Relates to bids by the city of Buffalo for foreclosed property

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.