Thursday, October 29, 2009

Dividing Lots

Posted By on Thu, Oct 29, 2009 at 10:49 AM

At any given time, Shelby County has an excess of about 3,000 properties in its land bank.

"They run the gamut from a ditch to an 11-story office building," says Tom Moss, land bank administrator, of the properties.

Last week, the County Commission approved the transfer of 140 inner city lots to developer Harold Buehler to build low-income rental houses. Because the areas affected already have high rental unit and vacancy rates, the proposal sparked controversy over what exactly should be done with vacant lots.

Once someone stops paying their property taxes, it takes the county trustee about three years to acquire the property, though legal proceedings begin much earlier than that. The county holds a tax sale six times a year and, if the properties are not sold at auction, they eventually become part of the land bank program. A list of those properties is published each month.

"The market is smarter than anyone would ever be. These people have generally been by the property," Moss says of the buyers who frequent the county's auctions. "What gets sold is the existing houses. The vacant lots don't and the house in disrepair don't."

Another snag in the process is that most of the lots in older Memphis were subdivided into 25-foot wide lots.

"If you needed a 50-foot lot, you just bought two of them," Moss says. "That was the method at the turn of the century."

In fact, current zoning codes mean a buyer cannot build on a 25-foot vacant lot, even if a house was once on the property. Though the proposed unified development code is supposed to address that to some extent, it has not yet been approved by the City Council or the County Commission.

"Once you get the house down, the lot isn't buildable," says Robert Lipscomb, director of Housing and Community Development and the Memphis Housing Authority. "We try to sell those properties to the next-door neighbors. They can have a garden or something like that."

The city owns some property, but unlike the county, isn't required to seize tax-delinquent properties. Lipscomb says some of the abandoned properties — especially former industrial sites — are "liabilities."

"It's kind of like the chicken and the egg," Lipscomb says. "A lot of the property is in bad areas and when you tear it down, it becomes a maintenance issue. Somebody has to maintain it."

"It comes with a cost. A lot of these areas are challenged and not quite ready for development," he says.

[Moss notes that there is a provision in the statute that allows the county not to acquire properties that have environmental issues.]

Though the county owns the bulk of tax-delinquent properties, the land bank can transfer those properties to the city for redevelopment efforts. Which is good because the city receives the bulk of the area's federal funding for revitalization projects.

The county also tries to divest itself of land bank property through the Homestead program. Under the program, which aims to stimulate neighborhood revitalization and increase the amount of affordable housing in the county, buyers pay a small application fee and a deposit for the lot. If they build a house on the property within a year, they get the deposit back.

"You have to show us what you're going to do. It has to blend with the neighborhood," Moss says. "If you build a house on it, you basically get the lot for free."

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