy of BRIDGE Housing
|Develop a shared database to track abandonment|
A database that combines property-related information from tax collectors, housing and code enforcement officials, and other government departments can allow communities to get started on restoring abandoned and at-risk properties to productive use.
Reform the tax foreclosure process
Foreclosing on unpaid property taxes and other governmental liens is often a protracted process that involves multiple jurisdictions and still may not yield a clear, marketable title to the property. Legislative reforms can substantially shorten the time frame for tax foreclosures and result in clear titles.
Implement conveyance and receivership programs that expedite redevelopment
Innovative programs, such as vacant property receivership (essentially the court
|appointment of a property manager to stabilize and rehabilitate a disinvested property) and voluntary conveyance (the gift or sale of blighted property to a municipality in exchange for the waiver of municipal liens), can increase communities' options for quickly rehabilitating abandoned properties without completing a lengthy tax foreclosure. Some forms of eminent domain also may be useful, although somewhat controversial.|
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Reduce barriers to the reuse of abandoned properties
State and local governments can foster the reuse of abandoned properties by reducing lengthy tax foreclosure processes and allowing properties to leave foreclosure with a clear, marketable title.
Other pages in this section:
Manage the acquisition and disposition of abandoned properties as part of a comprehensive strategy
A coordinating body, such as a land bank, can be a useful tool for prioritizing communities' goals while effectively managing property acquisition and disposition.
Use abandoned, vacant, and tax-delinquent properties to create affordable homes
Although disinvested properties are often used for community economic development, using at least some properties to create affordable homes may benefit the community both now and in the long run.
Click here to view other resources on facilitating the reuse of abandoned, vacant, and tax-delinquent properties.
|Solutions in Action|
|Philadelphia, Pennsylvania's Building Uniformity in Land Development (BUILD) database provides one-stop access to data from multiple city departments on parcels' tax delinquency, code violations, vacancy, and sales information. BUILD was developed to facilitate the redevelopment of vacant properties by allowing city staff to track parcels without having to navigate through multiple different agencies' systems. Users can search by address for specific parcels, or they can search an entire area (such as a ZIP code or council district). Funding for BUILD came from tax-exempt bonds.|
Providence, Rhode Island, has been at the forefront of abandoned property data initiatives. The Providence Plan (ProvPlan) provides online data on property and neighborhood conditions for the city of Providence and elsewhere in Rhode Island. Through the site's Providence Property Mapper, users can search for property information by address or create interactive maps related to abandonment, foreclosure, zoning, and land use categories. The Property Mapper (and its predecessor, the Providence Land Information System) have been helpful for neighborhood planning and revitalization, city agency operations, decision-making by community development corporations (CDCs), and the identification and reform of undesirable aspects of the city's distressed property processes.
For more information on neighborhood information systems such as the one in Providence, see the paper "Data and Decisions: Parcel-Level Information Changing the Way Business Gets Done" by G. Thomas Kingsley and Kathryn L.S. Pettit. Background on the former Providence Land Information System may also be useful for those developing indicators of abandonment.
| To allow municipalities to quickly and strategically reuse abandoned properties, state legislation may be necessary to establish a new tax foreclosure process that serves local redevelopment needs. Effective reforms of the tax foreclosure process increase the speed of completing a tax foreclosure while also ensuring that all properties can be transferred with a clear title. In most states, the current tax foreclosure process involves first selling the tax lien to a third-party and then the third-party invoking the right to foreclose. Alan Mallach calls this process a "two-step proceeding" and notes that it can take five or more years to complete depending on the time periods required at each stage of the process. |
Changing to a one-step process of simply selling the title to the tax-delinquent property can result in a tax foreclosure timeline of 18 months to three years. (While discharging the lien, an alternative approach to speeding up the timeline, can also quickly resolve tax delinquencies, it may not serve the community's interests. Tax-delinquent properties may be in a state of serious disrepair after having been neglected for years; discharging the lien without an assurance that the property will be restored may allow neighborhood blight and disinvestment to continue.)
Photo credit: The Olson Company
|Solutions in Action|
|Michigan reformed its tax foreclosure process in 1999. The new law, Public Act 123 of 1999, replaced tax lien sales with judicial foreclosures, reduced the timeline to three years from six, and works in combination with land banking to facilitate the reuse of abandoned properties. The judicial process has stronger due process and notification requirements that allow properties to be conveyed with a clear title. The new law also permits counties to choose not to proceed with the foreclosure if the property owner is experiencing serious financial hardship. The full text [PDF] of the act is available on the Michigan Legislature's website. A history of the bill and amendments is available here.|
In 1995, amendments to the Georgia Code reduced the time required to complete tax foreclosures and enacted a judicial process. The former two-step process of tax lien sales followed by foreclosure on the liens took from three to five years and allowed owners twelve months to redeem the property. The new process can take from 18 months to two years and provides only two months for owners to redeem the property after tax sale. The stronger notice requirements of the judicial process also allow tax foreclosed properties to have insurable titles. Click here to leave this site and view the text of the reform bill. The new law can also be found through the online version of the Georgia Code (browse for Title 48, Chapter 4, Article 5). Similar to the Michigan example above, Georgia's tax foreclosure process also works in conjunction with land banking.
|Voluntary conveyance allows owners to transfer unwanted properties to the municipality without facing a tax foreclosure. Properties that can be conveyed with clear title can be either given or sold to the municipality, beginning the process of stabilizing or redeveloping the property. (For properties with title clearance problems, it may be more appropriate to foreclose on municipal liens using a strong judicial process that can void other claims and liens.) The impact of voluntary conveyance will be limited by the need for a clear title. Properties of which owners want to divest themselves often have title clearance problems such as outstanding mortgage debt or other non-municipal liens. |
Despite this limitation, voluntary conveyance can play a role in the local toolkit for reusing disinvested properties. Voluntary conveyance can save municipalities the expense of tax foreclosure, stimulate community reinvestment and reduce blight, and benefit property owners whose municipal liens may be discharged and who may be able to deduct the loss incurred in the property transfer on their taxes. Voluntary conveyance is part of the toolkit in cities like Trenton, New Jersey, and Covington, Kentucky. Since property owners must be aware of the program and opt to participate, the city of Covington conducted outreach including contacting property owners directly and placing advertisements in the local newspaper.
Another approach, known as receivership or possession, facilitates redevelopment by allowing repairs to begin before the transfer of title. In communities that allow receivership for vacant properties, a governmental or non-profit entity can petition the court to appoint a responsible party, known as a receiver or entity in possession, to rehabilitate a vacant property on behalf of the owner.
The receiver obtains a lien on the property for any rehabilitation expenses and other costs incurred. The lien can also be used to borrow money for rehabilitation expenses. The owner can regain possession of the property by paying the receiver for costs associated with any repair work, or the receiver can foreclose on the lien. Vacant property receivership can be a useful tool for bringing
|Solutions in Action|
|Baltimore, Maryland's Code of Public Local Laws allows the use of "quick-take" eminent domain to acquire abandoned properties. The city can obtain possession of an abandoned property in 30 days if the court determines that "the public interest requires the City to have immediate possession." After the city has taken possession, the issue of compensation to the property owner is resolved by the court. If a property had municipal liens and other charges in excess of the property's value, the owner may receive no compensation and would instead owe the difference to the city. |
The city used quick-take eminent domain, among other abandoned property redevelopment strategies, as part of its Project 5000 initiative. The initiative's goal was to acquire and dispose of 5,000 abandoned properties; according to the city, the initiative led to the acquisition of more than 6,100 properties.
After a 2007 Maryland Court of Appeals ruling, Baltimore may be less likely to seek possession of properties using quick-take. The court found that the expedited version of eminent domain had been used too broadly by the city in assembling properties which could also have been acquired using the standard eminent domain procedure.
According to the opinion, "the City must demonstrate the reason or reasons why it is necessary for it to have immediate possession and immediate title to a particular property via the exercise of a quick-take condemnation." Click here [PDF] to leave this site and view the opinion.
|Solutions in Action|
|In 2004, New Jersey authorized "orders of possession" (another term for vacant property receivership) in the Abandoned Property Rehabilitation Act. If neither the property owner nor other lien holders submit a realistic plan to quickly rehabilitate the property, the court can appoint an entity in possession to expedite rehabilitation. Repairs can be funded through loans or state grants, and the value of any loan becomes a lien on the property. If the owner does not regain possession of the property, the court can order the sale of the property at fair market value with the proceeds going toward the various liens on the property and providing a development fee to the entity in possession; any remaining proceeds go to the owner. The purchaser of a rehabilitated property can obtain it with a clear, marketable title. Click here to leave this site and learn more about tools for restoring abandoned properties in New Jersey.|
The Building Code for Baltimore, Maryland allows the use of receivership if the owner of a vacant property has not complied with rehabilitation orders. The court can appoint a receiver to either rehabilitate the property or sell it to an entity that has the demonstrated ability to complete the necessary repairs in a timely manner. If a receiver is appointed to sell a property, the proceeds go toward the costs of sale and then toward any liens. A receiver that rehabilitates the property has the right to manage and rent out the property for up to two years after rehabilitation; the rent can be used to cover operating expenses and repay the costs of rehabilitation.
|Constraints on Eminent Domain|
Eminent domain is the power of the government to take private property for public use in exchange for the fair market value of the property. Public use projects have traditionally included roads, schools, stadiums, parks and redevelopment to address dangerous living conditions.
In 2005, the Supreme Court ruled that the City of New London, Connecticut could use eminent domain to take the property of Susette Kelo as part of a private economic development effort [Kelo v. City of New London, 545 U.S. 469 (2005)]. The decision was an expansion of the use of the power, stating that the economic benefits to the community expected from the development counted as a public use.
In the wake of the decision, 43 states passed laws protecting property owners from eminent domain for private economic development, and the federal government barred the use of federal funds for seizing property for private economic development projects. The practice remains controversial.