Renewing Public Assets

for

Community
Development

Professor Frank S. Alexander

Emory University School of Law
 Renewing Public Assets
for Community Development

Written by
Frank S. Alexander
Published by
Local Initiatives Support Corporation

October 1, 2000

The work that provided the basis for this publication was supported
by funding from the U.S. Department of Housing and Urban
Development and the National Community Development Initiative.
The substance and finding of the work are dedicated to the public.
The author and publisher are solely responsible for the accuracy of
the statements and interpretations contained in this publication.
Such interpretations do not necessarily reflect the views of the
Government or the NCDI funders.
Renewing Public Assets for Community Development

The Local Initiatives Support Corporation (LISC) is very pleased to present

“Renewing Public Assets for Community Development,” as part of the LISC Online Resource
Library. In response to a growing national interest in the topic of property disposition, this pub-
lication is intended to serve as a tool for community development practitioners and local govern-
ment officials seeking to examine and improve their systems of returning lien encumbered and
publicly owned properties to productive use.

LISC is fortunate to have retained Frank Alexander, Professor of Law at Emory University, to
share his extensive knowledge of a complicated topic in this straightforward, exceptionally useful
article. Professor Alexander was a pivotal player in reforming key Georgia statutes that govern tax
foreclosure and property disposition, and he has become a leading national expert on the legal,
political and practical obstacles communities face in dealing with publicly owned and encum-
bered properties. The article provides a concise description of the nature of tax liens, the ways in
which most municipalities deal with tax delinquent and publicly owned properties, and specific
reforms which can help convert these properties into productive and performing community
assets. (See Professor Alexander’s Biography for more information.)

About LISC
The Local Initiatives Support Corporation (LISC) is a national community development inter-
mediary, dedicated to supporting the neighborhood revitalization efforts of Community
Development Corporations (CDCs). These nonprofit local organizations develop housing and
businesses, perform essential neighborhood services, and assemble communities out of the indi-
vidual energies of residents, entrepreneurs, volunteers, and government agencies. LISC channels
grants, investments, and loans to thousands of CDCs in 40 states and metropolitan areas, plus 59
rural communities, to help them create safe, attractive environments where markets can function
effectively and families find the goods and services they need, close to the housing they can
afford.

In LISC’s twenty years of existence, we have placed significant emphasis on the physical develop-
ment activities of CDCs as a foundation for effective comprehensive community revitalization.
For years, in fact, many CDCs almost exclusively did housing, in an effort to rescue the physical
environment of their neighborhoods from the chaos caused by abandoned, run-down blocks and
dangerous streets. LISC and CDCs have seen how eliminating physical blight in neighborhoods
offers a spark of life to communities - streets, stores, safety, schools and healthy families.

LISC’s work in neighborhoods around the country has revealed that CDCs in most cities and
towns continue to confront obstacles posed by the existence of blighted and abandoned proper-
ties in their neighborhoods, many of which are encumbered by liens or are publicly owned. We
have seen that the costs imposed by vacant and lien-encumbered properties on neighborhoods
often far exceed the dollar amount of the delinquent taxes. A demoralizing eyesore to neighbors
and passers-by, blighted houses and storefronts cause local property values to decline, damage
the reputation of the neighborhood and discourage investment by both current and potential
residents and business owners. In contrast, the benefits of rehabilitating these properties and
returning them to the tax rolls are tremendous. The city and other taxing bodies gain more tax
revenue, utilities recapture customers, public officials receive tangible credit, and surrounding
residents often respond by improving their properties and addressing neighborhood security and
quality of life issues. Thus, the redevelopment of formerly tax delinquent properties significantly
increases the market appeal of entire neighborhoods.

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 Renewing Public Assets for Community Development

In response to an evident national need to address the issue of tax delinquent and publicly
owned properties as a development resource for CDCs, LISC initiated a coordinated effort in
1999 to assist localities in assessing the effectiveness of their systems of dealing with tax delin-
quent and publicly owned properties. Our attention to this issue has involved several initiatives
beginning in early 1999, including organizing the Restoring Community Assets Conference in
September 1999 to examine national “best practice” models from five cities and to begin a
national dialogue on this topic. We also created a Public Assets Renewal Team of national
experts and LISC staff to provide technical assistance to localities, and to identify and create tools
that can be used to examine and reform local property disposition systems.

LISC Online Resource Library

The LISC Online Resource Library was created in 1999 to promote ongoing innovation and suc-
cess in the comprehensive revitalization of neighborhoods by disseminating LISC’s and others’
lessons learned in the field, and enhancing exchange among community development experts
and practitioners nationwide. Funded with grants from the Department of Housing and Urban
Development and the National Community Development Initiative, this resource will continue
to grow over time to provide useful industry tools, best practices, web links and online chat ses-
sions with community development experts.

The LISC Online Resource Library presents “Renewing Public Assets for Community
Development,” as part of a series of papers that will be available online. Additional topics we are
planning include homeownership, organizational development, smart growth / regionalism, and
economic development. All papers in the series will be available online at
www.liscnet.org/resources.

LISC Contacts
To find out more about LISC, visit our web site at www.liscnet.org or call Tolu Sekoni at
(202) 785-2908.

For additional community development resources and best practices, visit the LISC Online
Resource Library at www.liscnet.org/resources.

For information about current LISC property disposition initiatives or to obtain Restoring
Community Assets Conference materials, please contact Orlando Artze, LISC Program Vice
President for the Southeast Region at oartze@liscnet.org or (202) 785-2908.

Michael Rubinger
President & CEO, LISC

ii
Renewing Public Assets for Community Development

Introduction
Community development must always begin with the individuals, families and businesses which
constitute the community. Development, however, requires that the community quickly turn its
attention to the real property lying within the community. No single tract of land occupies a “neu-
tral” position with respect to the life and health of a community. Either a parcel of land is utilized
in a way which is consistent with and supportive of the vitality of the community, or it stands as a
barrier to growth and a harm to the community’s well-being.

Key to community development is the realization that each parcel of land is a potential resource to
the revitalization of a community. Land which is presently used in a manner consistent with the
strategic growth plan of a community, whether as residences, retail facilities, or open public parks,
serves as an anchor for stability and further development. Land which is neglected or abandoned
detracts from surrounding property values, invites dangerous or criminal behaviors, and serves as
a major barrier to any community development a ctivity. Neglected and abandoned land invites
further decay and flight from the community.

Part of the community development process is to inventory and assess the current utilization of
property within the community. This assessment, which is integral to preparation of a strategic
plan, involves identification of existing land utilization, with a particular focus on those parcels of
land which are presently causing the greatest harms to the life of the community. A second focus
is to identify those parcels of land which, if available, could be converted into a new productive use
consistent with the strategic plan.

In most urban areas, and in many rural areas, an examination of the parcels of land causing the
greatest harm to a community will reveal that they have great potential for conversion to a pro-
ductive use supporting the life of the community. Often these parcels contain one of two charac-
teristics: they have delinquent property taxes, or they are publicly owned. Parcels of land in either
category can be viewed as public assets that can become vital tools for community development.

An owner of private property who has allowed the property to decline through years of neglect
commonly has made the conscious choice not to pay the annual property taxes. Years of taxes
mount up, and when penalties and interest are included, it is possible that the total amount of
delinquent taxes exceeds the fair market value of the property. At this point the owner has no
incentive to support the life of the community by investing further in the property. For a wide vari-
ety of reasons, government enforcement of delinquent tax liens thus far has not been effective in
changing this situation. Tax delinquent property is both a source of harm to the community, and
a potential asset for future community development.

A second,and commonly overlooked, key to development is that some of the land lying at the heart
of a community’s difficulties may be land actually owned by a government entity. In neighbor-
hoods that have gone through a cycle of decline and deterioration, it is likely that some of the
parcels of land have been acquired by the city, county, or state through tax foreclosure procedures,
enforcement of other liens such as demolition liens and water and sewer liens, or through foreclo-
sure of government mortgages.

One of the primary tasks for a community development corporation, or local government seeking
to enhance community revitalization efforts, is to focus on those parcels of land which have been
creating the greatest amount of harm to a community, and to realize that these same parcels likely

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 Renewing Public Assets for Community Development

contain keys which can become tools in the development process. Delinquent tax liens, and govern-
ment owned land, are public assets waiting to be renewed in the process of community development.

This article is designed to provide a basic overview of the form and substance of these two public
assets which are central to community development. The first three parts describe the typical struc-
ture of property tax liens, property tax foreclosure procedures, and categories of publicly owned
land. The second three parts offer suggestions to improve the effectiveness of existing laws, or to
create new governmental entities that will facilitate the process of renewing these public assets. As
there is tremendous divergence throughout the United States in the laws o f each specific city or
county, this article is not intended to be a description of the laws of any particular community.
Instead, this article is designed to permit community development organizations and local gov-
ernment officials to understand the relevant basic concepts and to enable them to analyze and
reform the applicable laws of their cities and counties.

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Renewing Public Assets for Community Development

Identifying Public Assets

I. Property Tax Liens

Virtually all of the privately owned real property in the United States is subject to an annual prop-
erty tax. Property that is owned by governmental entities, and properties of certain nonprofit enti-
ties,are usually exempt from such taxation. Though the amount of revenue generated by the prop-
erty tax has declined over the years as a percentage of the total budgets of state and local govern-
ments, the property tax remains the single largest source of tax revenue which is wholly within the
control of local governments. As local governments face greater responsibilities for programs in the
future, increased pressure will be placed on the property tax as the method of financing govern-
ment expenditures.

The Mechanics of the Property Tax

The annual property tax is derived from two factors: the value of the property (which is why they
are commonly referred to as “ad valorem taxes”) and the rate of taxation. In theory, the full fair
market value of property is potentially subject to taxation. While some jurisdictions do impose the
tax upon the full value of the property, many jurisdictions elect to tax only a percentage of its fair
market value (an “assessed value”). At the same time, most jurisdictions recognize various limited
forms of exemptions and deductions from the value which is taxed, such as “homestead” exemp-
tions for property which is owner-occupied, or special exemptions for elderly or disabled.
Determining the fair market value of a piece of property is notoriously difficult, and much of the
frustration and anger with property taxation lies in the calculation of this value. A small number
of states and local governments have placed artificial limits on values,in effect freezing the value at
a particular point in time for purposes of taxation. The second factor in the property tax, the rate
of taxation, is established annually by the governmental entity based upon its budget needs and
forecasts. If property values rise, the amount of property taxes owed increases even without an
increase in the tax rate.

In neighborhoods and central city areas that have experienced a general economic decline, absen-
tee property owners who choose to ignore or abandon their properties frequently don’t bother to
contest the valuation placed on the property by the tax collector. As a result, taxes may be imposed
on property far in excess of the actual value, which simply encourages further a spiral of deterio-
ration and abandonment. In low income neighborhoods that continue to have residential proper-
ties,if these properties are owner-occupied,it is common that these owners do not understand the
nature of property tax exemptions to which they are entitled, and are struggling to pay annual tax
bills higher than they should be paying.

Super Priority Status of the Property Tax Lien

Because of the importance of property tax revenues to government operations, collection of the
property tax carries with it one important feature, or power, which is not available to any other
form of tax or debt.Liability for payment of the annual property tax gives rise to a lien on the prop-
erty. This lien, or claim against the property, arises automatically when the tax bills are issued. Most
importantly, this lien in favor of the government takes priority over all other liens or claims against
the property. Most liens (such as mortgages) or claims (such as judgments) take priority as of the
date they are created. For this reason, a mortgage placed on property which is not subject to any
other mortgages or claims is commonly referred to as a first mortgage, and a mortgage which is
later placed on the same property is referred to as a second or subordinate mortgage. In normal
circumstances, priority in time establishes the relative rights of the different claimants to the property.

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 Renewing Public Assets for Community Development

In the case of property taxes,however, the situation changes entirely. The property tax lien becomes
a first priority claim upon the property if the taxes are not paid when due.This “super priority sta-
tus” of property tax liens means that a tax lien has a higher claim,a first right to be paid, than mort-
gages which existed on the property years before the taxes went unpaid. Because of this super pri-
ority status of property tax liens, mortgage companies are deeply concerned about property taxes
and commonly require that debtors “escrow”funds each month to pay the annual property tax bill.

The super priority status of property tax liens is a feature not found in most other liens or claims
against property. Bills for governmental services such as water and sewer, or for improvements such
as sidewalks,can result in a lien against the property if the bills are not paid, but these kinds of liens
very rarely are given super priority status. If a local government at its expense demolishes a vacant
and abandoned building which had become a public nuisance, the government may be able to
place a demolition lien on the property for the cost of its work, but this lien will usually be behind
all other liens and claims to the property. It is thus a frequent source of frustration to development
organizations and government officials to discover that many such governmental liens will never
be paid because existing mortgages have a higher priority claim to the property. Because of this
inconsistency, mortgage companies want to make sure that property taxes that are senior in prior-
ity to their mortgages are paid on time. Mortgage companies have far less concern with other gov-
ernment liens which are subordinate, or junior, to their mortgages.

Every jurisdiction imposes substantial penalties and interest when property tax bills remain
unpaid. Added together, the annual amount of penalties and interest on delinquent property taxes
can easily exceed 25 to 40 percent of the initial tax bill. When property tax bills remain unpaid for
several years, the total amount of the delinquency can approach or exceed the total fair market
value of the property. In distressed neighborhoods which have declined in economic strength, it is
even more likely to discover abandoned properties in which the amount of the delinquent taxes
exceeds the value of the property.

The super priority status of property tax liens facilitates the collection of property tax revenues by
local governments. It also causes private investors to look at the property tax lien as a potentially
lucrative investment. In approximately one-half of the cities and counties across the country, it is
possible for a private investor to purchase from the local government the lien for the unpaid taxes.
The advantage to the government is that it receives payment of the delinquent tax bill from the
investor. The advantage to the investor is that it is able to receive high rates of return on its invest-
ment reflected by the substantial penalties and interest if the owner redeems the property. A poten-
tial disadvantage to the property owner is that he or she may have difficulty knowing of the sale of
the tax lien, locating the tax lien purchaser in order to pay the bill, or in negotiating with govern-
ment officials about the fairness of the original amount of the bill. In recent years several metro-
politan areas that have significant volumes of delinquent tax liens have negotiated with investment
banking companies for the sale in bulk of these liens. An investment banking firm may purchase
as much as $25 million, or $100 million, of delinquent property tax liens from a city or county.
The property tax lien is a key public asset both for the governmental entities seeking to collect tax
revenues and for community developers. Liens for delinquent taxes usually indicate that property
owners are choosing to neglect the property, or that they are struggling with ways to pay the taxes.
In either situation, prolonged delinquency results in deterioration and decline of the property and
the neighborhood. Because of its powerful status, the property tax lien is a key to reversing the
process of neighborhood decline. Enforcement of a tax lien by a local government can be a vital
method of transferring ownership of the property to p ersons or organizations willing to reinvest
in the community.

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Renewing Public Assets for Community Development

II. Property Tax Foreclosures

Because of its super priority status, the property
tax lien should be the easiest of all liens to enforce.
As the senior lien on the property, the enforce-
ment proceeding, known as foreclosure,should be
able to result in the sale of the property to a pur-
chaser, free of all other liens and claims. The pur-
chaser, whether a governmental entity, a nonprof-
it organization, or a private person should then be
able to redevelop the property in a manner con-
sistent with public and private development
strategies. In many jurisdictions, however, pre-
cisely the opposite is true. The tax lien foreclosure
process is often so lengthy, cumbersome and filled
with doubts and objections that local govern-
ments have largely ignored growing tax delin-
quencies, particularly in low income neighbor-
hoods.

Obstacles to Enforcement
There are two primary reasons for the lack of enforcement of
property tax liens in many jurisdictions. The first reason is
simply due to the harshness of the remedy. When a proper-
ty tax lien is enforced through foreclosure, the owner loses
the property and all claims to the property. In addition, all
other persons or companies with an interest in the property,
whether tenants or mortgage companies,also lose their interests in the property. Fear of this result
has led most jurisdictions to create additional periods of time before a tax sale is finally complete.
Some of these provide that foreclosure proceedings cannot be commenced until the taxes are delin-
quent for at least a year, or several years, or that owners and other interested parties have a right to
get the property back after a foreclosure sale has been completed. All property owners have a right
to stop foreclosure proceedings before they are completed by paying the amount of the taxes,
penalties and interest which are due (the “right of redemption”). Some jurisdictions have extend-
ed this right of redemption for a period of several years after the sale. Virtually every jurisdiction
in the United States follows a slightly different set of enforcement procedures, often with cities and
counties having the choice among a range of different procedures. When property owners know
that an enforcement proceeding may take several years at a minimum to complete, there is a ten-
dency to ignore the liability for the taxes. When property owners choose not to pay their proper-
ty taxes for whatever reason, neighborhood deterioration tends to accelerate.

The second reason for the lack of enforcement of property tax liens is that the procedures for fore-
closure of tax liens have not kept up with changing constitutional requirements over the years.
Typical of many procedures is that notice of the pending tax foreclosure sale is given by publica-
tion of an advertisement in the local newspaper. Notice by certified mail, or by other legal process,
is rarely given to all of the persons or entities with an interest in the property. In recent years, how-
ever, the United States Supreme Court has gradually tightened the requirements for tax foreclo-
sures, ruling that notice by publication is not adequate, and that notice must be given to all parties
with an interest in the property. Local governments are then faced with statutory procedures that
do not provide for adequate notice to all parties, or local government officials are uncertain about
how to provide notice to all parties.

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 Renewing Public Assets for Community Development

Forms of Foreclosure Proceedings

Across the United States there are three different kinds of property tax enforcement proceedings.
The first form is known as “strict foreclosure” and does not involve a sale of the property. In this
type of proceeding the government gives notice of the tax foreclosure and if the taxes aren’t paid
by a specific date ownership of the property is conveyed directly to the government. Most states do
not permit this form of tax foreclosure, or permit it only in special cases, because of the problem
which may arise when property is functionally forfeited to the government for nonpayment of
taxes that are only a small fraction of the value of the property. In these cases an owner may lose
entirely a valuable piece of property for taxes which are very small in relation to the value of the
land.

Most states follow one of the other two forms of property tax enforcement proceedings, both of
which require at some point a public sale of the property. Roughly half of the states have tax fore-
closure procedures, resulting ultimately in a tax sale, which do not require any involvement of the
court system. This procedure,known as the “nonjudicial tax foreclosure” procedure, relies solely on
administrative actions of the tax collector to give notice to all interested parties and to conduct the
tax sale. Significantly, in this approach there is no court supervision of the tax foreclosure, and no
final court order approving the process. In approximately one-half of the states the tax foreclosure
proceeding does involve the courts (“judicial tax foreclosure” proceedings), either through the
entire process or as a review of the process at its conclusion to ensure its accuracy and fairness. In
judicial tax foreclosures there is a final court order approving the adequacy of notice to all inter-
ested parties.

In the typical property tax foreclosure proceeding, once a sufficient period of time has gone by
after the taxes become delinquent, notice is given that a tax sale will be conducted, and that the
property will be sold. If the taxes are not paid prior to the date of the sale, the property is sold in a
public proceeding. It is important to distinguish between the sale of a tax lien, and the sale of proper-
ty at a tax sale. Despite the similarity in the words,there is a large difference. When a tax lien is sold
by a local government, what is being sold is the right to foreclose that tax lien in the future. In con-
trast, at a tax foreclosure sale, normally it is the property which is being t ransferred to the pur-
chaser and not just a lien. Some jurisdictions use the term “tax certificates”, in which case it is vir-
tually impossible to know precisely what is taking place at a tax sale without a thorough examina-
tion of the state statutes.

Some states follow a relatively simple procedure of conducting a single tax sale of the property.
State law may permit owners an additional period of time after the sale (a post-sale right of
redemption) to pay the taxes and redeem the property, but upon failure to do so within a specified
period of time, the sale is considered complete. In other states the procedures are complicated by
conducting two different sales. There is first a sale of the property (or perhaps sale of a lien), but it
is not considered final until a second sale occurs several months or years later, at which time the
property is finally transferred to a purchaser. Given the complexity of these proceedings,and the wide
differences in the proceedings and terminology between states, the only way to be confident about the
precise consequences of any given step in a foreclosure procedure is to analyze very carefully the entire
statutory procedure.

At a public tax foreclosure sale, the most common approach is to offer the sale to the highest bid-
der. Any person or entity (including a community development corporation) is permitted to bid
for the property. The bid price must be in cash, and the minimum bid is usually the full amount
of the delinquent taxes, penalties, interest, and costs. Roughly eight states attempt to reduce the

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Renewing Public Assets for Community Development

harsh consequences of a tax sale on the owner by selling at a foreclosure sale only a fractional own-
ership interest in the property, meaning that the tax sale purchaser and the former owner become
joint owners of the property. A few states conduct tax sales by selling the property to the purchas-
er willing to charge the lowest rate of interest to the owner during the post-foreclosure period of
redemption.

Ineffective Tax Sales

One problem that occurs in cities and counties which have not enforced property tax liens regu-
larly is that the accumulated taxes (with penalties, interest and costs) may exceed the fair market
value of the property. In this situation there will be no effective tax sale of the property because no
person will pay the minimum bid. When this occurs there is the danger that the tax sale will be
ineffective, and the property will continue to be a source of harm to the surrounding community.
The best solution to this dilemma is to provide that the local government, or a governmental enti-
ty, may acquire the property at the tax sale for the amount of the minimum bid. Such property can
then become a public asset available for further community development.

At a tax foreclosure sale the property is never sold for its fair market value. Instead, the sales price
(if there is competitive bidding) is frequently just a small fraction of the full value of the land.
There are two reasons for this disparity. One reason is that a tax sale is usually not a complete sale,
and is subject to additional rights of the former owner. The second reason is that most tax sale pro-
cedures leave unresolved many legal and constitutional questions about the rights of the various
owners and other parties having claims to the property. A p rospective purchaser will reduce the
price it is willing to pay to reflect these uncertainties.

In states that rely upon a nonjudicial property tax foreclosure procedure, there is usually a period
of time after the date of the tax sale during which the prior owner can reclaim the property by pay-
ing the taxes, or the foreclosure sale price. This post-sale right of redemption typically lasts for one
to three years after the sale. During this time the tax sale purchaser has no rights to use or to devel-
op the property, and no assurance that it will ever acquire the property because of the chance the
prior owner may redeem the property. The effect of this post-sale redemption period is that the
property continues to deteriorate and harm the surrounding community. Additional uncertainty
about the effect of the original tax sale is found in those jurisdictions that require the tax sale pur-
chaser, in order to terminate this redemption period, to undertake additional legal actions.

The second reason that property never sells for fair market value at a tax sale is that the legal pro-
cedures for enforcement of property tax liens are filled with constitutional doubts and questions.
The legal procedure that was recommended and adopted in many states in the early and middle
parts of the twentieth century relied not upon a court proceeding, but simply upon the publica-
tion of notice in a local newspaper that a tax foreclosure would occur. This newspaper advertise-
ment was, and is, often the only notice given to the owner of the property, and to the mortgagees,
tenants and other parties having interests in the property, that the property is to be sold for taxes
and their interests terminated. Towards the end of the twentieth century the United States Supreme
Court held that notice by publication is not adequate notice in most instances, creating serious
doubts about whether a tax sale could result in a sale of the property even if the procedures fol-
lowed the existing state law.

Due process under the United States Constitution now requires that in a property tax foreclosure
procedure notice must be g iven to every party holding a legally protected property interest whose
name and address can reasonably be determined by diligent efforts. The notice must be of the kind

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 Renewing Public Assets for Community Development

designed to inform these parties of the proceedings. Notice by publication in a newspaper will not
be adequate notice except in very rare circumstances. Notice by mail sent to the best available
address will usually be required. Because most existing state laws require that notice be sent only
to the property owner, or perhaps to a mortgagee as well, serious constitutional doubts exist about
the adequacy of the tax sale proceeding. In order to meet this higher standard of constitutionally
required notice, it is now basically necessary to conduct a full examination of the title to the prop-
erty prior to the tax foreclosure proceeding in order to identify all of the owners and other parties
having an interest in the property. Adequate notice must then be mailed to each of these owners.

Title Insurance
The presence of constitutional doubts about existing tax foreclosure procedures makes it extremely dif-
ficult for a tax sale purchaser to obtain title insurance. In the development of property it is essential
to be able to obtain clear title to, or ownership of, the property. The best evidence of such title is
the availability of title insurance, which insures that the owner owns the property free and clear of
the claims of other parties. If title insurance is not available for a particular parcel of land,it is risky
to invest in its development,and banks will usually decline to make loans if lender’s title insurance
is not provided.

Title insurance companies throughout the country are understandably reluctant to issue title
insurance policies for tax foreclosure sales unless there is some degree of clarity that constitution-
al procedures were followed. From their perspective, the title insurance companies will normally
require a court ruling on the adequacy of the procedures which were followed. In every state this
can be accomplished by a separate legal proceeding, after a tax sale,known as a “Quiet Title” action,
in which a court issues a final order on the ownership of the property. Unfortunately, such lawsuits
are expensive and time consuming, only adding to the costs and time periods for conveying clear
title through a tax sale. An alternative approach, which is increasingly being adopted by states, is to
have the basic tax foreclosure proceeding involve participation by the local courts. This is a change
from the historic nonjudicial tax foreclosure process to a judicial tax foreclosure process. The key
feature of a judicial tax foreclosure process is a court ruling that adequate notice was given to every
party with an interest in the property. On the basis of such a final and binding court order, title
insurance companies are more willing to issue title insurance polices for property conveyed at a tax
sale.

The failure to enforce adequately the collection of property taxes not only undercuts the financial
health of a local government, it commonly contributes to neighborhood decline. The failure to
have an efficient and effective system of enforcing property tax liens creates a barrier to neighbor-
hood development. As some cities, counties and states have demonstrated in recent years, howev-
er, the existence of the property tax lien is a valuable public asset which can become a tool for com-
munity development activities. With appropriate revisions in state and local laws on tax foreclo-
sures, future abandonment of properties can be stopped far more quickly, and existing vacant and
abandoned tax delinquent properties conveyed to those who are willing to undertake reinvestment
in the community.

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Renewing Public Assets for Community Development

III. Government Owned Property

Over the past fifty years local governments have acquired ownership of more parcels of land than
at any prior point in our history. Much of this land acquisition is due simply to the expanding
range of local government functions and services. It is also due in part to the widespread urban
renewal programs of the 1960’s and 1970’s,and to the creation of major public works projects such
as transportation and recreation facilities. Cities and counties have also added to their inventories
of publicly owned properties, perhaps unintentionally, through attempts to enforce property tax
liens or other government liens.

Parcels of land which are owned by local governments, or local government agencies, often pres-
ent a second opportunity for community development activities. It is quite common that in neigh-
borhoods and communities that have gone through a cycle of decline and deterioration, a surpris-
ingly large number of the properties are actually owned by the local government. In certain situa-
tions the government may not even be aware of its ownership of the property. Whenever property
is held by a local government, it is exempt from property taxes and not directly contributing to the
financial health of the government. Whenever publicly owned property is not being used for pub-
lic functions, it is an idle asset frequently standing as a barrier to development. For local govern-
ments and community development entities the task is to determine which properties are publicly
owned, how the property is currently used, and if the property can be converted to a more pro-
ductive use.

Categories of Government Owned Property

One category of publicly owned property includes land which has been acquired through a lien
foreclosure process. The foreclosure of property tax liens falls into this category when the proper-
ty is conveyed directly to the government through a strict foreclosure process (which is rarely
used), or when there is no one else
willing to purchase the property at a
tax sale. Given the likely constitu-
tional defects in the tax foreclosure
procedures by which this property
was a cquired, this category of prop-
erty presents special problems for
the local government. It is not likely
to develop the property for public
uses in fear that a prior owner may
some day challenge its loss of owner-
ship. It is also not easy for the gov-
ernment to sell, or transfer, this
property because of the same owner-
ship issues. Within this broad cate-
gory of property are also those parcels of land which have been acquired by the local government
through the enforcement of liens other than property taxes, such as liens for demolition of
improvements, assessments, and water and sewer liens. In the absence of a super priority status for
such liens, the legal status of government ownership of the property through a foreclosure pro-
ceeding is even more doubtful than in a property tax foreclosure proceeding. One additional group
of properties which potentially exists in this category are properties acquired by a local government
through foreclosure of government mortgages. Over the past thirty years a number of federal,state
and local programs have extended mortgages for various development projects, and inevitably

9
 Renewing Public Assets for Community Development

some of these projects went into default. Foreclosure of the mortgages has occasionally placed
ownership of the property in the local government.

A second category of publicly owned property involves property which was originally acquired for
a large public project such as a transportation, recreation or sanitation project, or construction of
new public buildings. Such projects usually require the acquisition of more property than is per-
manently required for the facility, with the excess land remaining unused by either the government
or the private sector (and not producing any property taxes). In this category the local government
usually has relatively clean title to the property because of the manner in which it was initially
acquired either by purchase or by eminent domain. The difficulty thus far in converting such excess
property to a more productive use is that usually the local government, or government agency, has
not made a determination of the geographical boundaries of such excess land. In addition, the
funds that were used to acquire the property initially may contain restrictions on how the proper-
ty can be used, or transferred, after completion of the initial project.

A third category of government owned real estate which could be a key to community develop-
ment activity is property that is no longer used for its original functions. Examples of such prop-
erties include land and buildings formerly used for public schools but which have long been closed
due to declining student enrollments, land once used for public housing projects but since aban-
doned in the face of changing public housing strategies, and government buildings once used for
offices, jails, or warehouses but later replaced by newer facilities elsewhere. In each of these situa-
tions the challenge usually does not pertain to questions of ownership or title. Instead,the primary
challenge is a determination by public leadership of which properties are indeed surplus proper-
ties and no longer needed for governmental functions. Even if a policy decision is made to sell or
convey such surplus property, an additional policy decision needs to be made on whether to con-
vey the property at little or no cost for community development work, or to sell the property on
the open market to the highest bidder.

A fourth, and often overlooked, category of publicly owned property is land which has been, or
could be, donated to a local government by the existing private owner. If a private landowner has
allowed property taxes to become delinquent, or has made the decision not to invest any further
money in the property, the owner should be encouraged to consider donating the property to the
local government instead of simply abandoning the property. This approach may provide the
owner with income tax deductions for a charitable donation,may reduce the possibility of lawsuits
over repair of the property, and could avoid reliance on a questionable tax foreclosure proceeding.

From the perspective of community development activities, government owned property should
not be viewed only in terms of the large tracts of land with buildings on them. It is often the small-
er tracts of land,frequently not suited for large development due to size or location,that pose both
the greatest problems to a neighborhood and the greatest potential for easy conversion to produc-
tive use. Local governments are often not effective property managers of small tracts of land that
are not being directly used for government or public functions. These small tracts are the ones
which are usually acquired through lien foreclosure, or are surplus from public projects,and which
get “lost” in the government’s property inventory and management system. For a neighborhood
association pursuing development, small tracts which accumulate debris quickly become public
nuisances.

10
Renewing Public Assets for Community Development

Barriers to Development
Just as there are four primary categories of government owned property potentially available for
community development, there are four different types of barriers to the actual renewal of these
properties. The first and most basic barrier is the lack of knowledge and awareness of the public
ownership of these properties. In many jurisdictions maintenance of these properties is a low pri-
ority in terms of public policies, and there often is a lack of coordination between the government
agency which enforces lien foreclosures and the government division responsible for property
management of publicly owned properties.

The second possible barrier is that when property is acquired by a government for public purpos-
es, the funds used for the acquisition may contain restrictions or limitations on subsequent use or
transfer of the property. Tracing of the original acquisition funds, and the restrictions imposed
upon the property by federal or state law, can be a difficult and time-consuming process. It is not,
however, an insurmountable barrier. A parallel obstacle may exist with respect to properties that
were donated to the local government for specific purposes, such as for public parks. Depending
on the precise form of the words of the conveyance, it may not be possible to convert such prop-
erty to other uses.

The third barrier to conversion of existing government owned property to other uses consistent
with community development is that every state and local government has a specific legal proce-
dure which applies to the transfer of government properties to private entities. Created in order to
prevent unethical conveyances, or conveyances inconsistent with the concept of the common good,
these statutory disposition procedures generally require that surplus or excess properties be sold at
public auction to the highest bidder. In some cities proper use of the existing procedures may be
adequate for conveyance of government owned property to meet development goals. In other cities
it may be appropriate to create new procedures authorizing conveyance of properties to nonprof-
it entities at little or no cost in exchange for a commitment to develop the property in a certain
manner.

In some states a fourth barrier is present when existing laws unnecessarily restrain the local gov-
ernment from conveying property to another public entity, or to a public or private nonprofit cor-
poration for specific purposes. If a local government is unable to convey its surplus property to a
development agency or nonprofit entity, what may be missing is the legal authorization for a new
public entity that can act as an intermediary between the local government and community devel-
opment organizations.

Delinquent property tax liens and government owned property are two key potential assets for
community development. Both stand as a possible cause of neighborhood deterioration, yet both
stand as a potential resource to achieve neighb orhood revitalization. Renewal of these assets for
community development depends on increasing access to these assets.

11
 Renewing Public Assets for Community Development

Increasing Access to Public Assets

IV. Drafting an Efficient and Effective Tax Foreclosure Process

When a neighborhood, or area targeted for community development, confronts large numbers of
parcels of land that are heavily tax delinquent, or even a few key tracts of land that are tax delin-
quent, the first task is to work with the appropriate local government officials to determine the fea-
sibility of using existing property tax enforcement proce-
dures on these properties. It may well be that existing proce-
dures are adequate to force existing owners to become
responsible for the condition (and taxes!) of their property,
and that all is required is a little public encouragement to
elevate property tax enforcement on the priority list of the
public officials.

Unfortunately, however, the response of the tax collectors, or

local government attorneys, is often simply that the existing
patchwork of foreclosure procedures takes too long, is too
cumbersome, is subject to constitutional inadequacies, or
will not produce insurable title. Faced with this response,the
appropriate course of action is to prepare a revision of the
applicable laws to create an enforcement mechanism which
will work.

Building Collaboration
Revising state and local government laws on property tax foreclosure is not an easy task, but it can
be done. In the last four years alone, several states have enacted significant revisions to their prop-
erty tax foreclosure laws, and, where permitted, a number of local governments have revised their
own ordinances and procedures. Reform of the tax foreclosure process requires collaboration
among four different constituencies that do not necessarily have a history of working together, so
coalition building is essential. The first partner in these efforts must be the tax collector. It is the
tax collector who is likely to be the most frustrated by the inadequacy of existing remedies, and
who has the most to gain by having an efficient and effective enforcement mechanism at his or her
disposal. The second partner must be the local government attorneys, for they are the ones who
specialize in the statutory authority of the public officials and without whom no new statute is like-
ly to be passed. Participation by the tax collectors,and the city attorneys, will be backed by the sup-
port of the local government elected officials who see the possibility of both increasing general tax
revenues and encouraging community development simultaneously.

The third partner in the coalition must be the nonprofit community development organizations.
These groups will be able to emphasize the harmful effects on the community of the lack of prop-
erty tax enforcement,and will be in a position to ensure that new legislative approaches do not end
up harming the very people they are trying to serve, such as the low-income elderly who happen
to own their own homes but who have never understood the significance of applying for home-
stead exemptions. The fourth par tner in this coalition, who is in many ways the most significant,
is the title insurance company. Whatever new statutory procedure is designed must be acceptable
to title insurance companies. When a property tax foreclosure procedure is ultimately completed,
if the title to the property is not insurable,no future development will occur on that property until
yet more legal proceedings are completed.

12
Renewing Public Assets for Community Development

Elements of an Efficient System

There are four elements to an efficient and effective tax foreclosure procedure. The first involves
the length of time it takes to begin, and complete, the entire process, and the second element per-
tains to the number of different steps, or stages in the process. The provision of constitutionally
adequate notice is a third key element, and the availability of insurable title is the fourth. In any
given jurisdiction, the existing statutory framework has one, or two, or even three of these critical
elements present, yet fails to be either efficient or effective because of the missing fourth element.
Most jurisdictions, however, lack two or more of these elements.

Everyone agrees that property owners must be given a reasonable period of time to pay property
taxes, even once the taxes are delinquent. A reasonable period of time is justified by the harshness
of the enforcement remedy - the complete loss of the property. What is reasonable will vary accord-
ing to the jurisdiction, with the minimum period of time for the entire process being roughly one
year after the taxes become delinquent. There is little justification for having a process which takes
two years, or four years, or longer in order to be completed. If a property owner fails to pay delin-
quent taxes by the end of an additional year after actual date of delinquency, and after receiving
notice of the enforcement proceedings, it is most likely that the owner will never pay the taxes and
the property will continue to decline. Advocates of a very extended period of time for payment of
delinquent taxes are usually simply expressing their opposition to property taxes generally, or their
fears about never receiving adequate notice of the foreclosure proceeding.

From the perspective of efficiency, whatever period of time is determined to be reasonable should
be a period of time prior to the commencement of legal proceedings. If an owner is going to be
given an additional period of time to pay the property taxes, it should be before a court orders a
sale of the property (or a transfer of title to the government). In other words, there is no need for a
post-sale right of redemption from a property tax foreclosure if an adequate period of time exists before
the sale occurs.

The second key element in an efficient and effective tax foreclosure process is reliance on a single
stage, or single event. There is no sound policy justification for a process which involves first a “condi-
tional” public auction of the property, and then later a second proceeding to terminate, finally, the
rights of the property owner. Statutes which provide for multiple events, or stages,not only prolong
the length of time required to complete the process, and the costs, but also present significant con-
stitutional questions of providing adequate notice at each step in the process. If there is a reason-
able period of time prior to the single, and final, event, and the owner and all other interested par-
ties received notice of the commencement of the process, a single foreclosure event which is final
and binding should be fair to all parties.

Providing adequate notice of the property tax foreclosure proceeding, the third key element, is
essential simply because it is constitutionally required. This is the primary legal defect in most
existing tax foreclosure laws. Existing laws tend to rely upon notice by publication, and mailed
notice to the owner and perhaps to mortgagees. The Supreme Court has made clear, however, that
actual notice must be given to every party having an interest in the property whose identity and
address can reasonably be ascertained. Functionally, the only way to identify all of the interested
parties is to conduct a title examination, and mail notice of the proceeding to every party identi-
fied. Notice should also be given to every occupant of the property. The costs of the title examina-
tion can be added to the minimum foreclosure sales price.

13
 Renewing Public Assets for Community Development

Having insurable title in the hands of a tax foreclosure sale purchaser, or the local government, at
the completion of the process is a fourth,and crucial, element for future development of the prop-
erty. Making sure that title insurance companies are comfortable with the title examination
requirements and the provisions for notice is essential.

Judicial Foreclosure
Though it is possible to create a new nonjudicial property tax foreclosure process, it is likely that
such a process will leave open serious questions about the adequacy of the procedure, or whether
each of the elements were met in a particular case. For this reason, creating a foreclosure procedure
which r elies upon court sup ervision and approval is far preferable. A court will be in a position to
issue a final order on the constitutional and statutory adequacy of the procedures, and title insur-
ance companies will be able to rely upon the express words of the court authorized deed.

Some jurisdictions have elected to create a separate, modified, procedure for certain types of prop-
erty. These modified procedures provide for an even more expedited tax foreclosure process.
Properties that are subject to these procedures are those which are found to be abandoned, or
which are a serious nuisance to the surrounding properties. These expedited procedures may set
forth a very short period of time, such as sixty days, for completion of a tax sale in a single step.
The element which can not be modified, however, is the requirement of adequate notice to all interest-
ed parties, which applies regardless of the condition of the property.

Reform of existing tax foreclosure laws should always anticipate the situations in which title to the
property is conveyed to the local government. A few jurisdictions provide that at the conclusion of
the proceeding all tax delinquent properties are forfeited to the local or state government. This has
the advantage of allowing the government to use, or convey, the property as it deems appropriate.
Most jurisdictions, however, prefer to sell the property at public sales, as local governments are not
necessarily in the business of managing large numbers of scattered parcels of land.

Whenever a tax foreclosure law relies upon public sales, the law should anticipate the situation
where the minimum bid (the total amount of taxes, penalties, interests, and costs) exceeds the fair
market value of the land. When this occurs, no third party will bid for the property, and no sale
will take place, unless special provision is made for “sale” of the property to the government, or a
governmental agency.

One additional policy issue will likely need to be addressed in the reform of existing tax foreclo-
sure laws. A significant number of states have, for decades, permitted private third parties (either
individuals or institutional investors) to purchase the liens for delinquent taxes from the local gov-
ernments. To the extent that the purpose of this policy was to permit governments to raise cash by
selling tax liens which were difficult to enforce, reform of the tax foreclosure laws should eliminate
this need by creating efficient and effective tax foreclosure laws.

V. Using Government Properties for Community Development

The second key to community development is to make maximum utilization of the tracts of land
that are currently owned by the state or local government within the targeted development area. In
order for this to occur, each of the four barriers to renewal must be addressed. The four barriers
are (i) identification of publicly owned property, (ii) legal restrictions on use of the properties,
which arise from the original sources of funding to acquire the property, (iii) legal requirements
that all property be sold for the highest possible price, and (iv) laws restricting conveyance of pub-
lic property to nonprofit entities.

14
Renewing Public Assets for Community Development

Depending upon the local government,indices and other lists of publicly owned properties may be
accurate and easily accessible. This should not be assumed, however, and individual tracts of land
which are central to neighborhood revitalization should be checked carefully for evidence of pub-
lic ownership. A survey of land ownership also should not be limited to the name of the city, or
county, as frequently title to the property may be
listed in the name of an agency of the local gov-
ernment, or an independent government
authority.

When a particular tract of land is identified as

being owned by the local or state government, it
is advisable to determine how the government
acquired ownership. For example, if federal
funds were used to help acquire the land for a
public project, there may be restrictions on sub-
sequent use and development. Such restrictions
are not insurmountable, but do need to be
addressed carefully.

The third and fourth barriers to the transfer of

government property are the most common.
Virtually all states have general statutes requiring
that public property that is no longer needed for
public purposes be sold at a public auction for
the highest possible price,and prohibit negotiat-
ed transfers for little or no consideration to non-
profit entities. There are several options to
address this barrier, each of which may be used
independently or concurrently.

One option is to create a statutory amendment to the state statute

on disposition of public property, authorizing local governments to
convey property upon terms and conditions determined by the
local government. This approach grants maximum authority and
flexibility to the local government. A second option is to authorize
local governments to convey public property, at little or no cost, for
use in certain designated programs. For example, state law may
permit local governments to convey residential properties at no
cost to first-time homebuyers as part of an “urban homesteading”
program. Alternatively, state law may authorize local governments
to convey public properties in targeted development areas to non-
profit entities for future development.

A third option builds upon the first two and adds one essential
component - the creation of a new public agency, or authority spe-
cializing in the acquisition and transfer of properties for community development. In some juris-
dictions these entities take the form of public development authorities, while other jurisdictions
have created separate land bank authorities.

15
 Renewing Public Assets for Community Development

The effectiveness of an independent, or quasi-independent,authority depends in large measure on

the nature of the properties over which the authority has control. If there is a large volume of tax
delinquent properties, then a land bank authority needs to have the power to acquire the proper-
ties at the tax foreclosure for little or no consideration other than responsibility for the taxes. If the
authority has been given power to waive the taxes, it is then able to acquire clean title to the prop-
erty and reconvey it to a qualified nonprofit entity for development purposes. If, instead, the pub-
licly owned properties consist primarily of parcels of land owned for years by the local government
and acquired through various lien foreclosure procedures, the authority must have the power to
initiate legal proceedings to resolve title questions.

VI. Evaluating the Challenges

Community development is a challenging task,and the complexity of laws on delinquent taxes and
publicly owned property doesn’t make it any easier. Instead of attempting to master all of the var-
ious possibilities, problems,and options,it is frequently easier to assess the challenges,and the pos-
sible solutions, one question at a time. The following set of questions presents a form of “decision-
tree” analysis. It begins by asking a basic question and then, depending on the answer, indicates a
follow-up series of questions leading ultimately to a concrete set of potential solutions for proper-
ty in a particular neighborhood or community.

Before beginning with the following questions, identify (as least in preliminary form) a specific
neighborhood or community in which there are one or more specific parcels of land which are key
to development activities,and which cannot be acquired through direct negotiations with the cur-
rent owner. With respect to these properties, answer the following questions and then proceed as
indicated to subsequent questions or recommendations.

16
 Renewing Public Assets for Community Development
Question 1
Are properties in the target area
characterized by significant
delinquent taxes?
Yes
Has the local government attempted to
enforce tax foreclosure proceedings in
recent years?
No
Does the tax collector or tax commis-
sioner feel that the existing tax foreclo-
sure laws are unworkable, or ineffi-
cient, or ineffective?
No
Is the failure to enforce delinquent
taxes due primarily to administrative
resources, or to political concerns?
No
Has the jurisdiction followed a prac-
tice of selling tax liens, either individ-
ually or in bulk, to private third party
purchasers?
No
Potential solution:
Meet with the tax collector, and the
local government attorneys, to deter -
mine why existing tax foreclosure pro-
ceedings are not being utilized.
No Go to Question #2
Yes
Potential solution:
Begin working with tax collector to ensure
commencement of enforcement proceed-
ings.
Yes
Are existing procedures ineffective
because they do not provide for constitu-
tionally adequate notice with judicial
review and order?
Yes
Potential solution:
Begin building a coalition
around key issues of the
losses to the public treasury
of nonpayment of property
taxes; the implicit shifting of
the tax burden to property
owners willing to pay taxes,
and the negative economic
impact on neighborhoods
from abandoned and neg-
lected properties.
Yes
Potential solution:
Examine why the sale of
tax liens is not address -
ing the “problem”
parcels in the targeted
development areas.
Yes
Potential solution:
Begin building a coalition of local
Government attorneys, title insurance
companies, and tax collectors to draft
appropriate revisions to state laws, and
if necessary, to local government ordi -
nances, making sure that title to the
property at the completion of the proce-
dure is insurable title.
No
Are the existing procedures inefficient
and ineffective because of the multiple
steps required, or the length of time (the
redemption periods) before the proce -
dures is complete?
Yes No
Potential solution: Are existing proce-
Begin building a coalition dures inefficient
of tax collectors, local gov - and ineffective
ernment attorneys, ttle because of the
insurance companies, and statutory provisions
community development for minimum bids?
corporations to revise tax
foreclosure laws to simplify
procedures and reduce
time period, with careful
attention not to create
hardships on low-income
owner occupied properties.
Yes
No
Potential solution:
Either revise the existing
Next step:
statutory minimum bid
Work with the tax
requirements, or create a
collector to determine
new special purpose
if he or she believes
government entity which
that existing laws are
has authority to acquire
inefficient or ineffec-
the property at less than
tive.
the minimum bid, such
as a land bank authority.
17

Question 2
Are properties in the target area characterized
by abandoned buildings, or “junk” improve-
ments which are a danger to neighborhood?
Yes
Has the local government attempted to
bring legal proceedings against the prop-
erty to require the owner to rehabilitate
the property or cause the improvements to
be demolished?
No
Are there existing government ordinances
pertaining to elimination of public nui-
sances caused by vacant and abandoned
properties that could be enforced?
Yes
Is the failure to enforce existing ordi-
nances due to actual or perceived defects
in the existing legislation?
No
Is the failure to enforce existing ordi-
nances due to lack of public resources
or political will?
No
Next Step:
Encourage community groups to meet with
elected political representatives to seek
enforcement of existing ordinances against
specific “problem” parcels.
18
Renewing Public Assets for Community Development
No Go to Question #3
Yes
Potential solution:
Work with local government officials to
develop a priority list for “problem”
parcels, focusing both on those parcels
which are causing the greatest harm and
on those parcels which can be converted
into productive use for the community.
No
Potential solution:
Build a coalition of local government offi-
cials to draft appropriate legislation for
local, or state, enactment granting authori-
ty to local governments to proceed expedi-
tiously in judicial proceedings against
properties which constitute a public nui-
sance.
Yes
Potential solution:
Build a coalition of local government
attorneys, real estate attorneys and title
insurance companies to review, and pre-
pare revisions of, existing code enforce-
ment ordinances and statutes.
Yes
Potential solution:
Build constituency that can demonstrate
the economic and cultural harm to the
community from inaction with respect to
public nuisances.
 Renewing Public Assets for Community Development
Question 3
Are properties in the neighborhood owned by a
governmental entity, a public agency or public
authority?
Yes
Have the publicly owned properties been invento-
ried, and divided into categories according to the
method, or source, or acquisition of the properties?
Yes
Within each categor y, has a determination been
made of restriction, if any, imposed on the property
by virtue of the source of funds used to acquire the
property initially?
Yes
Do existing state laws and local ordinances, per-
mit the transfer of public properties to community
development corporations, other nonprofit entities,
or possibly private developers for title or no cash
consideration so long as the property is developed
and used in accordance with stated purposes?
Yes
Is the failure to utilize existing procedures for the
transfer of publicly owned properties due to the
lack of capacity of community development corpo-
rations or other entities to acquire and develop
such properties?
No
Is the failure to utilize existing procedures attributa-
ble to title questions involving the properties?
No
Next Step:
Identify one or more specific parcels as “models” to
use to initiate the transfer of the property to entities
for community development purposes.
No
Potential solution:
with no property which is tax delinquent, aban-
doned, constituting a nuisance, or even owned by
governmental entities, the only (!) challenge is to
find a way to attract new private investment into
the community.
No
Next Step:
Work with the appropriate department of the local
government to inventory publicly owned properties,
and divide them into categories according to
source of acquisition (lien foreclosure, excess prop-
erties from public works projects, surplus properties
no longer needed by local government), and
according to geographic location.
No
Next Step:
Begin tracing the source of acquisition of the prop-
erty to determine if any federal, sate, or local grant
contracts impose conditions on the use of the prop-
erty, or upon proceeds derived from the sale or
transfer of the property.
No
Next Step:
Build a coalition of local government attorneys and
community development corporations to prepare
necessary legislation for authorization of special
purpose conveyances. Include within this legislation
consideration of the possibility of creating a land
bank authority.
Yes
Potential solution:
Focus on capacity building in the local nonprofit
community, whether on nonprofits serving special
needs, or on community associations seeking to
prepare a strategic plan for a neighborhood, and
consider utilization of nonprofit intermediar y
(either local or national) to facilitate the capacity
building.
Yes
Potential solution:
Evaluate the feasibility of using existing statutory
procedures (such as Quiet Title Actions) to resolve
title defects or creating a new procedure for bulk
“reforeclosure” of the tax liens or other liens by
which the local government acquired the properties.
19
 Biography

Frank S. Alexander
Frank S. Alexander is a Professor of Law at Emory University School of Law,
where he joined the faculty on a full-time basis in 1982 following four years in
the private practice of law. At Emory his courses include Property, Real Estate
Sales and Finance, State and Local Government Law, Law and Theology, and a
seminar in Federal Housing Policies and Homelessness. Honored with the Emory
Williams Award for Distinguished Teaching in Professional Education in 1991,
and the Ben F. Johnson Faculty Excellence Award in 1998, Professor Alexander
has been selected eight times as the Professor Who Best Exemplifies the Ideals of the Legal
Profession by the Emory Student Bar Association. He is the author of Georgia Real Estate Finance
& Foreclosure Law (2rd edition, 1999), co-editor of The Weightier Matters of the Law: Essays on
Law and Religion (1988), and has published eighteen articles in real estate finance, law and theol-
ogy, and legal philosophy.

Founder of Emory University’s Law and Religion Program in 1982, Professor Alexander’s work in
recent years has focused on homelessness and affordable housing. From 1993 to 1996, he served
as a Fellow of the Carter Center of Emory University, specializing in neighborhood redevelop-
ment activities and low-income housing in conjunction with The Atlanta Project. Appointed by
Governor Miller in 1994, he served as a Commissioner of the State Housing Trust Fund for the
Homeless from 1994 to 1998, and has served as an advisor to the residents of East Lake Meadows
in the redevelopment of the public housing project. Professor Alexander is Chairman of the
Board of Directors of the Consumer Credit Counseling Service, a non-profit community service
agency providing consumer credit counseling, and Treasurer of Community Friendship, Inc., a
non-profit psycho-social rehabilitation program for the seriously mentally ill. He is the recipient
of the 1996 Outstanding Service Award from the Atlanta Legal Aid Society, the 1995 Georgia
Affordable Housing Award for Individual Initiatives, and the 1995 Citizen’s Award for
Outstanding Service from the Fulton County/City of Atlanta Land Bank Authority.

Professor Alexander received both a J.D. from Harvard Law School and a Masters in Theological
Studies from Harvard Divinity School in 1978, and holds a B.A. from the University of North
Carolina. He was admitted to the State Bar of Georgia in 1978, and has served as Counsel with
the Atlanta law firms of Kutak Rock and Powell, Goldstein, Frazer & Murphy. He is an active
member of the American Arbitration Association, the American Law Institute, the American Bar
Association, and the Georgia Bar Association.

20