Relates to bids by the city of Buffalo for foreclosed property.
TITLE OF BILL: An act to amend the real property tax law, in relation to bids by the city of Buffalo for foreclosed property
PURPOSE: To give the City of Buffalo preferred bid power at In Rem Foreclosure Auctions.
SUMMARY OF PROVISIONS: This bill authorizes the City of Buffalo to tender a bid at certain public sales in an amount equal to the total amount of all municipal claims and liens which were the basis for the judgment.Upon tendering such bid, the property shall be deemed sold to the City, and the obligation of the City to perform in accordance with such agreement shall be deemed to be in full satisfaction of the municipal claim which was the basis for the judgment. The City takes absolute title to the property sold, free and discharged of all tax and municipal claims, liens, mortgaged, charges and estates of whatever kind.
JUSTIFICATION: The City of Buffalo forecloses on several thousand tax-delinquent properties each year through its In Rem Tax Foreclosure process. Unfortunately, many properties are transferred from one negligent landlord to another because the City has no preferred bid status at its annual In Rem Foreclosure Auction. As with any other interested party, the City must place the highest bid on a given property in order to purchase it.
As a result of the City's inability to step into a position in front of all other bidders to acquire problem properties at the auction, certain neglected properties continue to cycle through ownership by various unscrupulous landlords, who may even be relatives of the delinquent owner who was originally foreclosed upon. This cycle stymies productive reuse of the property and revitalization of the surround neighborhood.
The City would benefit from being granted the same power that land banks, such as the Buffalo Erie Niagara Land Improvement Corporation (BENLIC), have. The Land Bank Act (Article 16 of the New York State Not-For-Profit Corporation Law) empowers land banks to win a bid by default at a public sale and in certain other circumstances, provided that no municipality tenders a bid and that the land bank's bid is greater than, or equivalent to, the total amount of all municipal claims and liens which were the basis for the judgment.
This bill would provide a significant financial benefits for the City of Buffalo:
* The City of Buffalo contains an estimated 20,000 vacant parcels and 5,000 vacant structures.Vacant and abandoned properties represent lost revenue for the tax base, as well as huge expenses in the form of health hazards, attracting illicit activity and demolition costs. Last fiscal year the City contracted out an estimated 220 property demolitions, at an average cost of more than $19,000 each.
* At the City's In Rem Foreclosure Auction in 2012, approximately 3,200 properties were listed. Since the City did not have preferred
bid power, it lost the occasion to pursue dozens of economic and community development opportunities.
* The Land Bank Act specifically states that land banks' "super bid" powers do not apply when a municipality tenders a bid on the property in question.Therefore, BENLIC would not be adversely affected by authorizing the City of Buffalo to exercise preferred bids in the limited context of the City's own annual In Rem Foreclosure Auction. Additionally, the City and its residents would stand to benefit immensely as "problem properties" could be efficiently removed from their previous cycle of neglect and finally turned over to conscientious property owners.
LEGISLATIVE HISTORY: New bill.
FISCAL IMPLICATIONS: None to New York state.
EFFECTIVE DATE: This act shall take effect immediately.
STATE OF NEW YORK ________________________________________________________________________ 7665 IN SENATE May 27, 2014 ___________Introduced by Sen. GRISANTI -- read twice and ordered printed, and when printed to be committed to the Committee on Local Government AN ACT to amend the real property tax law, in relation to bids by the city of Buffalo for foreclosed property THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. Section 1120 of the real property tax law is amended by adding a new subdivision 3 to read as follows: 3. AT A PUBLIC SALE PURSUANT TO THE PROVISIONS OF SECTION ELEVEN HUNDRED SIXTY-SIX OF THIS ARTICLE OR SALE PURSUANT TO THE PROVISIONS OF A COUNTY CHARTER, CITY CHARTER, ADMINISTRATIVE CODE, OR SPECIAL LAW WHEN APPLICABLE UNDER SECTION ELEVEN HUNDRED FOUR OF THIS ARTICLE, THE CITY OF BUFFALO MAY TENDER A BID AT SUCH SALE IN AN AMOUNT EQUAL TO THE TOTAL AMOUNT OF ALL MUNICIPAL CLAIMS AND LIENS WHICH WERE THE BASIS FOR THE JUDGMENT. IN THE EVENT OF SUCH TENDER BY THE CITY OF BUFFALO, THE PROP- ERTY SHALL BE DEEMED SOLD TO THE CITY OF BUFFALO REGARDLESS OF ANY BIDS BY ANY OTHER THIRD PARTIES. THE OBLIGATION OF THE CITY OF BUFFALO TO PERFORM IN ACCORDANCE WITH SUCH AGREEMENT SHALL BE DEEMED TO BE IN FULL SATISFACTION OF THE MUNICIPAL CLAIM WHICH WAS THE BASIS FOR THE JUDG- MENT. THE CITY OF BUFFALO, AS PURCHASER AT SUCH PUBLIC SALE OR SALE PURSUANT TO THE PROVISIONS OF A COUNTY CHARTER, CITY CHARTER, ADMINIS- TRATIVE CODE, OR SPECIAL LAW WHEN APPLICABLE UNDER SECTION ELEVEN HUNDRED FOUR OF THIS ARTICLE, SHALL TAKE AND FOREVER THEREAFTER HAVE, AN ABSOLUTE TITLE TO THE PROPERTY SOLD, FREE AND DISCHARGED OF ALL TAX AND MUNICIPAL CLAIMS, LIENS, MORTGAGES, CHARGES AND ESTATES OF WHATEVER KIND. THE DEED TO THE CITY OF BUFFALO SHALL BE EXECUTED, ACKNOWLEDGED AND DELIVERED WITHIN THIRTY DAYS OF THE SALE. ALL CITY OF BUFFALO DISPO- SITIONS OF PROPERTY ACQUIRED PURSUANT TO THIS SUBDIVISION SHALL COMPLY WITH THE LAWS OF THE CITY OF BUFFALO REGARDING DISPOSITION OF REAL PROP- ERTY. S 2. This act shall take effect immediately.EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD15305-01-4