Many Massachusetts cities and towns continue to have large numbers of abandoned tax-delinquent properties despite a booming real estate market and overall shortage of affordable housing, a new study has shown.
The report, just released by the Citizen’s Housing and Planning Association, looked at the tax foreclosure process and found that such properties could be turned back into productive use by municipalities with better planning, coordination am-
ong departments, knowledge of the process, and strong political leadership.
In a market where finding suitable vacant land to develop into housing is becoming more difficult, the ability to reuse existing structures within cities and towns has become more important, according to CHAPA Executive Director Aaron Gornstein.
One of the key problems identified by developers was they were having a hard time working on getting these properties to reuse them, he said.
Hearing similar complaints from municipal officials and community leaders about the difficulty associated with bringing abandoned properties back on line, CHAPA decided to investigate to see if major changes were needed in the system.
We decided to dig into the system, said Charleen Regan, principal author of the study, titled Back on the Roll in Massachusetts. This is the most comprehensive review of the tax title process for community development in over 10 years.
The study took about six months to complete.
People perceived [the tax title process] as an overwhelming problem, Regan said. They always poked around the edges of the of the problem, but never actually looked in the box.
While many interviewed for the survey placed blame on the Land Court for a bogged-down system of returning abandoned properties to productive use, Regan said most of the suggestions for improvement come outside of court at the municipal level.
We thought we’d find a need for major changes [in the Land Court], she said. The bias in the community development world was toward that. But what we found is that while the system is arcane, it is understandable and predictable, and most of the weight falls on the petitioners.
Cities and towns need to formulate plans to convert tax title properties, keep lines of communication open between departments, and consistently follow up on properties on which they have started the tax title process, Regan said.
Even when you have neighborhoods where people want to work on revitalizing a property, they find it hard to get into the system, she said.
Community redevelopment advocates need to work in tandem with town treasurers and tax collectors, who have a fiscal interest in the property, the report said.
There is a gulf between the fiscal people and the community development people, and in that gulf issues could fall through the cracks, Regan said.
While towns may not specifically be interested in creating affordable housing, CHAPA officials said other incentives should prompt tax collectors into taking action on the properties.
It’s not healthy to let these properties sit and build up taxes, affecting bond ratings, said Mathew Thall, the director for the Local Initiatives Support Corp. and chair of CHAPA’s work group on tax delinquent properties. These properties are like sinkholes. Getting them back on the tax rolls is good for everybody, even if it doesn’t result in affordable housing.
For improvements at the local level, the report recommends gaining the support of top officials, involving community development corporations, devoting more resources to reusing abandoned properties, and creating an inventory of all abandoned property in the city or town.
Because most cities and towns do not have an accurate list of tax title properties, Regan said CHAPA was unable to estimate how many properties could be affected by changes recommended in the report.
Once a city or town takes ownership of an abandoned property, it often faces the task of devoting resources to rehabilitating the property as affordable housing or other uses. Though there are no new funding programs proposed specifically for the renovation of tax title property, CHAPA says a wide range of funding options are available for properties that make it through the process.
These properties represent a major potential asset for affordable housing, Thall said. The properties can be matched with home funds, Community Development Block Grants and by piecing together other resources. In overheated markets like Boston, Chelsea and Brockton, these properties and those resources may be the only hope for affordable housing.
There’s nothing new in terms of state and federal funds available for these properties, said Bob Ebersole of the Department of Housing and Community Development. But a lot of these funds only become available once you have control of the property, and grants require the ability to proceed.
The sooner these existing properties are cleared through the tax title process, the sooner they can access funding, he added. Without a plan, there is no incentive for fast-tracking these properties. We need to give direction to the tax collectors … and over the long run, get the community back on line faster.
Ebersole agreed the tax title process is a difficult one because of the number of parties involved. There is no one magic bullet, he said. There’s no one thing that’s going to connect everything. Actions have to be taken by many different parties.
New Bedford Model
One example of a city that has worked on a successful plan for taking and disposing of abandoned properties is New Bedford, according to Gornstein. New Bedford has speeded up the foreclosure process and turned the properties over to first-time homebuyers. The personal involvement of the mayor and the careful timing of auctions to closely follow the issuance of final foreclosure deeds by the court system have been critical ingredients for New Bedford’s success, he said.
For improvements at the Land Court, CHAPA recommends more computerization, including a Web site and more staff to increase access to information and reduce backlogs. Because the initiative to move cases through Land Court lies with the petitioners – tax collectors in the case of tax title properties – Regan said collectors would be more likely to check on the status of court cases and push properties through the court if they had easier access to the case’s status.
I would welcome any improvement in the technology and staffing, said Land Court Judge Mark Green. He added that the trial courts in general are part of a plan to conduct a complete review and upgrade of technology, but was unsure what effect that upgrade would have on public access to information.
Anything would be welcome, he said.
Legislative changes recommended by the study include fast-tracking the foreclosure process for a small number of problem properties, expanding eligibility for the administrative foreclosure process for buildings of low value, and allowing municipalities to accept deeds-in-lieu of foreclosure and avoid abatement procedures.
The tax foreclosure process is complex and not likely to change, nor should it, Regan said. The power vested in municipalities to take an individual’s property, and eradicate all other mortgages and liens in the process, is awesome, she said. The detailed notice requirements, hearings and opportunities for owners to pay up and redeem their properties is based on constitutional due process principles.
Now that the report has been released, Thall said CHAPA is planning a series of conferences and forums on the subject. It is also inviting cities and towns to participate as demonstration sites where practices developed elsewhere could be implemented. So far, Lawrence and Chelsea have asked to participate in the demonstration program.
The system moves according to a variety of triggers, Green said. If some of those triggers don’t get pulled, things languish.
