Friday, July 26, 2002
The U.S. Supreme Court has ruled that a similar foreclosure policy is unconstitutional.
By JoANNE VIVIANO
VINDICATOR STAFF WRITER
YOUNGSTOWN -- Mahoning County Treasurer John Reardon gets phone calls every day from city residents who look out their windows to see vacant, overgrown eyesores of neighboring property.
With many of these properties delinquent on taxes, the callers want to buy them, mow the weeds and maybe plant a flower garden.
Reardon thinks he has a plan to help them, while also reducing the county's $47 million real estate tax delinquency.
But as he presented his proposal to county and city officials this week, county Prosecutor Paul J. Gains and his staff warned: Don't violate landowners' constitutional rights.
A committee will be formed to discuss the issue further.
The tax delinquency is "grossly out of whack," Reardon said, with owners of 23,000 delinquent parcels owing $47 million, based on 2001 figures. Of the parcels, 17,000 are in Youngstown and account for $38.5 million.
Of that, 12,000 Youngstown parcels are vacant lots accounting for $20.5 million. Another 3,300 vacant lots are spread throughout the county.
Proposed plan
Reardon proposed a plan aimed at cutting the time and expense it takes to foreclose on properties and to rid 1,500 vacant parcels from the delinquent tax list per year. He wants to target delinquencies 15 years or older and properties with market values of $1,000 or less.
"We see it as a critical impediment to progress in this county," Reardon said. "And, frankly, I think that's being kind. I think it's bringing our county down."
He said his plan would cost only $75 per parcel and foreclosure could be completed in as little as seven months.
Since 1999, there were 482 foreclosures in the county. Sixty were handled by the county treasurer but the bulk -- 337 -- were handled by the Youngstown City Land Bank. The land bank is a program through which properties are deeded to the city and sold at a sheriff's sale, either to the city or another interested party.
Mayor George M. McKelvey said the bank has "failed miserably." Since its inception in 1995, 757 properties have been handled this way, taking 18 months to three years to completion. Another 330 properties await foreclosure.
Reardon said the treasurer's office standard foreclosure process can take anywhere from 10 months to two years and cost between $620 and $1,000. He suggests the county switch to a less used foreclosure process termed "in rem," meaning "against the property."
Through this type of foreclosure, the county does not complete a title search or identify lien holders or others with interest in the property, and notice of the foreclosure is not sent, Reardon said.
Buyers are notified that there may be liens on the property.
Unconstitutional
Gains balked at the plan, arguing that the "in rem" process has been deemed unconstitutional by the U.S. Supreme Court. The court ruled in an Indiana case that failing to notify property owners of the foreclosure of their properties is a violation of the 14th Amendment due process clause. A federal district court ruled similarly in a 1983 case out of Cuyahoga County.
"I'm sick and tired of the vacant lots," Gains said, "but we have a constitutional obligation to follow the law."
Assistant prosecutor Linnette Baringer, who once worked in Cuyahoga County, said the ruling there also invalidated 10,000 "in rem" foreclosures. "If we're going to work for a solution, we'd better think about the risks we're going to take," she said.
Reardon said he wants to find a legal way to complete "in rem" foreclosures, but he thinks the benefits outweigh the risks.
In an "in rem" case in Trumbull County where a property owner appeared, the sale price of the parcel was returned to the buyer and the parcel went back to its original owner. Trumbull is one of 11 counties in the state with "in rem" programs and completes 850 such foreclosures annually, Reardon said.
Reardon also argued that most of the delinquent vacant property owners likely don't want the parcels, which have low values, and would not attempt to sue the county to get them back.
Mayor's comments
McKelvey, a former county treasurer, rang in on the debate, saying it is "worth the risk" and suggesting a pilot program targeting 100 properties.
"Thirteen years ago, [when he was treasurer] we talked about exactly the same thing. Thirteen years later, there's been no revision of the foreclosure program," he said.
"Instead of talking about all the reasons it can't work, I want to hear some ways it will work. ... If we keep listening to the same 'we-can't-do-that' attitude, we'll be here again in five years and we'll have accomplished nothing," the mayor said.