In The News › Voters to decide on property issues

Oct 19, 2010

Source: The Times-Picayune

Filed under: On the Ballot, Taxation & Assessments

Voters to decide on property issues

Amendments affect taxes and tax sales

Tuesday, October 19, 2010
By Bruce Eggler
The Times-Picayune

Louisiana voters will pass judgment Nov. 2 on 10 amendments to the state Constitution. Here is a look at three of them, dealing with property tax exemptions, tax sales for delinquent property taxes and sales of expropriated property.

Amendment No. 5 is intended to help property owners affected by the 2005 hurricanes who, through no fault of their own, still cannot occupy their homes.

In 2006, voters amended the constitution to let owners of homes damaged in a disaster retain their homestead exemption for as many as five years even if they were not living in the home. The amendment also allowed elderly and disabled homeowners who benefit from a special freeze on their assessments to retain the pre-disaster assessment on their repaired or rebuilt home.

For homeowners whose property was damaged by Hurricanes Katrina or Rita, the five-year exemption expires this year. The proposed amendment would offer continued relief to owners who are still awaiting resolution of their Road Home applications or insurance claims.

It would extend for an additional two years the period in which the property owner can retain his homestead exemption and special assessment without reoccupying his home. As with the 2006 amendment, the owner would have to file an annual affidavit stating his intention to reoccupy the property. He also must provide proof of a pending damage claim with an insurance company or a governmental program offering rebuilding money, such as the Road Home program.

The amendment also would allow, though not require, the parish assessor to grant as many as three additional one-year extensions to property owners contending with contractor delays. To qualify for a one-year extension, the owner would have to provide evidence of a good-faith effort to secure a contractor to complete the project. Curiously, though, contractor delays would not be a basis for getting the first two-year extension.

One problem with the amendment is that it is hard to verify the truthfulness of the required affidavits. A homeowner can swear he intends to reoccupy a storm-damaged house even if he is doing little or nothing to repair it. The result can be to remove an incentive for repairing and reoccupying blighted homes while depriving tax-recipient bodies of needed revenue. However, the number of homeowners eligible for the extension is likely to be small, assessors believe.

Amendment No. 7 deals with sale of property put up for auction because the owner has not paid taxes due on it. Under the law, the winning bidder does not receive immediate ownership of the property but rather a “tax sale title.” This entitles the purchaser to reimbursement from the debtor for the taxes, interest and costs the buyer paid to the taxing authority, plus 1 percent interest per month and a 5 percent penalty.

If the debtor does not pay the full amount in a specified period, he can lose all claim to the property through a court proceeding. The amendment would add penalties due to the items included in the auction price.

Confusingly, though, a sale does not necessarily involve an entire lot or building. Instead, authorities sell the lowest percentage of ownership that a bidder is willing to accept in return for paying the taxes owed. The amendment would allow a change in the basis for bidding, giving tax collectors the option to base the bidding on incremental reductions to the 5 percent redemption penalty that buyers are entitled to receive rather than on reductions from 100 percent ownership of the property. That would make it easier for a buyer eventually to gain clear title to the property and thus the ability to redevelop it and put it back into commerce.

Proponents say the amendment would help to reduce blight, but critics say that foreclosing on blight liens is a more effective way of dealing with blight. They also say the amendment would make it too easy to take away property from owners behind on their taxes. However, owners still would have 18 months to three years to redeem their property after a sale.

Amendment No. 8 would remove restrictions on the transfer of property that has been expropriated to remove blight.

Responding to a controversial U.S. Supreme Court decision, Louisiana voters in 2006 amended the Constitution to place new limits on the ability of state and local governments to expropriate property in exchange for fair compensation. The changes prohibited expropriating property for use by a private party and said that expropriated property can be sold or leased only by public bid and only after it is first offered back to the original owner, unless the owner had held the property for more than 30 years.

In 2008 voters rejected an amendment that would have exempted blighted properties from the resale restrictions. Amendment No. 8 has the same objective, though it is less broad. It would eliminate the prior owner’s right of first refusal on buying property expropriated to remove “a threat to public health or safety caused by the existing use or disuse of the property.” Such property also would no longer have to be sold only by competitive public bidding.

Proponents say the exception is needed to facilitate both large- and small-scale redevelopment and renovation projects in flood-ravaged parishes of south Louisiana, where tens of thousands of properties remain blighted. They say governments need to be able to expropriate such lots or buildings and resell them to private developers.

Opponents say the amendment would infringe on property rights and could lead to unjustified use of blight allegations as a reason for expropriations.

Analyses of all the constitutional amendments are available on the websites of the Public Affairs Research Council,, and the Bureau of Governmental Research, PAR takes no position on any of the amendments. BGR opposes No. 5 and supports Nos. 7 and 8.


Constitutional amendments

No. 5: would allow homeowners displaced by disaster to apply for a second extension on their homestead exemptions and special assessment levels if they are unable to reoccupy their homes due to a pending appeal on damage claims.

No. 7: would change the bidding rules for tax sale auctions and would allow tax collectors to charge additional penalties for the nonpayment of property taxes.

No. 8: would remove the requirement that public authorities first offer expropriated property for resale to its prior owner before the property can be sold to a third party if the property was taken to remove a threat to public health or safety and was held for 30 years or less.

Oct 19, 2010

Source: The Times-Picayune

Filed under: On the Ballot, Taxation & Assessments

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