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City to use new foreclosure power to stabilize neighborhoods

The City of Buffalo, using newly acquired authority, hopes to obtain hundreds of properties at the city’s coming tax foreclosure sale and then resell the homes and vacant lots to help stabilize distressed neighborhoods through homeownership.

Here is how the plan will work:

Step 1: The city identified properties on its foreclosure list that are not owner-occupied and that it believes will likely end up in the hands of speculators if allowed to be purchased at the tax foreclosure auction scheduled for Oct. 18-20. Some of the properties are in South Buffalo, Black Rock and Riverside, but most are on the city’s East Side.

Step 2: The list is being shared with the Buffalo Erie Niagara Land Improvement Corp., which has the authority to make pre-emptive bids on properties at the point they are being auctioned off. The properties are then taken off the auction block. The process allows the land corporation to obtain the properties for the amount owed in back taxes. Under a law recently passed by New York State, the land corporation can now make the pre-emptive bids on behalf of the City of Buffalo, then turn the properties over to the city.

Step 3: The city anticipates the land improvement corporation obtaining about 100 houses and 200 vacant lots on the city’s behalf at the auction. Any costs incurred will be paid by the city, not the land corporation. The city does not have to pay the city taxes owed on the properties, but does have to pay delinquent Erie County taxes.

Erie County in recent years has not foreclosed on city properties that owe Erie County taxes. As a result, when Buffalo forecloses on a city property, there could be several years in delinquent county taxes on the property. City officials estimate the county is owed, on average, $1,000 in back taxes on properties with houses on them, and lesser amount on vacant lots.

Step 4: Once obtaining the properties, the city plans to resell houses to owner-occupants, and is currently talking with banks, mortgage companies and foundations to create a homeownership program that ensures money will be available for purchase and repair. City residents would get preference in such a program. The city is also working on a program that will create opportunities for renters now living in these houses to purchase them.

Step 5: Some of the vacant lots also will be sold, either to individuals wanting to build on the lots, or to property owners living next door to a vacant lot who want the extra land. Other lots – including those adjacent to existing city lots – will be retained by the city for future development.

The city is undertaking the program for the first time because local land banks and municipalities were just recently authorized by the state to work cooperatively in this way at foreclosure sales.

The Brown administration has been pushing for the legislation as a tool to further combat neighborhood blight.

“The new bill will be extremely helpful to Buffalo,” said Mayor Byron W. Brown.

In the past, properties have been transferred from one negligent landlord to another through foreclosure auctions because the city didn’t have the preferred bidding status it now has, the mayor said. This new process, Brown said, allows the city to put vacant and abandoned properties in the hands of responsible homeowners.

Brendan Mehaffy, executive director of Brown’s Office of Strategic Planning, also praised the new process which, he says, the city will likely continue using at future foreclosure sales to help stabilize neighborhoods.

“This is a tool to fight the neglect of properties in our neighborhoods,” he said.

email: sschulman@buffnews.com

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