Shelby County Property Tax Sale Review

Shelby County Property Tax Sales have always been a concern of Memphis. A lot of vacant properties that are awaiting tax sales date and  for the redemption period to past before any real work is done to the property… Here is what the Commission director of planning and development Andy Kitsiner and Steve Barlow a real estate lawyer is saying about this problem recently published…

Various government and economic development entities are working to reform the tax sales process in Shelby County with a goal of getting vacant properties in the hands of the best potential developers as opposed to the highest bidders.

The current tax sale process makes it easy for property owners to hold onto undeveloped properties indefinitely. While these sales put properties back on the tax rolls, the fiscal impact is less than it could be if an experienced or more motivated developer got control of such property.

Once a property has been delinquent on taxes for three years, the Shelby County Trustee puts it up for auction. The county enters a minimum bid for the amount of taxes owed. If no bids go above that, the county takes it over.

However, the property goes through a one-year redemption process in which the original owner can reclaim the property by paying back taxes plus interest and fees, even if another person claimed it at the tax sale auction. If it makes it through that period without being reclaimed, then the Shelby County Land Bank can sell the property for less than the taxes owed, with the Shelby County Commission approving all sales.

While this process can get properties back on the tax rolls, it doesn’t always mean the best for redevelopment efforts.

Downtown Memphis Commission director of planning and development Andy Kitsinger and Steve Barlow, a real estate lawyer with Brewer & Barlow PLC, are leading the charge on anti-blight efforts Downtown, which includes trying to redevelop under-used properties.

Kitsinger has had some early discussions with Shelby County Land Bank officials about finding more strategic approaches for transferring properties.

“In an ideal world and some of the best practices, governments and land banks are looking strategically at how they can leverage economic initiatives which are going on, but I don’t think we’re there yet,” Kitsinger says.

The Uptown development has a land bank which is more strategically focused. It obtains property through acquisition or eminent domain and then redistributes it through requests for proposals. However, this land bank has more autonomy than the Shelby County Land Bank. The county’s land bank also has a larger reach, with more than 3,700 properties ranging from vacant lots to warehouses.

“We’re like the real estate office for the county,” Dawn Kinard, administrator, says. “My charge requires that I sell these properties as quickly as possible to get them back on the tax roll, but we do want to do some due diligence.”

Somewhere in between those two approaches could be the ideal, according to Kitsinger.

The Downtown Memphis Commission usually calls the Shelby County Land Bank when a large developable property is about to make it through the redemption process.

“It was just something that we wanted to be aware of, that we had a property that was in their area and they wanted to make sure it was sold to someone who had a good plan and that it would benefit the Downtown area,” Kinard says.

One property which almost made it to the land bank was the Hickman Building, a 99,159-square-foot property at 240 Madison Ave.

The property, owned by Hickman Properties Inc. since 1993, has been vacant since the 1970s. It has remained vacant during the Downtown condominium boom and numerous apartment redevelopments. The property is surrounded by urban redevelopment, including AutoZone Park, the Visible School and the Downtown Elementary School.

Hickman Properties was delinquent on taxes, but redeemed the property before it made it to a tax sale auction.

Now, the property remains empty and fenced in.

The one-year redemption period is a challenge which many have brought up to David Lenoir, the Shelby County Trustee.

His office works with the Shelby County Land Bank and has organized four real estate road shows, where title attorneys, real estate agents and the general public have spoken up about the redemption period.

“I have thrown out that we’re looking for ways to improve the tax sale process and knock down some of the real hurdles of tax sales,” Lenoir says.

Lenoir is exploring the idea of a tiered redemption system.

“The more taxes that are owned on the property, the shorter the redemption period would be,” he says. “So if you have a property with seven years of back taxes, maybe the redemption period is only 90 days, but if you’ve got a property three years delinquent, the redemption period could stay a year or go to six months.”

Shortening the redemption period could also help those who have the winning auction bid for these properties. With the threat of the original owner reclaiming a property, a new owner often isn’t inclined to make improvements or rent it until the claims period has expired.

“If we can reduce the redemption period, it seems to clarify things for purchasers of property at the tax sales,” Lenoir says.

Shelby County Land Bank Government agency Administrator: Dawn Kinard Address: 584 Adams Ave. Phone: Website: www.shelbycountytn.gov

 

 

 

Posted In : Shelby County Government

This entry was posted on Tuesday, November 25th, 2014 at 5:02 pm. and is filed under Shelby County Government. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.