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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. Road to Adjudicated Property. Assessor certifies tax rolls in November

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Adjudicated properties

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


Road to adjudicated property
Road to Adjudicated Property

  • Assessor certifies tax rolls in November

  • Tax payments due in December

    • Sheriff collects for parish and others

    • LUS collects for city

  • Due process notices mailed

  • Sheriff’s tax sale in May

    • Bidders receive “tax sale title”

    • Unbid property is “adjudicated”


What is adjudicated property
What is Adjudicated Property?

  • Tax delinquent property for which no bid is received at tax sale

    • “Tax sale title” acquired by taxing body

  • Why no bid?

    • Unlikely prospect of redemption

    • Liens, interest & costs exceed property value

    • Title, liability and/or maintenance issues


Myth

  • Government owns adjudicated property

  • Tax sales convey ownership

    Fact

  • Tax sales convey “tax sale title”

    • Most purchased for income stream

    • Subject to three year redemption period

      • May convert ownership after three years


What is tax sale title
What is Tax Sale Title?

  • Rights acquired by

    • a tax sale purchaser, or

    • a political subdivision

  • May apply to all or an undivided interest

  • Does NOT convey ownership


2008 revisions to state law
2008 revisions to state law

  • Conforms to federal & state constitutions

  • Clarified language

  • Simplified process

  • Reduced cost

  • Provides safe harbor forms & notices

  • Requires local enabling ordinance



Lafayette taxing authorities

City of Lafayette

Parish of Lafayette

Lafayette Parish School Board

Lafayette Parish Sheriff’s Office

Lafayette Parish Bayou Vermilion District

Lafayette Economic Development Authority

Lafayette Centre Development District

Lafayette Tax Assessment District

Lafayette Airport Commission

Teche-Vermilion Fresh Water District

Lafayette Parish Library Board

Lafayette Taxing Authorities


Adjudicated properties 1 043
Adjudicated Properties - 1,043

  • Duson 15

  • Broussard 20

  • Carencro 14

  • Lafayette 717

  • Scott 29

  • Youngsville 13

  • Unincorporated 235

Compiled January 24, 2011


Adjudicated property lafayette parish
Adjudicated Property:Lafayette Parish


The problems
The Problems

  • Adjudicated property may:

    • Never be redeemed

    • Never yield tax revenue

    • Depress surrounding property values

    • Discourage development

  • Adjudicated property will:

    • Incur maintenance costs

    • Impair neighborhood aesthetics

    • Foster crime


Redemption
Redemption

  • Tax debtor retains title as owner

    • Absolute right to redeem for three years

  • May redeem until ownership is

    • Converted by tax sale purchaser

    • Transferred by political subdivision

  • Redemption requires payment of all

    • Taxes and Liens

    • Interest and Penalties

    • Costs


Goals of disposition
Goals of Disposition

  • Everyone

    • Return property to commerce

    • Reduce blight and crime

    • Revitalize and redevelop property

  • Neighborhoods

    • Enhance property values

    • Improve quality of life

  • Tax Authorities

    • Regain tax revenue streams

    • Eliminate maintenance costs


Disposition of adjudicated property

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

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

Disposition of Adjudicated Property


Sale of adjudicated property
Sale of Adjudicated Property

  • Purchasers apply to LCG Administrator

  • No minimum sale price required

    • All charges may be waived

  • 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


Donation of adjudicated property
Donation of Adjudicated Property

  • 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 Council must approve

  • LCG may only waive city and parish taxes

  • All private liens and consenting government liens are cancelled


Arm s length sale
Arm’s Length Sale

  • 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

    • Approved by each taxing authority


Adjoining landowner
Adjoining Landowner

  • 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


Donations require a facilitation agreement between the taxing authorities
Donations require a Facilitation Agreement between the taxing authorities


Facilitation agreement
Facilitation Agreement

  • 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


Case study 1
Case Study #1

  • “Arms length” sale

    • Two vacant lots

    • Surviving spouse unaware of ownership

  • Total taxes: $18,197.03

  • Estimated value: unknown

  • Owner willing to sell or donate in lieu of taxes

  • Administrator recommendation and Council approval


Case study 2
Case Study #2

  • Adjoining property owner

    • Maintains for one year

  • Occupant deceased

    • Home unoccupied

    • No successions

    • Property tax, interest and penalty

    • Grass liens

    • Mortgage balance

  • Property adjudicated three years prior

  • Council approval required

  • All public and private charges cancelled


Lcg administrator
LCG Administrator

  • New law requires enabling ordinance

  • Adjudication ordinance for LCG pending

    • Designates LCG Community Development as Administrator

      • Staff position

      • Civil Service job description

    • Same Administrator for Facilitation Agreement


Disposition handbook
Disposition Handbook

  • State-law Safe Harbor forms

  • Timelines for notice and process

  • Instructions to interested acquirers

  • Formalize applicant criteria

  • Disposition policies

  • Access through LCG web site


Safeguards
Safeguards

  • Council approval of donations

  • Acquiring party cannot be delinquent on other property tax

  • Tax debtor “related party”

    • Prohibited from obtaining property

    • Ethics Code definition of “related party”

  • LCG compliance verification

    • Disposition restrictions or conditions

    • Physical inspection or otherwise


Action items
Action Items

  • LCG enabling ordinance

  • Designate Administrator

    • Dept. of Community Development

      • Staff position

      • Civil Service job description

  • Facilitation Agreement

    • Approval by all taxing authorities

  • Post on LCG web site

    • Disposition Handbook

    • Inventory


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