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1. 2 Adjudicated Properties Lafayette City-Parish Council Briefing January 25, 2011 Patrick S. Ottinger, City-Parish Attorney Gary McGoffin, Assistant.

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Presentation on theme: "1. 2 Adjudicated Properties Lafayette City-Parish Council Briefing January 25, 2011 Patrick S. Ottinger, City-Parish Attorney Gary McGoffin, Assistant."— Presentation transcript:

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2 2 Adjudicated Properties Lafayette City-Parish Council Briefing January 25, 2011 Patrick S. Ottinger, City-Parish Attorney Gary McGoffin, Assistant City-Parish Attorney Ryan Goudelocke, Assistant City-Parish Attorney

3 3 Road to Adjudicated Property Assessor certifies tax rolls in November Assessor certifies tax rolls in November Tax payments due in December Tax payments due in December –Sheriff collects for parish and others –LUS collects for city Due process notices mailed Due process notices mailed Sheriff’s tax sale in May Sheriff’s tax sale in May –Bidders receive “tax sale title” –Unbid property is “adjudicated”

4 4 What is Adjudicated Property? Tax delinquent property for which no bid is received at tax sale Tax delinquent property for which no bid is received at tax sale –“Tax sale title” acquired by taxing body Why no bid? Why no bid? –Unlikely prospect of redemption –Liens, interest & costs exceed property value –Title, liability and/or maintenance issues

5 5 Myth Government owns adjudicated property Government owns adjudicated property Tax sales convey ownership Tax sales convey ownershipFact Tax sales convey “tax sale title” Tax sales convey “tax sale title” –Most purchased for income stream –Subject to three year redemption period  May convert ownership after three years

6 6 What is Tax Sale Title? Rights acquired by Rights acquired by –a tax sale purchaser, or –a political subdivision May apply to all or an undivided interest May apply to all or an undivided interest Does NOT convey ownership Does NOT convey ownership

7 revisions to state law Conforms to federal & state constitutions Conforms to federal & state constitutions Clarified language Clarified language Simplified process Simplified process Reduced cost Reduced cost Provides safe harbor forms & notices Provides safe harbor forms & notices Requires local enabling ordinance Requires local enabling ordinance

8 8 Pre-2008 Post-2008 Pre-2008 Post-2008

9 9 Lafayette Taxing Authorities City of Lafayette City of Lafayette Parish of Lafayette Parish of Lafayette Lafayette Parish School Board Lafayette Parish School Board Lafayette Parish Sheriff’s Office Lafayette Parish Sheriff’s Office Lafayette Parish Bayou Vermilion District Lafayette Parish Bayou Vermilion District Lafayette Economic Development Authority Lafayette Economic Development Authority Lafayette Centre Development District Lafayette Centre Development District Lafayette Tax Assessment District Lafayette Tax Assessment District Lafayette Airport Commission Lafayette Airport Commission Teche-Vermilion Fresh Water District Teche-Vermilion Fresh Water District Lafayette Parish Library Board Lafayette Parish Library Board

10 10 Adjudicated Properties - 1,043 Duson 15 Duson 15 Broussard 20 Broussard 20 Carencro 14 Carencro 14 Lafayette717 Lafayette717 Scott 29 Scott 29 Youngsville 13 Youngsville 13 Unincorporated235 Unincorporated235 Compiled January 24, 2011

11 11 Adjudicated Property: Lafayette Parish

12 12 The Problems Adjudicated property may: Adjudicated property may: –Never be redeemed –Never yield tax revenue –Depress surrounding property values –Discourage development Adjudicated property will: Adjudicated property will: –Incur maintenance costs –Impair neighborhood aesthetics –Foster crime

13 13 Redemption Redemption Tax debtor retains title as owner Tax debtor retains title as owner –Absolute right to redeem for three years May redeem until ownership is May redeem until ownership is –Converted by tax sale purchaser –Transferred by political subdivision Redemption requires payment of all Redemption requires payment of all  Taxes and Liens  Interest and Penalties  Costs

14 14 Goals of Disposition Everyone Everyone –Return property to commerce –Reduce blight and crime –Revitalize and redevelop property Neighborhoods Neighborhoods –Enhance property values –Improve quality of life Tax Authorities Tax Authorities –Regain tax revenue streams –Eliminate maintenance costs

15 15 Disposition of Adjudicated Property By Tax Debtor By Tax Debtor –Waives three year redemption period –Arm’s length sale –Unrelated purchaser –Taxes, liens, interest, penalty & costs may be collected or waived By LCG By LCG –Only after three year redemption period –Sale  Unrelated purchaser  No minimum price required per 2010 legislation –Donation  Unrelated non-profit  All charges may be waived –Adjoining owner  One year maintenance

16 16 Sale of Adjudicated Property Purchasers apply to LCG Administrator Purchasers apply to LCG Administrator No minimum sale price required No minimum sale price required –All charges may be waived Proceeds from sale Proceeds from sale –Reimburse costs of sale first –Remit pro rata balance, if any, to all taxing authorities All public and private liens are cancelled All public and private liens are cancelled

17 17 Donation of Adjudicated Property Only non-profits may apply Only non-profits may apply –Non-profit may not be “related” to tax debtor  State ethics rules define “related” parties LCG Administrator must approve LCG Administrator must approve LCG Council must approve LCG Council must approve LCG may only waive city and parish taxes LCG may only waive city and parish taxes All private liens and consenting government liens are cancelled All private liens and consenting government liens are cancelled

18 18 Arm’s Length Sale Sale by tax debtor to new owner Sale by tax debtor to new owner –“Arm’s length” transaction  Must be to unrelated purchaser  Sales price below market Partial or complete waiver of liens Partial or complete waiver of liens –Approved by each taxing authority

19 19 Adjoining Landowner Louisiana Constitution Louisiana Constitution –Article 7, Section 14 Donation  Land owner must maintain adjacent, adjudicated property for one year  Sale price is the anticipated cost of the sale  Requires Council approval as a donation –Addressed in the enabling ordinance

20 20 Donations require a Facilitation Agreement between the taxing authorities

21 21 Facilitation Agreement 2002 Facilitation Agreement (LSA) 2002 Facilitation Agreement (LSA) –Includes every Lafayette Parish taxing body  Oversight committee (one rep each)  May waive all or part of taxes –LCG manages the process –Based on pre-2008 adjudication process  Requires revision to conform with new law Should be approved by all original parties Should be approved by all original parties

22 22 Case Study #1 “Arms length” sale “Arms length” sale –Two vacant lots –Surviving spouse unaware of ownership Total taxes: $18, Total taxes: $18, Estimated value: unknown Estimated value: unknown Owner willing to sell or donate in lieu of taxes Owner willing to sell or donate in lieu of taxes Administrator recommendation and Council approval Administrator recommendation and Council approval

23 23 Case Study #2 Adjoining property owner Adjoining property owner –Maintains for one year Occupant deceased Occupant deceased –Home unoccupied –No successions –Property tax, interest and penalty –Grass liens –Mortgage balance Property adjudicated three years prior Property adjudicated three years prior Council approval required Council approval required All public and private charges cancelled All public and private charges cancelled

24 24 LCG Administrator New law requires enabling ordinance New law requires enabling ordinance Adjudication ordinance for LCG pending Adjudication ordinance for LCG pending –Designates LCG Community Development as Administrator  Staff position  Civil Service job description –Same Administrator for Facilitation Agreement

25 25 Disposition Handbook State-law Safe Harbor forms State-law Safe Harbor forms Timelines for notice and process Timelines for notice and process Instructions to interested acquirers Instructions to interested acquirers Formalize applicant criteria Formalize applicant criteria Disposition policies Disposition policies Access through LCG web site Access through LCG web site

26 26 Safeguards Council approval of donations Council approval of donations Acquiring party cannot be delinquent on other property tax Acquiring party cannot be delinquent on other property tax Tax debtor “related party” Tax debtor “related party” –Prohibited from obtaining property –Ethics Code definition of “related party” LCG compliance verification LCG compliance verification –Disposition restrictions or conditions –Physical inspection or otherwise

27 27 Action Items LCG enabling ordinance LCG enabling ordinance Designate Administrator Designate Administrator –Dept. of Community Development  Staff position  Civil Service job description Facilitation Agreement Facilitation Agreement –Approval by all taxing authorities Post on LCG web site Post on LCG web site –Disposition Handbook –Inventory


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