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HomeMy WebLinkAboutIR 8801INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8801 To the Mayor and Members of the City Council October 17, 2006 Page 1 of 3 x SUBJECT: Sale of Surplus Tax - Foreclosed Property +.n Purpose The purpose of this report is to respond to Councilmember inquiries concerning the sale of surplus tax - foreclosed properties held in trust by the City. The City's current administrative procedures allow City Departments and Councilmembers to place holds on properties, particularly those that fall within the Neighborhood Empowerment Zones (NEZs). Following is a brief summary of foreclosure trends, the status of housing standards, proposed property packaging and maintenance /management cost recovery opportunities. Tax Foreclosure Trends While tax - foreclosures occur throughout the City, the majority of the foreclosures occur in the southeast area of Fort Worth; Terrell Heights, Hillside/Morningside, Berryhill, Polytechnic Heights, and Stop Six neighborhoods. There are also significant numbers in the Lake Como and the Near North Side areas. These areas experience foreclosure for various reasons and have an aging housing stock. AOL Zoning and Housing Standards Procedures have been adopted to assure that proper zoning is in place for tax- foreclosed surplus properties before they are sold. As for specific housing design standards, both historic districts and conservation districts currently have those established. In the areas where these districts exist, a mechanism is in place to help assure quality redevelopment of properties. It is staffs' understanding that the Sustainable Neighborhoods Task Force will be developing standards to facilitate inner -city development and will be presenting their recommendations to the City Council. Packaging Properties for Sale Historically, the individual tax- foreclosed properties have been rezoned and sold individually through a sealed -bid sales process. Staff recommends that the City begin packaging properties together for direct sale through a "Request for Proposal" (RFP) process. The packages would consist of properties in close geographical proximity to each other in order to create attractive development opportunities. This approach would allow the City to attract developers and/or builders that would not ordinarily have an interest in those areas. Based upon previous discussions with builders, a minimum of 50 lots appears to be the number that would generate the most interest. There are a few builders who have expressed interest in smaller numbers and therefore flexibility in packaging should be utilized. Proposals that result from the RFP process would be evaluated utilizing several criteria including final development product, price, product design, product quality, developer's experience and financial capacity, in addition to the number of lots needed. Potential developers and/or builders would also be required to visit with neighborhood associations to share future development plans, so that the neighborhood may provide input. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 8801 To the Mayor and Members of the City Council October 17, 2006 Page 2 of 3 n x SUBJECT: Sale of Surplus Tax - Foreclosed Property +ass Tax- Foreclosed Surplus Properties in the NEZs Surplus properties located in the City's NEZs involve many areas and districts of the City. The current administrative NEZ guidelines result in properties being placed on "hold" until a desirable development is approved. The NEZ concept was not created to hold properties indefinitely but instead was created to offer incentives with the intent of generating interest in underserved areas. Through this interest, the City has the ability to move property faster while allowing for quality development. Unfortunately, the sales process has slowed significantly and the interest is not as strong as what was expected when the NEZ was created. Staff clearly understands the importance of reducing inventory and placing properties back on the tax rolls for productive use. However, staff recognizes that there are benefits in holding portions of the tax - foreclosed inventory until housing design standards are developed. While the Sustainable Neighborhoods Task Force works to create design standards and presents their recommendations to the City Council, sales could continue in those areas that have historical and/or conservation district overlays with design guidelines in place. 4, Cost Recovery Opportunities There is little, if any, net income realized from the sale of tax- foreclosed properties. Due to the numerous holds, the City continues to pay property management and maintenance expenses associated with the tax- foreclosed property inventory. The tax - foreclosed inventory should not be considered as an income generator, because tax- foreclosed proceeds must be distributed to the other taxing entities per the interlocal agreement between the local taxing entities. With regard to the mowing fees, staff recommends that the City Council continue to allocate funds on an annual basis from the General Fund to cover the mowing costs of properties being held by the city. Currently, the tax- foreclosed program is collecting a one -time fee of $500 to cover mowing, demolitions, general clean-ups, and board -ups at the time that the individual tax- foreclosed properties are sold. It is recommended that the City Council amend the City's current financial management polices to provide for the creation of separate demolition, mowing and property management escrow funds The separate escrow funds will provide funding for the services provided by the Code Compliance, Parks and Community Services and Engineering departments during the first year that the properties are held in trust by the City. Once the escrow funds are approved by the City Council, the City will begin withholding $600 per property for mowing and $500 per property for property management services at the time the properties are sold. In addition, the City will continue to withhold $500 per property for demolitions and board -ups. Staff believes that the City should fund the costs of mowing and management of the properties it holds at its discretion after the initial one -year the property is in the trust inventory. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS INFORMAL REPORT TO CITY COUNCIL MEMBERS To the Mayor and Members of the City Council r n x SUBJECT: Sale of Surplus Tax - Foreclosed Property *ass Summary of Property Holds No. 8801 October 17, 2006 Page 3 of 3 The following table is a summary of current holds by City Departments and Council: Departments Number of Holds Reason for Holds Housing 62 Future Housing Develo went PACS 16 Future Park Development TPW 20 Future Street/Right of Way and Drainage Projects Economic Development 5 Future Commercial Development and Strategic Development Planning and Zoning 48 Retaining for consistency with the Comprehensive Plan City Council Requests 44 NEZ Total 195 NEZ 0 The following table is a summary of current NEZ holds: Council District # of Pro ernes Reason for Hold 2 0 3 0 4 0 5 227 NEZ and Strategic Development 6 0 7 66 NEZ 8 163 NEZ 9 34 NEZ and Strategic Development Total 490 CharleskR. City Manager ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS