Public Nuisance Sales Tax
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MEMORANDUM
December 12, 2006
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TO:
The Honorable Mayor and City Council Members
FROM:
Michael C. Van Milligen, City Manager
SUBJECT: Public Nuisance Tax Sales
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Housing and Community Development Department Director David Harris is
recommending that a request be sent to the Dubuque County Board of Supervisors
asking that the County Board adopt an ordinance authorizing the County Treasurer to
sell at annual tax sale delinquent taxes on parcels that are abandoned property and that
are or may become a public nuisance. Prospective bidders on these properties would
be required to enter into a rehabilitation agreement with the County, or with the City if
the property is located within a city, to demonstrate their intent to rehabilitate the
property for use as housing.
Currently, individuals and firms purchase tax deeds of tax-delinquent properties for the
purpose of receiving high-interest returns. They hold these properties speculatively,
with the expectation of repayment plus interest before the end of the redemption period.
In the case of vacant properties, these are sometimes left unoccupied and
unmaintained. These become problems for City enforcement, as neighbors complain of
their appearance and condition. The Housing Department performs inspections and
often privately contracts for grass cutting and sidewalk snow removal. In more
problematic cases, these structures are entered by unauthorized persons, causing the
Housing Department to contract for boarding of doors and windows, in order to secure
the public safety.
In 2006 a new Iowa State Law was enacted that provides county boards the authority to
adopt this modified process. This will provide another tool to use in combating the blight
of abandoned buildings and restore them as homes and increase property tax
revenues.
I concur with the recommendation and respectfully request Mayor and City Council
approval.
MCVM/jh
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Attachment
cc: Dubuque County Board of Supervisors
Eric Stierman, Dubuque County Treasurer
Barry Lindahl, City Attorney
Cindy Steinhauser, Assistant City Manager
David Harris, Housing and Community Development Department Director
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MEMORANDUM
11 December 06
To: Michael Van Milligen, City Manager
From: David Harris, Housing and Community Development Department
Re: Public Nuisance Tax Sales
Introduction
The purpose of this memorandum is to request the City Council to propose to the
Dubuque County Board of Supervisors their adoption of an enabling ordinance,
authorizing the County Treasurer to sell at annual tax sale delinquent taxes on parcels
that are abandoned property and that are or may become a public nuisance.
Discussion
HF 2654 was adopted by the 2006 General Assembly, including a new section on public
nuisance tax tales, authorizing a county board of supervisors to adopt an ordinance
authorizing the county treasurer to offer and sell at annual tax sale delinquent taxes on
parcels that are abandoned property and are assessed as residential property, or as
commercial multi-family property, and that are, or are likely to become, a public
nuisance.
Prospective bidders on these properties are required to enter into a rehabilitation
agreement with the county, or with the city if the property is located within a city, to
demonstrate their intent to rehabilitate the property for use as housing.
To implement this provision, the Housing Department would develop a criteria for
qualification of rehabilitation contractors. When a tax-delinquent residential property is
identified, the Department would issue a request-for-proposals to contractors.
Proposals would be evaluated in order to select the best possible approach to
rehabilitation. The City Council would then approve a rehabilitation agreement between
the City and the selected contractor. The contractor would then be eligible to bid for
purchase of the property to the Board of Supervisors.
City Attorney Barry Lindahl has researched this legislation. His summary is attached.
He as well has written a proposed ordinance, for consideration by the Board of
Supervisors, to be adopted by the Board in satisfaction of the legislative requirement.
Recommendation
It is recommended that the Council request the County Board of Supervisors to adopt
this ordinance. This will provide us another tool to use in combating the blight of
abandoned buildings and restore them for habitation and increased tax revenue.
Public Nuisance Tax Sales
Iowa Code ~ 446.198
8arry A. Lindahl, Esq.
City Attorney
Dubuque
I. Introduction.
H.F. 2654, adopted by the 2006 General Assembly, included new 9 446.198.
Public nuisance tax sale--rehabilitation for use as housing. Section 446.198
authorizes the board of supervisors to adopt an ordinance authorizing the county
treasurer to separately offer and sell at the annual tax sale delinquent taxes on
parcels that are abandoned property and are assessed as residential property or
as commercial multifamily housing property and that are, or are likely to become,
a public nuisance.
For purposes of this section, "abandoned property" means the same as defined
in 9 446.19A [9 657A.1]:
1. "Abandoned" or "abandonment" means that a building has
remained vacant and has been in violation of the housing code of
the city in which the property is located or the housing code
applicable in the county in which the property is located if outside
the limits of a city for a period of six consecutive months.
"Public nuisance" means the same as defined in 9 657 A.1:
7. "Public nuisance" means a building that is a menace to the
public health, welfare, or safety, or that is structurally unsafe,
unsanitary, or not provided with adequate safe egress, or that
constitutes a fire hazard, or is otherwise dangerous to human life,
or that in relation to the existing use constitutes a hazard to the
public health, welfare, or safety by reason of inadequate
maintenance, dilapidation, obsolescence, or abandonment.
On or before May 15, the county or city must file with the county treasurer a
verified statement containing a listing of parcels and a declaration that each
parcel is:
. abandoned property;
. is assessed as residential property or as commercial multifamily housing
property;
. is, or is likely to become, a public nuisance; and
. is suitable for use as housing following rehabilitation.
The treasurer will separately offer and sell those parcels listed in the verified
statement at the sale, known as the "public nuisance tax sale."
To be eligible to bid on parcels under this section, a prospective bidder must
enter into a rehabilitation agreement with the county, or with the city if the
property is located within a city, to demonstrate the intent to rehabilitate the
property for use as housing if the property is not redeemed.
If after issuance of a tax sale deed to the holder of a certificate of purchase at the
public nuisance tax sale, the tax sale deed holder determines that a building,
structure, or other improvement located on the parcel cannot be rehabilitated for
habitation, the tax sale deed holder may request approval from the board of
supervisors, or the city council if the property is located within a city, to remove,
dismantle, or demolish the building, structure, or other improvement.
The tax sale certificate holder may assign the tax sale certificate obtained
pursuant to this section.
Under S 447.9(1), after three months from the date of a sale made under S
446.198, the holder of the certificate of purchase may cause to be served upon
the person in possession of the parcel, and also upon the person in whose name
the parcel is taxed, a notice signed by the certificate holder or the certificate
holder's agent or attorney, stating the date of sale, the description of the parcel
sold, the name of the purchaser, and that the right of redemption will expire and a
deed for the parcel be rnade unless redemption is made within ninety days from
the completed service of the notice.
II. Section 446.198.
S 446.198. Public nuisance tax sale--rehabilitation for use as
housing
1. The board of supervisors of a county may adopt an ordinance
authorizing the county treasurer to separately offer and sell at the
annual tax sale delinquent taxes on parcels that are abandoned
property and are assessed as residential property or as commercial
multifamily housing property and that are, or are likely to become, a
public nuisance. This section may only be used by a county or by a
city in the county if such an ordinance is in effect.
2. On or before May 15, the county or city may file with the county
treasurer a verified statement containing a listing of parcels and a
declaration that each parcel is abandoned property, each parcel is
assessed as residential property or as commercial multifamily
housing property, each parcel is, or is likely to become, a public
nuisance, and that each parcel is suitable for use as housing
following rehabilitation.
3. The verified statement shall be published at the same time and in
the same manner as the notice of the annual tax sale and the
requirements in section 446.9, subsection 2, for publication of
notice of the annual tax sale also apply to publication of the verified
statement.
4. On the day of the regular tax sale, or any continuance or
adjournment of the tax sale, the treasurer shall separately offer and
sell those parcels listed in a verified statement timely received and
properly published and which remain liable to sale for delinquent
taxes. This sale shall be known as the "public nuisance tax sale".
Notwithstanding any provision to the contrary, the percentage
interest that may be purchased in a parcel offered for sale under
this section shall not be less than one hundred percent.
5. To be eligible to bid on parcels under this section, a prospective
bidder shall enter into a rehabilitation agreement with the county, or
with the city if the property is located within a city, to demonstrate
the intent to rehabilitate the property for use as housing if the
property is not redeemed.
6. If after issuance of a tax sale deed to the holder of a certificate of
purchase at the public nuisance tax sale, the tax sale deed holder
determines that a building, structure, or other improvement located
on the parcel cannot be rehabilitated for habitation, the tax sale
deed holder may request approval from the board of supervisors, or
the city council if the property is located within a city, to remove,
dismantle, or demolish the building, structure, or other
improvement.
7. When a parcel is offered at public nuisance tax sale and no bid is
received, or if the bid received is less than the total amount due, the
county in which the parcel is located, through its county treasurer,
shall bid for the parcel a sum equal to the total amount due. Money
shall not be paid by the county or city for the purchase, but each of
the tax-levying and tax-certifying bodies having any interest in the
taxes shall be charged with the total amount due the tax-levying or
tax-certifying body as its just share of the purchase price.
8. The tax sale certificate holder may assign the tax sale certificate
obtained pursuant to this section.
9. For purposes of this section, "abandoned property" means the
same as defined in section 446.19A, and "public nuisance" means
the same as defined in section 657 A.1.
II. County Enabling Ordinance.
Iowa Code S 446.19B(1) provides that the board of supervisors of a county may
adopt an ordinance authorizing the county treasurer to separately offer and sell
at the annual tax sale delinquent taxes on parcels that are abandoned property
and are assessed as residential property or as commercial multifamily housing
property and that are, or are likely to become, a public nuisance. Section
446.19B may only be used by a county or by a city in the county if such an
ordinance is in effect.
ORDINANCE NO.
AUTHORIZING THE COUNTY TREASURER TO SEPARATELY OFFER AND
SELL AT THE ANNUAL TAX SALE DELINQUENT TAXES ON PARCELS
THAT ARE ABANDONED PROPERTY AND ARE ASSESSED AS
RESIDENTIAL PROPERTY OR AS COMMERCIAL MULTIFAMILY HOUSING
PROPERTY AND THAT ARE, OR ARE LIKELY TO BECOME, A PUBLIC
NUISANCE.
WHEREAS, Iowa Code S 446.19B, provides that the board of supervisors
of a county may adopt an ordinance authorizing the county treasurer to
separately offer and sell at the annual tax sale delinquent taxes on parcels that
are abandoned property and are assessed as residential property or as
commercial multifamily housing property and that are, or are likely to become, a
public nuisance; and
WHEREAS, the board of supervisors has determined that it is in the best
interest of Dubuque County that such an ordinance be adopted.
NOW, THEREFORE, BE IT ENACTED BY THE BOARD OF
SUPERVISORS AS FOLLOWS:
1. On or before May 15, the county or city may file with the county
treasurer a verified statement containing a listing of parcels and a declaration
that each parcel is abandoned property, each parcel is assessed as residential
property or as commercial multifamily housing property, each parcel is, or is likely
to become, a public nuisance, and that each parcel is suitable for use as housing
following rehabilitation.
2. The verified statement shall be published at the same time and in the
same manner as the notice of the annual tax sale and the requirements in Iowa
Code S 446.9(2) for publication of notice of the annual tax sale also apply to
publication of the verified statement.
3. On the day of the regular tax sale, or any continuance or adjournment
of the tax sale, the treasurer shall separately offer and sell those parcels listed in
a verified statement timely received and properly published and which remain
liable to sale for delinquent taxes. This sale shall be known as the "public
nuisance tax sale". Notwithstanding any provision to the contrary, the percentage
interest that may be purchased in a parcel offered for sale under this ordinance
shall not be less than one hundred percent.
4. To be eligible to bid on parcels under this ordinance, a prospective
bidder shall enter into a rehabilitation agreement with the county, or with the city
if the property is located within a city, to demonstrate the intent to rehabilitate the
property for use as housing if the property is not redeemed.
5. If after issuance of a tax sale deed to the holder of a certificate of
purchase at the public nuisance tax sale, the tax sale deed holder determines
that a building, structure, or other improvement located on the parcel cannot be
rehabilitated for habitation, the tax sale deed holder may request approval from
the board of supervisors, or the city council if the property is located within a city,
to remove, dismantle, or demolish the building, structure, or other improvement.
6. When a parcel is offered at public nuisance tax sale and no bid is
received, or if the bid received is less than the total amount due, the county
treasurer shall bid for the parcel a sum equal to the total amount due. Money
shall not be paid by the county or city for the purchase, but each of the tax-
levying and tax-certifying bodies having any interest in the taxes shall be charged
with the total amount due the tax-levying or tax-certifying body as its just share of
the purchase price.
7. The tax sale certificate holder may assign the tax sale certificate
obtained pursuant to this ordinance.
8. For purposes of this ordinance, "abandoned property" means means
that a building has remained vacant and has been in violation of the housing
code of the city in which the property is located or the housing code applicable in
the county in which the property is located if outside the limits of a city for a
period of six consecutive months and "public nuisance" means a building that is a
menace to the public health, welfare, or safety, or that is structurally unsafe,
unsanitary, or not provided with adequate safe egress, or that constitutes a fire
hazard, or is otherwise dangerous to human life, or that in relation to the existing
use constitutes a hazard to the public health, welfare, or safety by reason of
inadequate maintenance, dilapidation, obsolescence, or abandonment.
Passed, approved and adopted this
day of
,20_.
Chairperson