City’s business of fighting blight is through use of Sheriff’s auctions

23rd January 2012   ·   0 Comments

By Susan Buchanan
Contributing Writer

Dilemmas involving property holders who moved away or can’t afford repairs, along with ownership questions and other issues, make New Orleans one of the nation’s most blighted cities — in the company of Detroit and Flint, Michigan and Cleveland. Mayor Landrieu’s Administration declared war on blight in 2010, and last summer the Office of Orleans Parish Sheriff Marlin Gusman began auctioning dilapidated residential and commercial properties. Those sales are in addition to the foreclosure auctions that the Sheriff’s Office holds.

Starting late this month, the Sheriff’s blighted property auctions and its foreclosure sales will be conducted together every Thurs­day in the lobby of the Civil District Court building in downtown New Orleans.

City authorities are trying to meet the mayor’s goal of removing 10,000 blighted properties by 2014, compared with 2010. That represents a chunk of the estimated 40,000 to 60,000 rundown buildings and overgrown lots in our midst. In its battle, the administration has taken control of troubled properties through code-lien foreclosures. A lien is a legal claim to a property as security or payment for a violation or debt. In lien foreclosures, the city attempts to get violations corrected and to collect money owed. But when property owners don’t comply, the city can sell their property at a public auction.

“Starting in November 2010, the city began aggressively citing and adjudicating properties for blight,” said Ryan Berni, press secretary for Mayor Mitch Landrieu. “In keeping with Mayor Landrieu’s commitment to place-based development, code enforcement sweeps have been targeted within a five-block radius of the city’s public and private schools, along with parks, playgrounds and high-traffic commercial corridors.” Code enforcement and Sheriff’s sales are the most cost-effective tools for seizing blighted properties and making them productive again, Berni said.

The city collected $1.3 million last year from the sale of blighted properties from Sheriff’s auctions and the payment of liens under that process.

Jeff Hebert became Mayor Landrieu’s blight director in late 2010, and last week the mayor praised Hebert’s work and said he supports him for a current job opening for executive director at the New Orleans Redevelopment Authority. NORA, a public agency created in 1968 by the Louisiana State Legislature and the New Orleans City Council, holds its own auctions of Katrina-damaged properties — sales that are separate from the Sheriff’s offerings.

Meanwhile, in the process that leads to the Sheriff’s blighted property auctions, the city’s Office of Code Enforcement held 3,124 administrative hearings in the first three quarters of last year for commercial and residential properties, following inspections and notices of citation. Administrative hearings gave the city legal leverage to offer property in a Sheriff’s sale or to demolish it. The Code Enforcement and Hearings Bureau says it partnered case managers for enforcement hearings with inspectors to collect documentation and streamline its hearings. Twenty-six, additional hearing officers were trained last spring. A positive result of that approach was that 651 blighted properties were brought into compliance at administrative hearings through property owners’ actions in the first three quarters of 2011.

Other properties have headed for the auction block, however. According to the city, in the code lien foreclosure process, 1,003 writs were filed with the Civil District Court for Sheriff’s sales in the first three quarters of last year so that properties could be sold or remediated through foreclosure proceedings. Properties that reached the point of Sheriff’s sale weren’t necessarily offered for sale because owners can appeal or pay their fines and liens.

From late 2010 through 2011, the city demolished 2,280 blighted units after taking required administrative steps, including historical reviews. Buildings were removed through the city’s Imminent Danger of Collapse program, the Strategic Demolition Program and NORA actions.

Jackie Hill, executive director of non-profit Build Now, residential contractors on St. Claude Avenue, said “the Sheriff’s auctions are a great tool to get blighted properties back into commerce.” But she said “City Hall must fully notify owners of blighted properties of their violations and any upcoming sales dates affecting their properties, in accordance with their constitutional rights. Failure to properly notify owners continues to be an issue in some cases,” though the city’s efforts have improved.

As for buyers, Hill said, “they should be prepared to wait until all the paperwork following a sale is processed and should be aware of their obligations to maintain the property after the sale is concluded. If the house they bought is not remediated within a reasonable time, they could be cited for code violations and the house could subsequently be sold at auction again.”

Starting bids for blighted properties in Sheriff’s actions are usually set at two-thirds of their appraised value. A successful bidder must pay the Sheriff’s office ten percent of the purchase price immediately in cash or by certified check. Sheriff’s sales give new owners of blighted property a clear title at purchase, whereas tax sales of foreclosed properties can drag on because the original owner is allowed to “redeem” or win back his property within three years of sale by paying back taxes.

Ryan Berni said “unlike tax sales and sales of adjudicated properties, Sheriff’s sales of blighted property have no redemptive period. A homeowner must pay back taxes and any code enforcement liens before sale at auction to retain ownership.”

One thing to be aware of if you’re thinking of participating in a Sheriff’s auction is that any plans to renovate or demolish a house may have to be reviewed by the Historic District Landmarks Commission or the Neighborhood Conservation District Committee, adding time to your project and possibly altering it.

Sheriff’s auctions are opportunities for buyers but can be wrenching for anyone losing their home. Frank Williams, real estate broker at Parkway Realty in Gentilly, said the city clearly needs to take care of blighted property. But he feels that auction policies can use some tweaking and refinement to give property owners more options before their blighted holdings are seized and sold. “Some owners want to fix up their property but don’t have the means to do it, and banks aren’t in a lending mood,” he said. Williams also said owners of blighted property should have the chance to sell it if they want to.

Complaining that blight has become an excuse to gentrify the city, a group of Occupy NOLA protesters disrupted a December 6 Sheriff’s auction of blighted properties at the Civil District Court building on Loyola Ave.

Community leaders say it’s still too early to assess the impacts of blighted property auctions on their neighborhoods. Tracy Nelson, exec­utive director of the Lower 9th Ward Center for Sustainable En­gage­ment and Development, said “few people renovate quickly, so little change is evident” as a result of blighted holdings sold by the Sheriff in that area. In a positive sign, she noted that a few community members did buy property in recent auctions.

Kara Morgan, president of the Irish Channel Neighborhood Association, said a reduction in blight there is evident, but added “I can’t say for certain that it’s a result of the Sheriff’s auctions.”

Blight is a serious worry in the Lower Ninth Ward, the Seventh Ward, Mid City, Central City, the Freret Street area, Lakeview and New Orleans East. In fact, nearly every part of town has crumbling structures and vacant lots.

Since last summer, blighted property sales were held on occasional Tuesdays in the lobby of the Civil District Court building, but starting in late January and for the foreseeable future they’ll be mingled with the Sheriff’s weekly tax sales or general bank foreclosures — held in the court’s lobby every Thursday. In a recent Tuesday, the Sheriff’s office offered 69 blighted properties on January 10. The Orleans Parish Sheriff’s website at www.op­cso.org provides auction details within its real estate section.

For anyone who wants to review auction laws, “the code lien foreclosure and Sheriff’s sale process is allowed under Louisiana Re­vis­ed Statutes Sections 13:2575 and 13:2576,” Berni said. “The City codified the state law through City Code of Ordinances, Chapter 28 — a temporary, post-Katrina disaster replacement to parts of Chapters 6 and 26.”

Meanwhile on January 21, the New Orleans Redevelopment Authority auctioned more than 115 homes and vacant lots, with no minimum bid, through Gilmore Auction & Realty at the University of New Orleans.

For more than a year, the city has held biweekly, performance management meetings, known as BlightStat, attended by department heads and program managers to keep the blight fight on track.

This article was originally published in the January 23, 2012 print edition of The Louisiana Weekly newspaper