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Adjudicated Adjudicated PropertiesPropertiesLafayette City-Parish Lafayette City-Parish

Council BriefingCouncil Briefing

January 25, 2011January 25, 2011

Patrick S. Ottinger, City-Parish AttorneyPatrick S. Ottinger, City-Parish Attorney

Gary McGoffin, Assistant City-Parish AttorneyGary McGoffin, Assistant City-Parish Attorney

Ryan Goudelocke, Assistant City-Parish AttorneyRyan Goudelocke, Assistant City-Parish Attorney

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Road to Adjudicated Road to Adjudicated PropertyProperty

Assessor certifies tax rolls in November Assessor certifies tax rolls in November Tax payments due in DecemberTax payments due in December

– Sheriff collects for parish and othersSheriff collects for parish and others– LUS collects for cityLUS collects for city

Due process notices mailedDue process notices mailed Sheriff’s tax sale in MaySheriff’s tax sale in May

– Bidders receive “tax sale title”Bidders receive “tax sale title”– Unbid property is “adjudicated”Unbid property is “adjudicated”

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What is Adjudicated What is Adjudicated Property?Property?

Tax delinquent property for which no Tax delinquent property for which no bid is received at tax salebid is received at tax sale– ““Tax sale title” acquired by taxing bodyTax sale title” acquired by taxing body

Why no bid?Why no bid?– Unlikely prospect of redemptionUnlikely prospect of redemption– Liens, interest & costs exceed property Liens, interest & costs exceed property

valuevalue– Title, liability and/or maintenance issuesTitle, liability and/or maintenance issues

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MythMyth

Government owns adjudicated Government owns adjudicated propertyproperty

Tax sales convey ownershipTax sales convey ownership

FactFact Tax sales convey “tax sale title”Tax sales convey “tax sale title”

– Most purchased for income stream Most purchased for income stream – Subject to three year redemption periodSubject to three year redemption period

May convert ownership after three yearsMay convert ownership after three years

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What is Tax Sale Title?What is Tax Sale Title?

Rights acquired by Rights acquired by – a tax sale purchaser, ora tax sale purchaser, or– a political subdivisiona political subdivision

May apply to all or an undivided May apply to all or an undivided interestinterest

Does NOT convey ownershipDoes NOT convey ownership

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2008 revisions to state law2008 revisions to state law

Conforms to federal & state Conforms to federal & state constitutionsconstitutions

Clarified languageClarified language Simplified processSimplified process Reduced costReduced cost Provides safe harbor forms & noticesProvides safe harbor forms & notices

Requires local enabling ordinanceRequires local enabling ordinance

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

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Lafayette Taxing AuthoritiesLafayette Taxing Authorities

City of LafayetteCity of Lafayette Parish of LafayetteParish of Lafayette Lafayette Parish Lafayette Parish

School BoardSchool Board Lafayette Parish Lafayette Parish

Sheriff’s OfficeSheriff’s Office Lafayette Parish Bayou Lafayette Parish Bayou

Vermilion DistrictVermilion District Lafayette Economic Lafayette Economic

Development Development AuthorityAuthority

Lafayette Centre Lafayette Centre Development Development DistrictDistrict

Lafayette Tax Lafayette Tax Assessment DistrictAssessment District

Lafayette Airport Lafayette Airport CommissionCommission

Teche-Vermilion Teche-Vermilion Fresh Water DistrictFresh Water District

Lafayette Parish Lafayette Parish Library BoardLibrary Board

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Adjudicated Properties - Adjudicated Properties - 1,0431,043

DusonDuson 15 15 BroussardBroussard 20 20 CarencroCarencro 14 14 LafayetteLafayette 717717 ScottScott 29 29 YoungsvilleYoungsville 13 13 UnincorporatedUnincorporated 235235

Compiled January 24, 2011

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Adjudicated Property:Adjudicated Property:Lafayette ParishLafayette Parish

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The ProblemsThe Problems

Adjudicated property may:Adjudicated property may:– Never be redeemedNever be redeemed– Never yield tax revenueNever yield tax revenue– Depress surrounding property valuesDepress surrounding property values– Discourage developmentDiscourage development

Adjudicated property will:Adjudicated property will:– Incur maintenance costsIncur maintenance costs– Impair neighborhood aestheticsImpair neighborhood aesthetics– Foster crimeFoster crime

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RedemptionRedemption

Tax debtor retains title as ownerTax debtor retains title as owner– Absolute right to redeem for three yearsAbsolute right to redeem for three years

May redeem until ownership isMay redeem until ownership is– Converted by tax sale purchaser Converted by tax sale purchaser – Transferred by political subdivisionTransferred by political subdivision

Redemption requires payment of all Redemption requires payment of all Taxes and LiensTaxes and Liens Interest and PenaltiesInterest and Penalties CostsCosts

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Goals of DispositionGoals of Disposition

Everyone Everyone – Return property to commerceReturn property to commerce– Reduce blight and crimeReduce blight and crime– Revitalize and redevelop propertyRevitalize and redevelop property

Neighborhoods Neighborhoods – Enhance property values Enhance property values – Improve quality of lifeImprove quality of life

Tax Authorities Tax Authorities – Regain tax revenue streamsRegain tax revenue streams– Eliminate maintenance costs Eliminate maintenance costs

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Disposition of Adjudicated Disposition of Adjudicated PropertyProperty

By Tax DebtorBy Tax Debtor– Waives three year Waives three year

redemption periodredemption period

– Arm’s length saleArm’s length sale– Unrelated purchaserUnrelated purchaser

– Taxes, liens, interest, Taxes, liens, interest, penalty & costs may be penalty & costs may be collected or waivedcollected or waived

By LCG By LCG – Only after three year Only after three year

redemption periodredemption period– SaleSale

Unrelated purchaserUnrelated purchaser No minimum price No minimum price

required per 2010 required per 2010 legislationlegislation

– DonationDonation Unrelated non-profit Unrelated non-profit All charges may be All charges may be

waivedwaived

– Adjoining ownerAdjoining owner One year maintenanceOne year maintenance

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Sale of Adjudicated PropertySale of Adjudicated Property

Purchasers apply to LCG AdministratorPurchasers apply to LCG Administrator No minimum sale price requiredNo minimum sale price required

– All charges may be waivedAll charges may be waived Proceeds from saleProceeds from sale

– Reimburse costs of sale firstReimburse costs of sale first– RemitRemit pro rata pro rata balance, if any, to all taxing balance, if any, to all taxing

authoritiesauthorities All public and private liens are All public and private liens are

cancelledcancelled

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Donation of Adjudicated Donation of Adjudicated PropertyProperty

Only non-profits may applyOnly non-profits may apply– Non-profit may not be “related” to tax debtorNon-profit may not be “related” to tax debtor

State ethics rules define “related” partiesState ethics rules define “related” parties

LCG Administrator must approveLCG Administrator must approve LCG Council must approveLCG Council must approve LCG may only waive city and parish taxes LCG may only waive city and parish taxes

All private liens and consenting All private liens and consenting government liens are cancelledgovernment liens are cancelled

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Arm’s Length SaleArm’s Length Sale

Sale by tax debtor to new ownerSale by tax debtor to new owner– ““Arm’s length” transactionArm’s length” transaction

Must be to unrelated purchaserMust be to unrelated purchaser Sales price below marketSales price below market

Partial or complete waiver of liensPartial or complete waiver of liens– Approved by each taxing authorityApproved by each taxing authority

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Adjoining LandownerAdjoining Landowner

Louisiana Constitution Louisiana Constitution – Article 7, Section 14 DonationArticle 7, Section 14 Donation

Land owner must maintain adjacent, Land owner must maintain adjacent, adjudicated property for one year adjudicated property for one year

Sale price is the anticipated cost of the saleSale price is the anticipated cost of the sale Requires Council approval as a donationRequires Council approval as a donation

– Addressed in the enabling ordinanceAddressed in the enabling ordinance

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Donations require a Donations require a Facilitation Agreement Facilitation Agreement

between the taxing between the taxing authoritiesauthorities

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Facilitation AgreementFacilitation Agreement

2002 Facilitation Agreement (LSA)2002 Facilitation Agreement (LSA)– Includes every Lafayette Parish taxing body Includes every Lafayette Parish taxing body

Oversight committee (one rep each)Oversight committee (one rep each) May waive all or part of taxes May waive all or part of taxes

– LCG manages the processLCG manages the process– Based on pre-2008 adjudication processBased on pre-2008 adjudication process

Requires revision to conform with new lawRequires revision to conform with new law

Should be approved by all original Should be approved by all original partiesparties

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Case Study #1 Case Study #1

““Arms length” saleArms length” sale– Two vacant lotsTwo vacant lots– Surviving spouse unaware of ownershipSurviving spouse unaware of ownership

Total taxes: $18,197.03Total taxes: $18,197.03 Estimated value: unknownEstimated value: unknown Owner willing to sell or donate in lieu Owner willing to sell or donate in lieu

of taxesof taxes Administrator recommendation and Administrator recommendation and

Council approvalCouncil approval

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Case Study #2Case Study #2 Adjoining property owner Adjoining property owner

– Maintains for one yearMaintains for one year Occupant deceased Occupant deceased

– Home unoccupiedHome unoccupied– No successionsNo successions– Property tax, interest and penaltyProperty tax, interest and penalty– Grass liensGrass liens– Mortgage balance Mortgage balance

Property adjudicated three years priorProperty adjudicated three years prior Council approval requiredCouncil approval required All public and private charges cancelledAll public and private charges cancelled

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LCG AdministratorLCG Administrator

New law requires enabling ordinanceNew law requires enabling ordinance

Adjudication ordinance for LCG pendingAdjudication ordinance for LCG pending– Designates LCG Community Development Designates LCG Community Development

as Administratoras Administrator Staff positionStaff position Civil Service job descriptionCivil Service job description

– Same Administrator for Facilitation Same Administrator for Facilitation AgreementAgreement

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Disposition HandbookDisposition Handbook

State-law Safe Harbor formsState-law Safe Harbor forms Timelines for notice and Timelines for notice and

processprocess Instructions to interested Instructions to interested

acquirersacquirers Formalize applicant criteriaFormalize applicant criteria Disposition policiesDisposition policies Access through LCG web siteAccess through LCG web site

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SafeguardsSafeguards

Council approval of donationsCouncil approval of donations Acquiring party cannot be delinquent Acquiring party cannot be delinquent

on other property taxon other property tax Tax debtor “related party” Tax debtor “related party”

– Prohibited from obtaining propertyProhibited from obtaining property– Ethics Code definition of “related party”Ethics Code definition of “related party”

LCG compliance verification LCG compliance verification – Disposition restrictions or conditionsDisposition restrictions or conditions– Physical inspection or otherwisePhysical inspection or otherwise

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Action ItemsAction Items

LCG enabling ordinanceLCG enabling ordinance Designate AdministratorDesignate Administrator

– Dept. of Community Dept. of Community Development Development Staff positionStaff position Civil Service job descriptionCivil Service job description

Facilitation AgreementFacilitation Agreement– Approval by all taxing Approval by all taxing

authoritiesauthorities Post on LCG web sitePost on LCG web site

– Disposition Handbook Disposition Handbook – InventoryInventory