Tax Foreclosed Property Presented by Jesus Chapa, Director Housing and Economic Development April 10, 2012

Presentation Overview Update Regarding Sale of Tax-Foreclosed Property Request for Council Direction on Future Sales 2

= Tax Foreclosed Property 9

How does the City receive tax foreclosed properties? Each month Tarrant County holds a sale of properties foreclosed for non-payment of taxes. Properties located in Fort Worth which do not receive a bid are “struck off” to the City. The City holds the properties as trustee for all taxing entities must market and sell the properties. The sales proceeds (minus fees and lien releases) are divided amongst the various entities that were a party to the lawsuit. 3

How Does the City Sell Tax Foreclosed Properties? Direct Sale – Strategic Areas: An interested buyer must approach the City with a request to purchase the property. Must show how the property will be developed and funding New development must comply with zoning Allows the City to control the type of development that occurs in the strategic areas Sealed Bid Sale – Non Strategic Areas: Properties are added to bid sale once staff has verified the following: Zoning complies with Comprehensive Plan If not in compliance, work with Planning and Development to re-zone 4

Inventory Reduction 2010 – Over 1000 tax foreclosed properties Summer 2010 – March 2012 sold 523 properties for almost $3.4 million. City has received an estimated $1,420,000 Over $550,000 in city fees and lien release payments Over $870,000 in taxes $500 for mowing – Goes to Parks $600 for Board up or Demo– if this was done– goes to Code If funds remaining from sales proceeds– HED gets $500– to cover filing deeds and lien releases -- does not go into our budget– goes into General Fund Revenue- 5

Current Inventory Status 7-15 properties a month are “struck off” to the City 645 properties in the inventory as of March 2012. Of these, 266 are available for sealed bid sale. The remaining 379 are in strategic areas and must be sold via direct sale. Sealed bid sales are held every other month to reduce the inventory, but these sales do not address the 379 properties in strategic areas. 6

Tax Foreclosed Properties 7

Issues Related with a Large Inventory Lost tax revenues Ongoing mowing and maintenance costs Resources not available to fully manage which leads to: Illegal dumping Illicit uses Deterioration of properties Loss of opportunity for development 8

Breakout of Strategic Area 379 Properties in Strategic Area: 241 vacant residential lots 62 improved residential lots 43 vacant commercial lots 31 improved commercial lots 2 duplexes Source: TAD 9

CD #2 = Strategic Area Boundary = Tax Foreclosed Property 11

CD #3 = Strategic Area Boundary = Tax Foreclosed Property 12 NOTE: CD 3 has two strategic areas. There are no tax foreclosed properties in either area. 12

CD #4 = Strategic Area Boundary = Tax Foreclosed Property 13

CD #5 = Strategic Area Boundary = Tax Foreclosed Property 14

CD #6 = Strategic Area Boundary = Tax Foreclosed Property 15

CD #7 = Strategic Area Boundary = Tax Foreclosed Property 16

CD #8 = Strategic Area Boundary = Tax Foreclosed Property 17

CD #9 = Strategic Area Boundary = Tax Foreclosed Property 18

Strategic Area Properties Non Strategic Area Properties Detailed Inventory CD Strategic Area Properties Non Strategic Area Properties # of Properties TAD Value 2 51 $2,061,644 45 $1,336,960 3 $0 5 $327,832 4 10 $362,301 $157,512 169 $2,583,187 61 $2,181,578 6 $112,659 $78,060 7 93 $1,436,480 8 $1,583,773 52 $762,160 113 $4,642,761 9 $80,450 28 $567,160 TOTAL 379 $7,398,881 266 $10,875,636 19

Strategic Area Properties Non Strategic Area Properties Time In Inventory Years In Inventory Strategic Area Properties Non Strategic Area Properties # of Properties TAD Value 12+ 83 $905,577 46 $1,283,808 7-12 113 $1,774,440 53 $3,163,258 4-6 91 $1,843,190 36 $2,541,018 3 39 $1,800,648 13 $1,061,811 2 23 $715,292 34 $713,564 1 or less 30 $1,436,480 84 $2,112,177 TOTAL 379 $7,398,881 266 $10,875,636 20

Time In Inventory Average Non Strategic: 5 years, 8 months Strategic: 21

Expenses to Manage Police Department Fire Department calls to properties to address complaints Fire Department calls to properties to address fires Parks & Community Services Department mowing Code Compliance Department board –up Housing and Economic Development management 22

Parks & Community Services Mowing of Tax Foreclosed Properties 2010: Total: $768,900.20 Properties – 1170 Mowing Cycle – 35 days Cost – $73.02 9 mows per year 2011: Total: $590,804.82 Properties – 899 23

Code Compliance Department Board-Up of Tax Foreclosed Properties 2010: Total: $10,015 # of Board-Ups: 14 Avg. Cost per board-up: $715.36 2011: Total: $38,044 # of Board-Ups: 34 Avg. Cost per board-up: $1,118.94 2012*: Total: $19,718 # of Board-Ups: 10 Avg. Cost per board-up: $1,971.80 *From October 2011- March 2012 24

Code Compliance Department Demolition of Tax Foreclosed Properties 2010: Total: $529,991 # of Demos: 13 Avg. Cost per Demo: $40,768 2011: Total: $180,894 # of Demos: 49 Avg. Cost per Demo: $3,692 2012*: Total: $34,051 # of Demos: 6 Avg. Cost per Demo: $5,675 *From October 2011- March 2012 25

Code Compliance Department Clean-Up of Tax Foreclosed Properties 2010: Total: $16,203 # of Clean-ups: 3 Avg. Cost per Clean-up: $5,401 2011: Total: $37,104 # of Clean-ups: 8 Avg. Cost per Clean-up: $4,638 2012*: Total: $3,208 # of Clean-ups: 1 Avg. Cost per Clean-up: $3,208 *From October 2011 - March 2012 26

Options to Reduce Inventory Eliminate strategic areas – sell all tax foreclosed properties through bid sales Reduce the number and/or size of strategic areas Keep current procedures, however, adopt policy that properties can only be kept for a specific time period (for example 2 yrs.) before being placed on a bid sale. No change in current procedures 27

Next Steps Meet with City Council members individually to discuss: potential of reducing the size of strategic areas potential of reducing the number of strategic areas Potential for setting a time limit on properties whereby they become eligible for bid sales Present to City Council, as part of the budget process, any recommended changes to the current process 28

Questions/Discussion? 29