Provides the land bank can assign all rights resulting from the land bank's successful tender for the property to the foreclosing governmental unit; allows the property to be deeded directly to the foreclosing governmental unit.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8156B
SPONSOR: Peoples-Stokes TITLE OF BILL:
An act to amend the not-for-profit corporation law, in relation to
assignment of rights by a land bank
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 obli-
gation 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, mort-
gaged, charges and estates of whatever kind.
JUSTIFICATION:
The City of Buffalo forecloses on several thousand tax-delinquent prop-
erties each year through its In Rem Tax Foreclosure process. Unfortu-
nately, 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 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 develop-
ment 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 authoriz-
ing the City of Buffalo to exercise preferred bids in the limited
context of the City's own annual In Rem Foreclosure Auction. Addi-
tionally, 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.
