Approve Amended Interlocal Agreement between City, County, LMISD, TCISD, COM and Galveston County Drainage District No. 2, for foreclosure and resell of properties with delinquent taxes by PIT Committee. 

City staff initiated a review of property owned by the City. Staff contacted the City's delinquent tax attorney who provided a comprehensive list of property that the City had listed under its name. The list is exhaustive, but includes all City property, including property wherein the City acts as the “trustee.” The list was comprehensive and included background information and aerial photos. Staff is completing a review of all property including properties wherein the City is the Trustee. All property that is currently utilized for city facilities such as water facilities, lift stations, city hall, fire stations, parks, etc., will be identified. In addition, property will be reviewed for potential future city uses, such as park expansion, new parks, future water or sewer facilities, easements or rights of way. All departments are involved in the process that is expected to be completed by the middle of June. Once all of the review is completed, the City will initiate an aggressive program to return property that is not needed to the tax rolls, including marketing, contacting interested parties, obtaining names of interested parties, etc.

In addition, deeds are being located and those files are being better organized for easy reference and future sales.

Part of the review will identify property that the city sees as having an economic benefit and that the TCEDC may have an interest in obtaining for promoting a particular use or to combine with other properties that have potential to aid in the development of an area. The TCEDC is aware of the program and is willing to participate.

Currently, property that is delinquent on taxes, at or near the amount of the value of the property, are placed in a Sheriff's sale. The strike off amount is limited by law to be the lesser of either the judgment (taxes, liens, fees, fines, etc.) or the tax rolls (appraised value) for the purpose of a minimum bid at the Sheriff's sale. Once the property does not sell, the city becomes the “trustee” of the property. The City currently has an agreement with the other taxing entities to find ways to sell the property that does not sell at a Sheriff's sale.

Part of the program being initiated by staff to return the property to productive use requires an amendment to the existing PIT (Property in Trust) Agreement that the city has in place with the other taxing entities to sell property that has been foreclosed on for delinquent taxes. On the property that the City acts as the “Trustee,” a City rep meets with a PIT committee of the other taxing entities to determine a new strike off price of property that is delinquent and a method of sale (another Sheriff sale, sealed bids, etc., the amendment shows the seven methods). The current contract was amended to allow TCISD in 2002 to relinquish any rights of proceeds or liabilities of property that initially went to Sheriff's sale and did not sell in exchange for the opportunity to obtain any property that it would have an interest in for school district purposes such as additional land adjacent to an existing school or future school site. The proposal is to amend the agreement to allow the TCEDC an opportunity to purchase any property that did not sell at the initial Sheriff's sale at the original strike off price (the lesser of the judgment or the appraisal). It could only exercise the right after TCISD had an opportunity to exercise its rights (sort of like a second right of refusal). If the TCEDC does not have an interest at that strike off price, then the PIT committee would go through the process of selecting a new strike off price and method of sale as previously done. Our delinquent Tax Attorney prepared the amendment and it has been reviewed by staff and the City Attorney.

George Fuller will be the City’s representative on the PIT committee as well as the property manager. He will look at ways the city can better market and promote the sale. As more properties become delinquent and subject to public sale, he will continue to identify if the city departments have a need for the property before it is sold at a sheriff's sale.