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Niagara Falls changing way it conducts tax foreclosure auctions

NIAGARA FALLS – The City of Niagara Falls is planning to change the way it conducts tax foreclosure auctions by prioritizing available properties for people who want to be homeowners, according to city officials.

Every year, hundreds of parcels around the city hit the auction block due to unpaid taxes.

The typically vacant parcels or abandoned buildings get scooped up, often by speculators or people who neglect their properties.

The same thing happens year after year, a cyclical occurrence that’s led to untold numbers of boarded-up buildings, a blight on the city.

“Land speculators and real estate speculators and – frankly I don’t know what else to call them – slumlords have learned how to game this system,” Mayor Paul A. Dyster told lawmakers last week. “They’ve figured out how to make the rules and regulations work to their advantage and we have to stay one step ahead of them.”

So here’s what a reform plan developed by the Dyster administration would do:

• Hold a “homeownership auction” prior to the city’s regular tax foreclosure auction, an event that would give potential homeowners essentially the right of first refusal for single-family and two-family dwellings coming available.

• Require the winning bidder for any single-family or two-family home to put down a 10 percent bond that the city would hold onto and reimburse when a certificate of occupancy is issued.

• Host smaller tax foreclosure auctions after the homeownership auctions – where the total number of properties available would be no more than 50 – instead of holding one big auction annually.

“We want to make the tax foreclosure process smaller, easier to track,” said Seth A. Piccirillo, director of the city’s Community Development Department.

With fewer properties changing hands at one time, there wouldn’t be a rush on city departments to handle a flood of new work in addition to the day-to-day work of employees, Piccirillo said.

Piccirillo’s department has tested these proposed changes in two “mini” homeownership auctions held in September 2013 and this past May.

At the 2013 auction, the city sold three homes near Niagara Falls Memorial Medical Center. Among the city’s requirements for those properties, the winning bidders agreed to live in the home for five years, submit a rehabilitation plan to the city within 60 days and be in good financial standing with the city in order to finalize the purchases.

Those parameters would carry forward and be used in the new homeownership auctions.

“Our goals are to prioritize homeownership, force realistic renovation standards and timelines and to ultimately stop the process of property neglect and tax evasion, especially among multi-unit buildings,” Piccirillo said.

Piccirillo said the city does not stand to take a financial hit from the change.

He said the 192 properties sold at the foreclosure auction last December brought in an average of $8,900.

At the homeownership auction this past May, seven houses were sold for an average of $9,100, he said.

It is not necessary for a new law to be passed for the Dyster administration’s proposals to be enacted, Piccirillo said.

Another potential change in years to come would be to move the auctions to the spring to increase the chances properties can be turned around in a single construction season.

And having more homeowners in a neighborhood strengthens that neighborhood, Piccirillo said.

“Ultimately, what is needed for this to work is buy-in,” he said.