Treasurer S Sale Submission and Land Reserve Process

The City of Pittsburgh Property Reserve: A Guide for Community Development Corporations

Prepared for the Vacant Property Working Group (VPWG) A Pittsburgh Community Reinvestment Group (PCRG) Program

December 17th, 2007

Pittsburgh Community Reinvestment Group 1901-15 Centre Avenue, Suite 200 Pittsburgh, PA 15219 Tel: (412) 391-6732 Fax: (412) 391-6737 www.pcrg.org

1 The City of Pittsburgh Property Reserve: A Guide for Community Development Corporations

TABLE OF CONTENTS

History and Background

PA Second Class City Treasurer’s Sale and Collection Act

The Vacant Property Working Group (VPWG)

Creation of the City Pittsburgh Property Reserve

Vacant Property Acquisition in Pittsburgh

City of Pittsburgh Sideyard Sales Program Private Partnerships and Real Estate Owned (REO) Property The City of Pittsburgh Property Reserve Property Information Request Application and Selection Treasurer’s Sale and Redemption Period Deposit and Promissory Note Clearing Title Lien Buybacks Settlement Default Provisions

Other Property Acquisition Issues

Inclusion of City Owned Property in the Reserve Inclusion of Occupied Property in the Reserve The Property Reserve and For-Profit Developers

List of Attachments

A. Resolution and Memorandum of Understanding establishing the Property Reserve B. Sideyard Sales Program Guidelines C. Request to Purchase Three Taxing Body Property D. Project Feasibility Application E. Sample Notification of Approval Letter F. Promissory Note G. Proposal to Purchase Property from Land Reserve H. Sample CARC Lien Statement, provided by ELDI I. Sample Lien Payoff Agreement Letter, provided by ELDI J. Sample Settlement Sheet, provided by ELDI

2 K. Policy Governing Inclusion of City Owned Property in the Property Reserve L. Policy and Procedures for Property Flipping M. Revised Procedures City of Pittsburgh Land Reserve Applications HISTORY AND BACKGROUND

Pennsylvania Second Class City Treasurer’s Sale and Collection Act

The City of Pittsburgh utilizes a Treasurer’s Sale as the primary method of enforcing tax collection and acquiring tax delinquent property. The Second Class City Treasurer’s Sale and Collection Act of 1984 defines the public process for the

“charge against real property, liened or unliened, held by a taxing body or an authority created by that taxing authority on account of delinquent real estate taxes, water rates, sewer charges, municipal assessments, municipal judgments, demolition liens, or other amount due to a taxing body under the Municipal Claim and Tax Lien Law of 1923.”

According to Pennsylvania law, tax claims including water rates and sewage service charges, have a first lien against a property from the date when they first became due and have priority over any other claim against the property including mortgages, judgment claims, liens or other obligations with which the property is charged.

A treasurer’s sale is a public sale in which a minimum sale price is established and public bids are accepted for purchase. The minimum price at sale, set by the treasurer, covers delinquent taxes, liened and unliened; water rents; sewage service charges; and other municipal claims. It is important to remember that the treasurer’s sale system is intended to be a tax collection mechanism, not a foreclosure mechanism, such as the County Sherriff’s Sale. Under a treasurer’s sale, the city treasurer is responsible for establishing a system of effecting notice to interested parties. Because the system only notifies the Three Taxing Bodies at time of sale, not all interested parties, a Treasurer’s Deed is only conveyed at the end of sale. Purchasing a property at treasurer’s sale does not satisfy any liens or judgments outside of municipal claims. The purchaser only receives a treasurer’s deed to the property, which is why the typical purchaser of property at a treasurer’s sale is the taxing body itself.

In order to clear title to a property acquired at a treasurer’s sale, the taxing authority acquiring the property must “file a petition with the court to quiet title, in favor of the city to the property acquired at treasurer’s sale in favor of the city. Only those interested parties who had no prior notice may appear and protect their interest by paying claims and liens having priority senior to their interest. Liens, including tax and municipal claims, shall be stricken from the subject property by the order granting clear title.”

Properties can be identified for a treasurer’s sale after two years of tax delinquency. The City uses the sale as a tax collection mechanism and will place properties into the sale for revenue purposes. The City does not use the sale as a mechanism for acquiring property for their own

3 portfolio, although the sale can be used as an acquisition tool for the Urban Redevelopment Authority (URA) and for non-profit Community Development Corporations (CDCs).

The Vacant Property Working Group (VPWG)

Despite having the enabling legislation, the City of Pittsburgh was hesitant to utilize the treasurer’s sale process because it looked bad politically. The city wanted a less political and more affordable means of recycling property and returning delinquent properties to the tax roll. In 1988, a volunteer sub committee was formed with the goal of decreasing the redemption period and to work on creating a program for the acquisition of side yards. The committee was successful in both establishing a Sideyard Sales Program and reducing the redemption period from one year to 90 days. The evolution of this effort was the Vacant Property Working Group (VPWG), now housed at the Pittsburgh Community Reinvestment Group.

PCRG’s Vacant Property Working Group (VPWG) is a coalition of community stakeholders working collectively toward the eradication of vacant and nuisance properties in the City of Pittsburgh and Allegheny County. VPWG partners include community organizations, faith- based entities, government agencies, financial institutions, universities and other community stakeholders. The VPWG mission is to build and refine the policies, programs and resources necessary to recycle vacant land and promote community revitalization. While the VPWG advocates for sound public policy regarding vacant property and land recycling, the main function of the program is the administration of the City of Pittsburgh Property Reserve.

Creation of the City of Pittsburgh Property Reserve

In 1996, the City of Pittsburgh and Pittsburgh Public Schools sold a tax lien portfolio to National Tax Funding, L.P. to be serviced by Capital Asset Research Corporation (CARC). The portfolio sale included all City and school district real estate tax liens as well as water and sewer liens through 1996. The agreement also established a purchase of additional liens issued in the years 1996 to 1998 to be purchased at a future date.

The possibility of a portfolio sale raised concerns among community organizations about what would happen to large tracts of vacant property in their communities. Through the work of the VPWG, an agreement was reached that provided community development organizations the opportunity to identify and exclude property from the tax lien portfolio sale. A Memorandum of Understanding (MOU) was established between the City of Pittsburgh, Urban Redevelopment Authority (URA), and the Pittsburgh Community Reinvestment Group (PCRG). This agreement established (1) a process that allows Community Development Corporations to exclude properties prior to a lien portfolio sale and (2) a property reserve for the placement of future development properties. The complete City Council Resolution and MOU are included in Attachment A. This is the legal document establishing the reserve process and also outlines all administrative policies and procedures to be followed by all parties.

4 An agreement was also crafted between the VPWG and Capital Asset Research Corporation (CARC) that established the parameters of a working relationship. The agreement was meant to ensure consistent communication and reporting between the parties, including the disclosure of monthly portfolio reports.

VACANT PROPERTY ACQUISITION PROGRAMS

In the 2003 report Reclaiming Abandoned Pennsylvania, the Housing Alliance of Pennsylvania estimated that the City of Pittsburgh has nearly 19,000 vacant and abandoned properties. Vacant properties cost municipalities money by decreasing property values, increasing crime, health and safety concerns and contributing to the overall deterioration of neighborhoods. Nuisance properties and negligent property owners erode the quality of life for residents and prevent private investment in neighborhoods.

The identification of vacant, abandoned and nuisance properties is the critical first step in abatement. Currently, there are a number of programs and mechanisms in place for community organizations to abate or acquire vacant and nuisance property. Before deciding upon an acquisition strategy, a CDC must conduct the necessary due diligence to choose the most cost effective and appropriate method for addressing a vacant property. A minimum amount of research must be conducted to understand the property history and to be able to weigh options for abating problems associated with the property. Basic property information that should be compiled includes:

Location: Can you identify the correct street address and lot and block number. Make sure to cross check your location information with both the City and County.

Owner of record: Is the property privately owned, publicly owned, owned by a bank or corporation? Identifying the owner can aid in direct purchase negotiations.

Vacancy status: Is the property vacant or occupied? Even if it is tax delinquent and appears to be vacant, anyone residing in a structure (legally or illegally) could trigger relocation costs in development if you are using public funding, such as CDBG or URA money.

Tax delinquency: Is the property at least two years delinquent on city taxes? How much is owed on the property? If there is very little owed, it is likely a property owner will redeem the property before it goes to sale.

Liens or foreclosure activity: Identify any additional claims or judgments made on a property by using the Prothonotary website. If there are other claims on a property, a foreclosure process may be another option for acquisition.

Below are common resources where most of this information can be obtained:

Allegheny County Real Estate – Basic property information and county tax information www2.county.Allegheny.pa.us/RealEstate

5 City of Pittsburgh Tax delinquency report – City real estate tax delinquency http://www.city.pittsburgh.pa.us/finance/html/tax_delinquency_report.html

Allegheny County Prothonotary – Liens, foreclosure activity, and other claims against a property http://prothonotary.county.allegheny.pa.us/ Based upon property research, there are a number of different paths a community organization may choose to address a vacant property. It is important to remember that each property will have unique circumstances that may prevent a certain approach from working. CDCs are encouraged to work closely with the VPWG manager to target problem properties or properties needed for a larger development deal.

City of Pittsburgh Sideyard Sales Program

The VPWG was instrumental in the creation of a City Sideyard Sales Program that provides property owners an opportunity to affordably purchase an adjacent, vacant lot. The program is an effective means of recycling vacant land and increasing property values for a homeowner as well as improving the appearance of a neighborhood. The Sideyard Program receives a line item in the City Capital budget annually (was $250,000 in the 2006 budget) and is often overlooked and underutilized by residents and community groups. Community organizations need to play an important role in the marketing of the sideyard program and should educate residents about this opportunity if there are suitable vacant lots in the neighborhood.

In order to be eligible for the sideyard program, a resident must own the property that directly borders the vacant lot and be current on all taxes. Additionally, the lot must be deemed unsuitable for development and must be owned by the City. If the lot is not owned by the City, a request can be made for the City to acquire the property through a treasurer’s sale. A complete list of program guidelines is included in Attachment B. The total cost for acquiring a lot through the Sideyard program is approximately $400 and a resident interested in purchasing a vacant lot through the sideyard program must submit a Request to Purchase Existing Three Taxing Body Property (Attachment C) to the City Real Estate Department. Any questions on the City Sideyard Sales Program should be directed to the City Real Estate Department.

Bank/REO Property

The Pittsburgh Community Reinvestment Group (PCRG) has established relationships with 14 local financial institutions as well as national lenders such as CitiFinancial, HSBC, and Chase Home Finance and corporations such as Fannie Mae. As part of this working relationship, local and national lenders regularly provide PCRG with updated lists of their Real Estate Owned (REO) properties. These lists are distributed to community organizations that can then identify any properties in their neighborhoods that they would like to target for homeownership opportunities or to acquire for a development project. CDCs and community organizations can provide service to a lending institution by helping them sell properties in their REO property portfolio and this is a valuable service that PCRG partners have access to. Additionally, if a

6 property identified by a CDC is owned by a lending institution, we encourage you to contact PCRG staff to see if they can facilitate a purchase negotiation.

The City of Pittsburgh Land Reserve

The land reserve is intended to be a tool for non-profit CDCs to affordably acquire and assemble vacant land for development projects. Properties identified for the land reserve must be part of a strategic rather than speculative development plan as defined by the CDC business plan or neighborhood plan. Organizations who wish to utilize the land reserve as part of their development strategy must adhere to the process guidelines and communicate with the VPWG manager on a regular basis.

I. Property Information Request

If the appropriate path for acquiring a property is determined to be the Treasurer’s Sale and Land Reserve, then a CDC must submit an information request to the Pittsburgh Community Reinvestment Group (PCRG) Program Manager for the Vacant Property Working Group (VPWG). The deadline for requests to PCRG is noted in the Treasurer’s Sale schedule, and is usually 12 weeks prior to the Treasurer’s Sale date. Requests should be e-mailed to [email protected] and should include the following information:

 Lot and Block  Street Address  Owner of Record  Ward  Vacancy Status (Vacant, Y/N)  Vacant Lot/Structure

The basic requirements for a property to be considered for the reserve are that the owner must be at least two (2) years tax delinquent and that the property is vacant.

After compiling all requests, the VPWG manager acts as facilitator between CDCs, the City and URA. This initial request step will identify any major problems associated with a property of interest and will also allow the CDC to understand what may be involved with a property before investing time in the completion of a formal application. Flags that may occur in this stage include owners on payment plans or who have filed for bankruptcy and properties with large amounts of encumbrances. If properties submitted are unable to be processed for the sale, the City will notify PCRG who will then provide notification to the appropriate development corporations.

7 II. Application and Selection

If properties are determined to be eligible for the treasurer’s sale, a CDC must then submit a Project Feasibility Application (Attachment D). The application provides information pertaining to the plan for the property, including detail on the development project that it is a part of. Applications must be complete and should provide as much detail as possible regarding property research, development plans, and sources of development financing. The MOU states that “URA pre-application properties approved for placement in the Land Reserve will be treated as properties being transferred to the URA.” Therefore, it is at the discretion of the URA which properties are accepted according to their development and funding standards. A written development and financing plan must be available.

Project Feasibility applications are available through PCRG and once completed should be sent to the following agencies:

Urban Redevelopment Authority of Pittsburgh 200 Ross Street Pittsburgh, PA 15219-2069 Attn: Jerome Frank Tel: (412) 255-6672 Fax: (412) 255-6645

City of Pittsburgh Department of Finance 200 City-County Building 414 Grant Street Pittsburgh, PA 15219-2476 Attn: Mary Lou Tenenbaum Tel: (412) 255-2468 Fax: (412) 255-2438

Pittsburgh Community Reinvestment Group P.O. Box 53009 Pittsburgh, PA 15219 Attn: Bethany E. Davidson Tel: (412) 391-6732 ext. 201 Fax: (412) 391-6737

Allegheny County Department of Economic Development 425 Sixth Avenue, Suite 800 Pittsburgh, PA 15219 Attn: Michael Pehur Tel: (412) 350-1000 Fax: (412) 642-2217

8 Please note that the Dept. of Finance will NOT accept electronic applications. When submitting an application to the Finance Dept. via fax, please limit the number of pages sent to the Project Feasibility application only. Complete applications with attachments, photos and supporting documents should be sent to both the URA and PCRG.

Once applications are reviewed and approved by the aforementioned authorities, properties are certified for inclusion into the City Treasurer’s Sale. The URA sends notification to the City approving the application and a selection letter is mailed notifying CDCs that the property has been selected for inclusion in the Treasurers Sale (Attachment E). CDCs can also check on the status of their property through the Property Reserve Reports provided at the monthly VPWG meetings. Any questions or concerns regarding a property’s inclusion in the sale should be directed to the VPWG program manager.

Once a property is selected for inclusion into the Treasurer’s Sale, certified notices are mailed to the owner of record and notices of inclusion in the Treasurer’s Sale are advertised twice in the Pittsburgh Post Gazette, the Legal Journal, and posted twice on the property itself. All costs of advertising are added to the final cost of the property. During this notification phase, property owners are able to enter into a payment plan to repay delinquent taxes. If the owner of record does not enter into a payment plan or pay the taxes due in full, the property is included in the Treasurer’s Sale.

III. Treasurer’s Sale and Redemption Period

Approximately one week after the Treasurer’s Sale, a list of properties available will be sent to PCRG. This information is typically distributed at the monthly VPWG meeting. If requests or questions arise about specific properties, contact the Program Manager.

Following the Treasurer’s Sale date, each property is subject to a 90-day redemption period. This period provides the owner of record one final opportunity to redeem the property by paying off any outstanding taxes against the property. If the owner of record does not take this opportunity to redeem the property, then the City has the right to take a treasurer’s deed for the property. During the redemption period, owners are no longer allowed to enter into a payment plan, but do have 90 days to pay delinquent taxes in full.

After the redemption period expires, the City will provide a list of properties that were not redeemed to PCRG. Property disposition reports are supplied at each monthly meeting of the Vacant Property Working Group. Reports inform property submitters of the Treasurer’s Sale outcomes and the position of their properties in the relevant sales. Property submitters are expected to keep up to date with each property that they submit.

IV. Deposit and Promissory Note

9 At the point of acquisition, the City places the property in the Land Reserve in the name of the acquiring party. Properties can remain in the Reserve for up to two (2) years for structures and five (5) years for vacant lots. This period allows CDCs time to acquire other parcels and create large-scale projects, while sheltering the properties from additional holding costs (i.e. taxes, insurance).

It is at this time that development groups placing properties into the reserve are to place deposit ($200) and sign a promissory agreement on their purchase of the property in question from the City (Attachment F). As outlined in the MOU agreement, the negotiated purchase price for a vacant lot is $600 plus cost ($200 deposit plus $400 promissory) and for a structure is $1,000 plus cost ($200 deposit plus $800 promissory). Deposits and notes must be submitted to the real estate department by the deadline defined on the treasurer’s sale schedule.

After a CDC submits a deposit and a promissory note, a Proposal to Purchase contract is generated by the city (Attachment G). This Proposal must be signed by the CDC and returned to the City before quiet title proceedings can be initiated. Once a Proposal to Purchase has been received, properties are transferred to the Reserve and the City begins the process of clearing encumbrances against the property to provide a free and clear title to the purchasing party. The sales agreement is contingent upon approval by the City Finance Department.

While in the Reserve, the City of Pittsburgh may perform routine maintenance on properties. The City of Pittsburgh reserves the right to make any and all improvements necessary to fulfill its responsibility as Three Taxing Bodies Trustee and to safeguard the public’s welfare. CDCs placing properties in the reserve are responsible for reimbursing the City for maintenance costs. A schedule of maintenance fees charged by the City is included in the MOU agreement in Attachment A. A CDC may enter into a license agreement with the City to provide maintenance services and/or make improvements on any properties included in the Reserve.

VI. Clearing Title

As discussed earlier, the Second Class City Treasurer’s Sale is not a foreclosure procedure, and therefore does not quiet title or satisfy non-municipal claims on a property. Once the City of Pittsburgh takes the treasurer’s deed to a property, they can initiate quiet title proceedings. All costs incurred by the City for clearing title will be reimbursed when the CDC purchases the property.

The city files a petition with the court to quiet title to a property. The court then notifies all interested parties, including all lienholders. If there are no objections to the petition by any interested party, quiet title is granted. If the quiet title action is answered, the petition is NOT granted on the properties. In the case the petition is answered, it is the potential buyer’s responsibility to research what is blocking the quiet title and to take appropriate actions to satisfy objecting lienholders.

The most common objection to a quiet title petition is from Capital Asset Research Corporation (CARC). If a property has CARC liens on it, the CDC will need to contact CARC

10 representatives to request specific account information on the property and the amount of liens. An example of a CARC account statement is provided in Attachment H. Some CDCs have been successful in negotiating with lien holders independently on an agreement to satisfy outstanding liens and remove the answer of record (Attachment I).

VII. Lien Buybacks

The most common procedure utilized in the land reserve process if the buyback of liens from CARC. As part of the sale and servicing agreement between the Three Taxing Bodies and CARC, the City has the ability to buyback liens sold to CARC for the purchase price plus interest. When the lien portfolio was sold and the land reserve established, an amount of $1 million was set aside for the repurchase of these liens for community development projects.

Recent negotiations with CARC have reinstated a buyback system that was not functioning due to disputes over payment between CARC and PWSA. The system is again operating, but the amount of buyback funds is nearly depleted and will likely be gone by the end of 2006.

VIII. Settlement

Once the City Law Department is able to provide a free and clear title, purchasing parties must be able to set closing dates with the City Finance Department to enable the transfer of properties from the City to the new owner. It is the CDC’s responsibility to set a closing date for the property. When a closing is ready, the City Finance Department will generate a settlement sheet that shows the following information (Attachment J):

Final amount Purchase price Deposit Costs/Fees

IX. Default Provisions

Properties may remain in the land eserve for up to two (2) years for structures and five (5) years for vacant lots. If a property must remain in the Reserve past the designated time, the CDC should make a formal request to the City to request additional time allotted in the Reserve. Requests should be made for properties that have quiet title as well as properties that have not yet received quiet title. PCRG staff will assist in notifying CDCs of when properties are due out of the Reserve, but it is the responsibility of the CDC to maintain communication with both PCRG and the City on the status of properties in the reserve and particularly properties approaching the due out date.

In the event that a CDC has not initiated the process of acquiring title to a property within the designated time, the City may remove the property from the Reserve and place it into the general

11 inventory for sale to the public after giving a written thirty-day notification warning of default. If a CDC is found to be in default, they may be prohibited from utilizing the Land Reserve for a period of two years at the discretion of the City.

OTHER PROPERTY ACQUISITION ISSUES

While the treasurer’s sale and property reserve system has been successful in recycling over 130 properties, the system is constantly being reviewed to identify means of increasing efficiency and effectiveness for all parties. Additionally, there are cases where the current reserve system does not allow for the acquisition of properties. As CDCs increasingly face these obstacles, the VPWG needs to examine how we can alter the system to accommodate for more inclusive land recycling. A few common acquisition issues are outlined below.

Inclusion of City Owned Property in the Reserve

The City has established criteria for the inclusion of property already owned by the Three Taxing Bodies into the land reserve (Attachment K). Typically, if a CDC follows the appropriate application process and received approval from the URA, the City will allow the inclusion of city owned property into the land reserve. However, as buyback funds decrease and as the private market in some neighborhoods grows, the City may be less likely to expend the administrative costs of including a property already in the City’s portfolio into a reserve, guaranteeing it cannot be sold privately. Additionally, a CDC should always attempt to purchase a property directly from the City when possible and circumvent the reserve process, particularly for properties to be sold to private buyers or developers.

Inclusion of Occupied Property in the Reserve

Technically, there is no formal policy prohibiting the inclusion of occupied properties in the Land Reserve. However, during the application review the URA will generally reject the inclusion of an occupied property into the land reserve due to the potential impact of relocation costs. As discussed earlier, the MOU treats properties approved for the land reserve as properties being transferred to the URA. If any URA funds are to be used in the development of these properties, this would trigger a federal law requiring the URA to pay relocation costs associated with the displacement of any resident or tenants on a property. The Vacant Property Working Group (VPWG) contends that there are instances where the inclusion of an occupied unit into a treasurer’s sale is both justified and necessary. Representatives of the VPWG have met with City officials and continue to discuss the creation of a policy calling for the inclusion of occupied units in the Land Reserve on a case-by-case basis.

The Property Reserve and For-Profit Developers

12 The intent of the land reserve is a tool for non-profit developers to acquire and assemble land affordably for community development projects. Increasingly, community organizations are partnering with for-profit developers in neighborhood deals and this highlights a concern over the use of the land reserve for transferring or ‘flipping’ properties to private developers. As part of the original reserve legislation, a CDC is required to split any net profit with the City if they sell a property acquired through the reserve to a private entity. While selling a property to a private developer or buyer is a means of generating future taxes, there are two general concerns voiced by Three Taxing Bodies. The first concern is that if there is private interest and a market for these properties, then the developer should be purchasing them directly from the City. Secondly, there is a concern that CDCs request properties with the intent of selling them or partnering with a private developer, but if the deal doesn’t materialize, the City is stuck owning another property in their portfolio. A general rule of thumb is to clearly identify any partnerships with developers in your project feasibility application. The URA will be more inclined to approve an application if there is concrete evidence of funding commitments and a developer partnership rather than vague plans of selling property to an interested buyer.

13 ATTACHMENT B

14 15 ATTACHMENT C

16 ATTACHMENT D

CITY OF PITTSBURGH DEPARTMENT OF FINANCE

PROJECT FEASIBILTY APPLICATION

Date of Application: Date of Treasurer’s Sale:

Property Address(es): Lot & Block(s): (attach separate sheet if necessary)

Organization Information

1. Contact Name:

2. Organization Name:

Please provide your organization’s contact information (Address, Phone, Fax, and Email)

Address:

Phone: Fax: Email:

3. Is your organization a 501(C)3?  Yes  No

If yes, please provide the federal and state ID______

4. Is the organization current on all City and County real estate taxes?  Yes  No  N/A

5. Can the applicant provide an audit report supporting the organization’s financial standing? (Do not include with this application, only upon request)

 Yes  No

6. Does your organization have a formal neighborhood development plan?  Yes  No (Do not submit plans with this application, only upon request)

If yes, has this plan been presented to City Planning?  Yes  No

17 For City/URA Use Only: URA Approval ______T/S Date ______7. How many residential and commercial development projects has your organization managed over the past five years?

Has construction been completed on these projects?  Yes  No

8. What is the role of the community organization in this project?

 Developer  Co-Developer  Other ______

9. Will a for-profit developer be utilized for part/all of this project?  Yes  No

10. If a for-profit developer will be utilized, please provide the following information:

Developer Name: ______

Developer Contact Information: ______

Sample list of current and/or completed projects:

Is the developer current on all City and County real estate taxes?  Yes  No  N/A

Please describe the level of commitment between developer and community organization (If a written agreement is available, please include with application):

Property Information

1. Please indicate property address, lot & block number, ward and if the property is already owned by the City. (provide additional sheet if necessary)

18 City Owned Address Lot & Block Ward

2. Is the property residential or commercial?  Residential  Commercial

3. Is the property a structure or vacant lot?  Structure  Vacant Lot

4. How many units are on the property? ______

5. Is the property occupied?  Yes  No  Vacant Lot

6. Describe the condition of the property:

7. Describe the condition of the adjacent properties:

8. If the property is a commercial structure, has the CDC done a preliminary title report?

 Yes  No  N/A

9. Are there any liens against this property?  Yes  No

If applicable, what are the amounts of GLS and CARC liens against the property?

19 10. Has there been any foreclosure activity on this property, as indicated by the Prothonotary?

 Yes  No

Project Information

1. Describe the plan for the property to be developed?

2. How does this project fit into your overall community strategy?

3. Is this a future phase of an existing project?  Yes  No

If yes, please indicate how many units have already been completed

4. What is the estimated cost of this project?

5. Please list all proposed sources of funding for this project including URA funding.

______Committed?  Yes  No

20 6. What is the estimated timetable for your development plan?

Site control by: ______

Financing in place by: ______

Construction to begin by: ______

Sale/Occupancy by: ______

7. What will be the estimated real estate tax revenue from the property? (Est. revenue/unit = 3% of unit sales price)

8. Please provide a photo(s) of the property in question, as well as a map of its location.

CITY OF PITTSBURGH

DEPARTMENT OF FINANCE

CDC REQUEST TO INCLUDE TAX DELINQUENT PROPERTY IN A TREASURER’S SALE

WE HEREBY REQUEST THAT THE CITY OF PITTSBURGH INCLUDE THE FOLLOWING TAX DELINQUENT PROPERTY IN A TREASURER’S SALE: (please indicate the sale)

____ Year

____ March ____ June ____ September ____ December

Address: Lot & Block Ward Occupied Vacant Lot

21 ATTACHMENT F

PROMISSORY NOTE FROM A NON-PROFIT COMMMUNITY DEVELOPMENT ORANIZATION

In consideration of the Department of Finance’s acceptance and submission to City Council for approval of a Proposal to Purchase Reserve Property (“Proposal”) pertaining to a parcel in the ______Ward of the City of Pittsburgh, County of Allegheny, Commonwealth of Pennsylvania, with a street address of ______and a Block and Lot designation of ______hereby promises to pay to the City of Pittsburgh the sum of ______dollars as a deposit on the purchase price of the property identified above.

This Promissory Note is made with the understanding that it is subject to and conditioned upon the approval of the Proposal by both City Council and the Mayor, and that this Note shall become null and void if said approval is not secured.

In the event that ______fails to complete the purchase of the property by payment of the entire purchase price (as defined in the Proposal) within thirty (30) days of the date of written notice from the City of Pittsburgh identifying the balance due and stating that the City is prepared to proceed to closing, this Note shall become immediately due and payable, without demand or further notice, as liquidated damages to be applied to the costs of all proceedings and other expenses incurred by the City of Pittsburgh.

And further, ______does hereby authorize and empower any attorney of any Court of Record of Pennsylvania or elsewhere to appear for and to enter judgment against ______, in favor of the City of Pittsburgh for the above sum with interest, costs of suit and a reasonable attorney’s fee, and ______does hereby, with full knowledge and consent, waive and release all benefit and relief from any and all appraisement, stay or exemption laws of the Commonwealth of Pennsylvania or any other state now in force or hereafter enacted.

ATTEST: NAME OF PURCHASER:

______By: ______

Title: ______Title: ______

Date: ______Date: ______

(Seal)

22 ATTACHMENT G PROPOSAL TO PURCHASE PROPERTY EXCLUDED FROM TAX LIEN SALE OR LAND RESERVE

WHEREAS, under Act. No. 171 on December 11, 1984, a party may propose to purchase a property acquired by the City of Pittsburgh under said Act;

WHEREAS, said Proposal to Purchase is subject to approval by City Council, the Mayor of the City of Pittsburgh, and the Court of Common Pleas of Allegheny County, which includes, in the case of a vacant lot, the right of others to bid or contest said Proposal to Purchase, in accordance with the provisions of said Act and the Pittsburgh Code;

WHEREAS, pursuant to Resolution of City Council No. 666, approved September 26, 1996 and effective September 27, 1996, certain properties within the City of Pittsburgh subject to real estate tax liens have been excluded from a sale of liens for the purpose of making said properties available to purchase by persons, organizations or entities with a plan of development and financing; and

WHEREAS, the party submitting this Proposal to Purchase does not own any properties within the City of Pittsburgh against which taxes, municipal charges, claims, liens or judgments are outstanding, and is in full compliance with all City Codes and policies as to all other properties which the party owns within the City.

WITNESS THAT______

______

______, hereinafter referred to as “Purchaser,” hereby proposes and agrees to pay the sum of $______, to purchase the hereinafter described real estate, as set forth in Exhibit 1, which is attached hereto and made part hereof.

The purchase price and deposit amounts are as follows, depending upon whether the subject property is a lot or has a structure thereon:

Purchase Price Deposit

Structures $1,000 + cost $200 deposit plus $800 promissory Lots $100 + cost $200 deposit plus $400 promissory

Costs include: Original Treasurer’s Sale costs, title search acquisition and related expenses, advertising costs, Prothonotary fees, fees for Sheriff’s service, mailing expenses, closing and settlement costs, and attorney fees and legal costs, as applicable.

The aforesaid purchase price is to be paid to the Department of Finance in escrow to be distributed by the closing agent upon final consummation of sale and delivery of a special warranty deed.

The subject property is sold to all existing zoning, building, subdivision laws and ordinances. The sale of property does not include any commitment by the City to change the zoning, grant zoning variances, or issue building permits.

Purchase further covenants and agrees that the said party will buy the property subject to the following covenants and conditions:

23 SUBJECT to the express covenant to run with the land or a period of fifteen (15) years from the time of this transfer, binding upon the Grantee(s), (his/her/its/their) heirs, executors, administrators, successors, and assigns, that no real estate tax exemption will be applied for or sought for all or part of the described real property and/or improvements, said improvements as now exist or are later constructed. SUBJECT to the further express covenant to run with the land for a period of fifteen (15) years from the date of this transfer by the Grantee(s), (his/her/its/their) heirs, executors, administrators, successors and assigns, that if a real estate tax exemption is sought for and obtained for all or any part of the above described real property and/or improvements, said improvements as now exist or are later constructed, the said Grantee(s), (his/her/its/their) heirs, executors, administrators, successors, and assigns, during the entire period of said exemption shall pay a sum of money to each of the Taxing Bodies, that is, CITY OF PITTSBURGH, COUNTY OF ALLEGHENY AND SCHOOL DISTRICT OF PITTSBURGH, all of the Commonwealth of Pennsylvania, equal to double the amount of real estate taxes which would have been levied by each said Taxing Body on all or any part of the above described real property and/or improvements as now exist or are later constructed, but for said exemption. Upon failure to pay such amounts to the Taxing Bodies in addition to any other remedies available, each Taxing Body shall have the same rights, actions and/or remedies provided it for the collection of real estate taxes levied by the Taxing Body.

The purchaser buys within described property in its “AS IS CONDITION,” subject to any and all violations, if any, of the Allegheny County Health Department and the City of Pittsburgh building ordinances.

NOTICE– THIS DOCUMENT MAY NOT (DOES NOT) SELL, CONVEY, TRANSFER OR INSURE THE TITLE TO COAL AND THE RIGHT OF SUPPORT UNDERNEATH THE SURFACE LAND DESCRIBED OR REFERRED TO HEREIN, AND THE OWNER OR OWNERS OF SUCH COAL MAY HAVE (HAVE) THE COMPLETE LEGAL RIGHT TO REMOVE ALL OF SUCH COAL, AND IN THAT CONNECTION, DAMAGE MAY RESULT TO THE SURFACE OF THE LAND AND ANY HOUSE, BUILDING, OR OTHER STRUCTURE ON OR IN SUCH LAND. THE INCLUSION OF THIS NOTICE DOES NOT ENLARGE, RESTRICT OR MODIFY ANY LEGAL RIGHTS OR ESTATES OTHERWISE CREATED, TRANSFERRED, EXCPETED OR SERVED BY THIS INSTRUMENT.

Purchaser hereby agrees to pay all transfer taxes on subject property. It is further agreed that the closing agent shall place a deed of record in the Recorder’s Office of Allegheny County immediately upon closing.

THIS PROPOSAL SHALL BE NULL AND VOID UNLESS AN EXTENSION OF TIME IS GRANTED IN WRITING BY THE FINANCE DEPARTMENT.

As per the requirement of Resolution of City Council No. 666, approved September 26, 2996 and effective September 27, 1996, Purchase has submitted a written development and financing plan for the property. The City will not accept objectors to the sale of properties which have been excluded from the tax lien sales.

On this, the 96th day following the Treasurer’s Sale of the subject property, the undersigned herewith tenders a check, money order, promissory note, letter of credit or URA funding commitment letter in the sum of $______, as hand money with the understanding that the Department of

24 Finance (Real Estate Division) of the City of Pittsburgh will submit the Proposal to Purchase to City Council for action in this matter. In the event that City Council and the Mayor act favorably in the matter and the same has been approved by the Court in accordance with the aforementioned Act and in the event that the Purchaser fails to complete the offer by payment of the balance of purchase price within thirty (30) days from the date of notification by the City of Pittsburgh, the hand money or promissory note, letter of credit shall be considered as liquidated damages to be applied to the costs of all proceedings and expenses occurred and this Proposal shall be null and void.

If requested, the Department of Finance will conduct the closing. If the Purchase fails to close on the property in the established manner, Purchase will not be permitted to submit a proposal to purchase on any other properties excluded from a tax lien sale for a period of one (1) year.

THIS PROPOSAL TO PURCHASE shall be binding upon the Purchaser, (his/her/its/their) heirs, successors, and assigns.

IN WITNESS THEROF, ______

______

Have hereunto set ______hand and seal this ______day of

______, ______.

WITNESS: ______

______

______PURCHASER

THIS PROPOSAL meets with the approval of the Director of the Department of Finance and is hereby approved for proper submission to the City Council and the Mayor of the City of Pittsburgh.

______MANAGER, THREE TAXING DIRECTOR BODIES PROPERTIES

25 ATTACHMENT K

POLICY GOVERNING THE INCLUSION OF EXISTING THREE TAXING BODIES PROPERTY IN THE PROPERTY RESERVE

The City of Pittsburgh will include certain existing Three Taxing Bodies property in the Property Reserve under the following conditions:

VACANT LOTS

 The property must be approved for sale  There are no interested, approved buyers  The adjacent property owners have been notified that the City owns the property and have been given thirty (30) days to apply to purchase it  An approved buyer will have thirty (30) days after notification of approval to sign a proposal to purchase and remit hand money  The CDC has not started a sale on the property  The CDC is approved to purchase  The CDC is in compliance with the requirements of the Reserve on all properties in the Reserve  A development plan has been submitted and been approved by the URA  The CDC remits the required hand money and promissory note and enters into the Proposal to Purchase

STRUCTURES

The City of Pittsburgh will not include existing inventory structures in the Property Reserve unless, after six (6) months of marketing, the City has not started a sale with a qualified buyer. After six (6) months of unsuccessful marketing, in order to be included in the reserve the following will apply:

 The property must be approved for sale and is not scheduled for demolition  An approved buyer will have (30) days after notification of approval to sign a proposal to purchase and remit hand money or there are no interested, approved buyers  The CDC has not started a sale on the property  The CDC is approved to purchase  The CDC is in compliance with the requirements of the Reserve on all properties in the Reserve  A development plan has been submitted and been approved by the URA  The CDC remits the required hand money and promissory note and enters into the Proposal to Purchase

26 ATTACHMENT L Policy and Procedures for Property Flipping City of Pittsburgh Property Reserve

Background

The City of Pittsburgh Property Reserve is a tool for non-profit Community Development Corporations (CDC) to acquire and assemble land affordably for community development projects. These development projects create new housing opportunities, increase property values, build the tax base and revitalize communities.

The function of the Reserve is to assist CDCs in overcoming barriers to land acquisition. These barriers are overcome by providing access to the municipal tax foreclosure system, establishing affordable fixed prices on lots and structures, and allowing CDCs to acquire and assemble development deals without paying holding costs on land. The Property Reserve system is a public investment that makes development projects financially feasible.

While the Reserve is for non-profit CDC use only, VPWG partners recognize that there is an appropriate role for private developers in the Land Reserve process. In a time of limited resources, partnerships become increasingly important. Not all CDCs have the capacity to undertake development projects themselves, and partnerships with private developers are common. Creating partnerships with private developers can also lead to additional development that does not require public subsidy. In order to ensure that public investment in the Land Reserve is yielding public return, the VPWG seeks to establish a formal policy regarding the flipping of property.

The current agreement in place allows a CDC, in appropriate circumstances, to identify property for the Land Reserve, buy the property from the City, then resell it to a developer or third party purchaser without significant improvements. In these cases, the CDC is to split evenly with the City of Pittsburgh all net profits made from the sale of the property. This transaction returns property to tax generating uses and provides a return on public investment to the City.

Definitions

CDC: A chartered, tax exempt, non-profit Community Development Corporation (CDC) or other eligible community based organization approved by the Finance Department to purchase City owned property

Property: Any property, vacant land or structure, identified for the Land Reserve. All eligible properties must be unoccupied and at least 2 years delinquent on City real estate taxes

Project Feasibility Application: The approved application required for all Treasurer’s Sale and Land Reserve requests. Approval of applications is contingent upon City Finance and Urban Redevelopment Authority of Pittsburgh (URA) approval

27 Flipping: The purchase and resale of property, for a profit, without significant physical improvements. The Department of Housing & Urban Development defines flipping as “a practice whereby a property that was acquired is quickly resold for a considerable profit with an artificially inflated value.”1 Though prices may not be inflated in the case of the Land Reserve, the City Sale price is artificially low, resulting in the same outcome.

Significant Improvements: Rehabilitation or physical improvements to a structure or the construction of a new structure or use on a vacant lot

Net Profit: Amount of profit earned by a CDC through the sale of a property after recovering eligible costs incurred through the acquisition of the property

Eligible Costs: Direct costs incurred by a CDC through the acquisition of a property including title reports, maintenance (if not done by the City), legal fees, documents and staff time investment

Staff Time Investment: Staff time expended on property identification, due diligence, site visits, application, correspondence, property stabilization, improvements and other actions necessary to advance development

Policy

The intent of the Land Reserve is to provide public investment for the acquisition and assembly of land, making community development projects financially feasible. The Reserve is not intended to provide revenue for CDC overhead. The VPWG acknowledges the following policy regarding the flipping of property from the Land Reserve:

Acquiring property through the Treasurer’s Sale and Land Reserve with the sole intent of quickly reselling the property for a profit without making significant physical improvements is prohibited.

If a CDC is unable to complete the plan originally approved in a Project Feasibility Application, the CDC must give the URA and City Real Estate Departments first right of refusal before selling the property to another party to complete the project. If neither the City nor URA is interested, then the CDC may sell the property to a competent buyer to complete the approved plan. In this case, the CDC must remit to the City exactly half of the net profit made from the sale of the property.

If a CDC is acquiring property on behalf of another developer/purchaser through a partnership, then the Project Feasibility Application must specify the CDC’s role and responsibilities in the partnership, the developer’s name and contact information, a detailed project description and proof of the partnership/agreement in place.

1 FR-4615 “Prohibition of Property Flipping in HUD's Single Family Mortgage Insurance Programs.” May 1, 2003

28 Procedure

1) When requesting property for the Treasurer’s Sale, a CDC must clearly state in the Project Feasibility Application their role as a developer, co-developer or other. If the CDC is to be a co-developer or ‘other’, the roles and responsibilities of the CDC in the project must be defined.

2) The project description must clearly outline a plan and timeline for acquiring the property and reselling to the developer.

3) To be approved, the Project Feasibility Application must include the developer’s name and contact information along with proof of partnership (eg. letter of intent, memorandum of understanding, etc.)

4) When submitting a Proposal to Purchase, the CDC must sign a Statement of Acknowledgement, stating the CDC has read and understands the policy, provisions and penalties of the Land Reserve and agrees to remit to the City fifty (50) percent of net profit made from the resale (flipping) of the property.

Penalties

Council Bill Number 402 of 1998, establishing the City of Pittsburgh Land Reserve, defines penalties for violating Land Reserve provisions. A CDC found in violation of Reserve provisions will be prohibited from utilizing the Reserve for a period of one (1) year from the time it is determined by the Department of Finance that default has occurred. At the expiration of one year, the CDC must compensate the City for funds not paid and demonstrate to the URA the CDC’s ability to undertake additional development activities in order to utilize the Reserve process.

PCRG, URA and City Finance will work collaboratively to ensure this policy is being implemented and enforced.

I have read and understand the above policy, provisions and penalties associated with flipping property held in the City of Pittsburgh Land Reserve.

Signatures

Organization: ______

Signature: ______

Name: ______Title:______(please print) (please print)

29 ATTACHMENT M Revised Procedures City of Pittsburgh Land Reserve Applications

Project Feasibility applications must be submitted to the following contacts:

______

Urban Redevelopment Authority of Pittsburgh Submit complete application with all necessary attachments, photos and supporting documents. Hard copy only

Urban Redevelopment Authority 200 Ross Street Tel: (412) 255-6568 Pittsburgh, PA 15219-2069 Fax: (412) 255-6645 Attn: Trey Barbour

______

City of Pittsburgh Department of Finance Submit only the Project Feasibility Application (no additional documents necessary) Hard copy only

200 City-County Building 414 Grant Street Tel: (412) 255-2468 Pittsburgh, PA 15219-2476 Fax: (412) 255-2438 Attn: Mary Lou Tenenbaum

______

Pittsburgh Community Reinvestment Group Submit complete application with all necessary attachments, photos and supporting documents.

PCRG P.O. Box 53009 Tel: (412) 391-6732 ext. 201 Pittsburgh, PA 15219 Fax: (412) 391-6737 Attn: Bethany E. Davidson

______

Notes to remember for submitting applications: . Mailing complete applications one week prior to the deadline is the best procedure . The URA and Finance Dept. will NOT accept electronic applications . When submitting via fax, do not include attachments . CDC’s no longer have to send an application copy to Allegheny County DED