I am often asked why the City is always buying and selling real estate. There are many reasons that the City is active in the real estate market. Each property is unique, but there a couple of general reasons why the City buys or sells a particular property.
Floodway Property – The City has been very aggressive since the 1970s on acquiring property located in the floodway. The idea is that by buying these properties and removing the structures we can eliminate future property damages when it does flood. Most of these properties are purchased through a federal grant process that pays for 75% of the cost. There are only a hand full of these properties remaining.
Collection of Money Owed – If a property owner does not take care of their property and the City has to mow the lawn, remove debris, or demolish a structure then the property owner is responsible for the costs that the City incurred. When the property owner is unwilling to pay, the City files a civil lawsuit against the property owner to recover our costs. Once the City obtains a judgment against the property owner the City will look to garnish the property owner’s wages or have the real estate sold to pay for the costs. If the property is sold, the sheriff will conduct a public auction and anyone is able to bid on the property. Generally, at these auctions, the City is the only bidder and acquires title to the property.
Dilapidated Houses, No Assets – Sometimes the City is dealing with a house that is dilapidated to the point where it cannot be repaired and the property owner has no other assets. The City could force the house to be demolished and go through the process of getting a judgment against the property owner, but if the owner does not have any assets, then we cannot get any money from them. In those cases, we have worked out agreements where the property owner deeds the house and usually gives money to the City. In return, the City will demolish the house and not try to collect the expenses from the owner. The benefit to the City is that we free up staff time to work on other projects or properties, we can accelerate the demolition process, and often the City ends up in a better financial position than if we had filed a lawsuit.
Zombie Properties – A zombie property is a property that for whatever reason no one is taking care of and everyone just seems to have walked away from. Most common zombie properties occur when back real estate taxes are owed, a bankruptcy is involved, the mortgage is being foreclosed, or the property belonged to a relative and the proper legal actions were never taken to transfer ownership. Soon the grass goes unmowed or house comes into disrepair. Typically, the City would contact the property owner to have these violations corrected, but with zombie properties the owner is often impossible to find. Rather than allowing a zombie property to continue to exist and be an unending cycle of code violations and City actions, if the City is able to obtain ownership, we can then break that cycle by transferring the property to someone who will take care of it.
Selling Properties – Regardless of how the City acquires the property we are always in the market to sell it. The City has enough properties to mow and take care of, so if someone is interested in a City owned property then we are interested in talking. Additionally, the City wants to see these properties become productive and go back on to the tax rolls.
There are a lot of moving parts and each property is unique. Hopefully this gives you a glimpse into the thought process at the City with regard to buying and selling real estate.
Tobias J. Tempelmeyer
City Administrator and General Manager