Tax-lien system must change to help neighborhoods

An editorial from The Herald-Dispatch

HUNTINGTON, W.Va. — Huntington has probably done more than any local government in the state to reduce the number of abandoned and dilapidated buildings that harm our neighborhoods in so many ways.

Yet, even with all those efforts, the city still struggles to handle the volume of troubled properties.

If you travel around the state, you will see that the problem is just as bad or worse in other communities. Last week, the Charleston Gazette-Mail outlined many of these neglected properties in the capital city and the role the state’s tax lien system plays in perpetuating decay.

 That is just what Huntington discovered a number of years ago, prompting the establishment of the city’s land bank program, which began in 2009. What the city program aims to do is take control of troubled properties that might otherwise might spend years in “tax-lien purgatory” and overtime help convert those properties to a more productive use.

That is a critical mission because the tax-lien system is really only designed to help counties collect property taxes. When an owner does not pay, a lien on the property can be sold at auction. The buyer of the lien pays the taxes owed, which is good for the county, but often not so good for the neighborhood.

The lien holder takes control of the property until the owner repays the taxes with interest (1 percent for each month). Or after 18 months, the lien holder can take possession of the property. That can be a good investment, and the lien sales often attract out-of-state bidders who are looking to make a profit on the interest repayment.

 Unfortunately, there is little incentive for the investor to improve or even maintain the property, and many properties just sit there and continue to deteriorate.

When the properties are purchased by the land bank, the buildings are secured and boarded up. Staffers also mow the grass and make these structures much less of a nuisance. If after three years the property is not redeemed, the land bank can sell it, work with developers to improve the property or find other productive uses. Recently, city officials began talking with the community about turning some properties into public gardens and “pocket” parks.

Overtime, the city should be able to put together some parcels into larger tracts that could be very attractive to developers for much needed new housing in the city.

But the land bank could be even more effective if it had “first right of refusal ” at the tax lien sales. In other words, let the land bank have the properties it needs first, then open the process to other bidders. That will require legislative action, but it would be an important first step in taking a look at the whole West Virginia system and how it can be retooled to benefit neighborhoods rather than just out-of-state speculators.

See more from The Herald-Dispatch. 

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