After 4 months, Denison lien program 'on life support'
After just four months, Denison's lien assignment program "is probably on life support," city officials said this week.
Issues with the program, which sought to clear up complicated deeds for empty lots, have led the city to put it on pause, Interim City Manager Bobby Atteberry said Wednesday.
The program allowed the city to put municipal liens on vacant properties up for sale. City officials at the time hoped this would allow developers to obtain clean titles through foreclosure.
"As we put the liens out for sale, that intended purpose didn't seem to be happening," Atteberry said. "Legitimate developers weren't the ones buying those liens to put homes on them (the properties)."
The program was approved by the City Council in October 2020 as an extension of the city's efforts over the past five years to support redevelopment and affordable housing growth in existing neighborhoods.
The affordable housing program was one of the larger components of these efforts. Through it, the city offered incentives for builders to construct affordable homes on vacant properties owned by the city. However, the city has since looked at other properties as a way of continuing momentum.
This included properties that may have complicated deeds or other issues hindering development.
“As a bit of background, as you know, many of our infill lots remain undeveloped due to a number of issues, some of which are title related,” then City Manager Jud Rex said in 2020. “Many of these vacant properties have out-of-state ownership, owners who are unaware that they own the property or they are owned by multiple heirs to an estate.”
Through this program, city officials hoped to alleviate the complicated deeds, encourage redevelopment and get some compensation on the liens place on properties.
“So, the taxpayers are made whole for what they are out to maintain the lots and those builders can foreclose on a property to clear up those title issues and then essentially take ownership of the property,” Rex said.
However, Atteberry said the program hasn't achieved these goals in as clean of a fashion as hoped.
"It makes it difficult to manage that and there is a lot of legal maneuvering that needs to take place," he said.
Upon review, Atteberry said some of the liens were found to be invalid with the current property owner. The liens were placed upon property under previous owner, but the land has since chance changed hands — in some cases multiple times.
In other cases, the properties were bought by individuals and speculators rather than developers with a clear vision of redevelopment. Of the approximately 50 liens that were sold, only one buyer could be identified as a professional builder or developer.
The others were purchased by individuals who might consider development at some point. However, the program requires that permits be pulled within two years of the lien purchase.
"It was only a maybe," he said. "It wasn't a legitimate builder who was looking into this."
Others problems were related to lien buyers not following the full process to acquire the lands cleanly. In some cases, the buyer assumed that they had ownership of the property based simply on the lien purchase.
Instead, the purchase of the lien was only the first step in acquiring the property. Foreclosure and other court proceedings were necessary, Atteberry said.
"If you purchase a lien, all you own is that piece of paper," he said.
From the city's standpoint, the program was complicated and nuanced and required resources beyond what staff was readily able to provide, Atteberry said. To properly manage the program, it would likely require a specialist or an outside organization.
The city will now work to reverse the sale of the liens as much as possible. City staff will also look at other avenues for solving the lien issue, including renewed efforts to alert the owners of properties with substantial liens.
Atteberry would not commit to this being the end of the lien assignment program, but said in hindsight it likely wasn't as vetted as it should have been prior to approval.
"It could be the end of the program," he said. "I am not prepared to say that until we've dug a little deeper, but we've dug pretty deep."