BILL NUMBER:S7665

TITLE OF BILL:  An act to amend the real property tax law, in relation
to bids by the city of Buffalo for foreclosed property

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 obligation 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, mortgaged, charges and estates of
whatever kind.

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.