Tax Foreclosure Reform and Land Banking: A New Approach for Crea>ng Strong Neighborhoods Webinar

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Curtis Chambers
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1 Tax Foreclosure Reform and Land Banking: A New Approach for Crea>ng Strong Neighborhoods Webinar September 6, 2012 Amy Hovey, Interim President/CEO

2 Our Mission Formed in 2009 from the merger of the National Vacant Property Campaign and the Genesee Institute to meet the need of a growing number of places burdened by abandoned land and property, we work to: encourage the acquisition and creative use of vacant property to revitalize the nation s cities and towns. transform the local, state and federal systems that impede effective community control and repurposing of vacant properties. further the understanding and transformation of vacant properties from blight to community asset which can be the foundation of the renewal that creates 21 st Century cities and towns.

3 What We Do Community Progress works at a local, state and national level in the following program areas: Technical assistance and capacity building Research Develop and advocate for policies Share and disseminate strategies

4 Our Goal We strive to develop the strategies and tools that enable communities to gain control of vacant lands and buildings in order to rebuild cities and towns that are Winancially and socially viable and provide a sustainable environment for the families and businesses therein.

5 Areas of Work Our areas of work stem from the belief that public control of land is essential to build a healthy future. To that end, we focus on: Code enforcement for both occupied and vacant properties Property tax systems, including tax sale of liens and properties Land banks and land banking as means of ensuring control of properties Vacant property registration ordinances Code enforcement State mortgage foreclosure system modiwications Strategies for adaptive reuse of buildings and land

6 Tax collection and enforcement Governments need taxes to operate governmental services, most local governments rely on property taxes for some/most revenue All taxable properties are required to pay their fair share of the tax burden Failure to pay on time results in some form of enforcement against the property itself, rather than typical collection actions against owners

7 Tax collection and enforcement Common elements of tax collection and foreclosure systems: Property taxes are typically a priority lien Non- payment of taxes results in loss of ownership Highest priority is on collection of the taxes owing Disposition of the property itself is secondary

8 Tax collection and enforcement No uniformity of approaches across the country, but the systems fall in to some basic categories: Tax lien Sales Tax auctions/tax deed or certi3icate sales Judicial foreclosure Some of these processes are used in combination with one another in and in a variety of different forms. Recent movement toward servicing agreements.

9 Tax collection and enforcement variables and elements to include in reform process Time period of collection and enforcement Penalties and fees that apply to delinquencies Standard of notice applying to process Judicial/non- judicial procedure Bulk process or separate enforcement actions Provision for hardship/homeowner protections Sale of collection stream, receivable, or asset? Requirements for disposition of assets (Winancial and real estate assets) Mandatory and uniform enforcement vs. optional enforcement/foreclosure by parcel

10 What are we trying to achieve? Tax collection that is efwicient and produces the necessary revenue to operate government A collection process that is fair and provides uniformity of enforcement and relief for owners experiencing Winancial hardship A system that produces productive reutilization of the foreclosed properties

11 Tax foreclosure reform Elimination of tax liens sales/tax certiwicate sales County or municipal- wide collection process Replace privatized system with DTAN/ foreclosure How it works: Municipality issues short- term bonds for back taxes Tax collector collects principal and penalty Collections generate fund to retire notes, plus public prowit On $50 million in delinquency, $3-5 million in surplus, plus equity in foreclosed property Title to and equity in foreclosed property is a public asset

12 What is a Land Bank? A land bank is a public authority or nonprowit created to efwiciently acquire, hold, manage, develop and dispose of vacant and abandoned properties.

13 Why Land Banking? Reason Antiquated and disconnected systems Decline of Legacy Cities History of population loss Obsolete housing stock Foreclosure Crisis Great Recession Increase in Speculators Response Connect tax collection/ foreclosure systems InWluence Supply and Demand InWluence Future Land Reuse Incentivize Development Reduce Blight Facilitate/Develop Intermediate Uses

14 Roles of a Land Bank Community Stakeholder / Leader Pre Development Specialist Property Owner and Manager Developer / Development Partner Land Use Planner Financier

15 Land Banks Can. Sell or convey property through locally developed policies that rewlect the communities priorities Sell through negotiated sales Eliminate the bureaucracy for public land sale Convey property for other than monetary consideration Lease properties as a interim use Maintain properties with predetermined maintenance standards Utilize Winancing tools Code enforcement and nuisance abatement

16 Center for Community Progress 421 Garland Street Suite A Flint, Michigan P: F: Connecticut Avenue Suite 1235 Washington, D.C P: F: S. Jefferson Davis Parkway Suite 231 New Orleans, LA P: x158 F:

Sustainable Communities: Taking Vacant Properties Solutions to Scale

Sustainable Communities: Taking Vacant Properties Solutions to Scale Local Initiatives Support Corporation (LISC) is dedicated to helping nonprofit community development corporations (CDCs) transform distressed