11 - Private Re-Sale of a Tract of Tax Foreclosed Property - Westgate ApartmentsItem No. 11
TO: Mayor & City Council
Grayson Path, City Manager
FROM: Carla Easton, PE, Engineering & Community Development Director
SUBJECT: WESTGATE APARTMENT PROPERTY SALE to
RAIN FINANCIAL SERVICES, INC.
DATE: June 8, 2020
BACKGROUND: The Westgate Apartments are located at 635 7th N.W. in Paris, Texas. The
apartments have been abandoned for several years and are in a state of disrepair. The City has
been working diligently to address this issue including abating the property on three different
occasions. Working with the City's Delinquent Tax Attorney Tracy Pounders of The Pounders
Law Firm, the property was filed in court for delinquent taxes and, pursuant to approval of the
Judge, put up for sale. In January 2020, an attempt was made to auction the property at a tax sale,
but no buyers presented an offer so the property was bid -off to the City as trustee for itself, Paris
Junior College, Lamar County, and Paris ISD, each of whom are owed delinquent taxes on said
property. Since that time, the property has been advertised for sale by the Pounders Law Firm, in
hopes of finding a buyer.
Over the past four months, several investors have shown an interest in the property, but were
discouraged by the condition of the property and estimated cost to revitalize it. Most wanted to
acquire the property for low cost/no cost through an agreement with the city rather than purchase
outright.
STATUS OF ISSUE: On May 10th, a formal written offer to purchase the property was received
from Rain Financial Services, Inc. in the amount of $75,000.00. This is the only actual offer to
purchase the property to date. Mr. Pounders has reviewed the judgment and tax liens, and he
estimates the city to receive a prorated amount of $14,000, assuming all taxing entities accept this
offer.
The Rain Financial Services, Inc. is a group of motivated investors from the Paris Area who want
to give back to the community by restoring the property as an affordable housing development.
For additional information, the City of Paris delinquent tax on the property was $29,986.51 (tax
years 2013-18), as well as $15,560.30 for nuisance abatement costs and $4,112.06 in legal fees. It
should be noted that when a property goes up for auction, the end result is not always full
compensation of delinquent taxes. More importantly, having the property in the hands of an owner
who will pay future taxes as well as maintain the property is a desired outcome. We believe such
to be the case in this situation.
If the City Council approves of the sale, the Lamar County, Paris Junior College, and Paris ISD
must each also approve the sale as all four entities are joint owners of the property. The Pounders
Law Firm and Staff would take necessary actions to present this to each of them.
BUDGET: The City does not pay the Pounders Law Firm directly for its work, but rather their fee
comes out of the sale of the property. The City therefore has no direct expense other than time of
staff. If the sale is approved by all four taxing entities, then the City's final revenue is estimated
to be $14,000 which is a prorated share with the other three taxing entities.
OPTIONS:
1. Approve the Resolution as drafted, authorizing for the sale of the property,
2. Request additional information.
3. Edit the Resolution.
4. Counter the offer.
5. Reject the offer, the City will continue to list the property for sale as Trustee on behalf of
the City, County, Paris ISD, and Paris Junior College.
RECOMMENDATION: Approve Resolution authorizing the sale of a tract of tax foreclosed
property known as the Westgate Apartments to Rain Financial Services, Inc. in the amount of
$75,000, and authorize the mayor to execute the deeds.
jure, 8, 2020 LOCATION MAP
Westgate Apartments
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Site Photos
WESTGATE APARTMENTS TIMELINE
• Suit filed April 27, 2018
• AT ISSUE: City of Paris was owed $22,833.53 in delinquent ad valorem taxes for tax
years 2013-17, and $13,786.57 in nuisance abatement costs.
• April — December, 2018: numerous failed attempts to locate and serve owner Property
Partners I, LLC and principal lienholder J Frost Investments LLC — both are single owner
LLCs — eventually my title abstractor determined that the owners (who were also the
registered agents for the LLCs) were dead and service of citation would need to be
handled differently
• Jan. — March, 2019: Service of Citation was attempted on Property Partners I, LLC and J
Frost Investments LLC through the Texas Secretary of State — returns were received
dated March 12, 2019 and filed with the Court
• Jan. 10, 2019 — first defendant, J L Brault Family Trust, a judgment lienholder, was
served citation — they filed an answer on February 5, 2019
• Jan. — May, 2019: numerous unsuccessful attempts to serve the other judgment
lienholders, Barbara Ramp, Donald Ramp, and their LLCs: Game Set Match LLC and
Bear Facts Investments LLC — turns out the Ramps were in bad health and living in their
Florida home during this period - in April, service was finally secured and we started to
work with their lawyer. The Ramps and their LLCs filed a counter -claim as part of their
answer on May 14, 2019.
• A final hearing on the case was set for July 11, 2019
• The July 11, 2019 trial hearing was postponed by agreement of the parties until October
17, 2019.
• June -October, 2019: negotiations with the Breault Family Trust and the Ramps over their
counter -claims were initially unsuccessful, but eventually all of the judgment lienholders
agreed to withdraw their counter -claims and to join in an agreed judgment.
• October 14, 2019 — Court signs the Agreed Judgment — City of Paris was awarded
$29,986.51 for delinquent taxes (2013-18), $15,560.30 for nuisance abatement costs, and
$4,112.06 in supplemental legal fees relating to the nuisance abatement costs — total
judgment is $168,375.30 — adjudged value is $486,830.00 - not final until expiration of
30 days.
• November 19, 2019 — District Clerk issues requested Order of Sale — sale is set for
January 7, 2020
• January 7, 2020 — Tax Sale — legal minimum bid of $170,500 — no buyers — property was
bid -off to the City of Paris as trustee for itself, Paris Junior College, Lamar County and
Paris ISD
• January — May, 2020 — Carla Easton and I actively market the property — although several
potential buyers came forward, none submitted a written offer of $75,000.00 or more
• May 10, 2020 — received offer to purchase the property for $75,000.00 from Rain
Financial Services, Inc.
RESOLUTION NO.
A RESOLUTION APPROVING THE PRIVATE RE -SALE OF A TRACT
OF TAX FORECLOSED PROPERTY, AND AUTHORIZING THE
MAYOR TO EXECUTE DEEDS
WHEREAS, numerous tracts of real property have previously been judicially foreclosed
upon for delinquent ad valorem taxes and bid off to the City of Paris as Trustee for itself, Lamar
County, Paris ISD and Paris Junior College (the "Trustee Properties"); and
WHEREAS, Texas Property Tax Code Section 34.05(1) provides that the Trustee
Properties may be sold by private sale in lieu of a public sale under Texas Property Tax Code
Section 34.05(c) & (d) with the approval of all taxing units entitled to receive proceeds from the
sale, being the City of Paris, Lamar County, Paris ISD and Paris Junior College; and
WHEREAS, a private offer to purchase one of the Trustee Properties has been received
by the City of Paris (the "Private Sale");
NOW, THEREFORE, BE IT RESOLVED AND ORDERED by the City Council of
Paris, Texas; that:
Section 1. The following offer to purchase the following tracts of real property, being
the highest bid received, is hereby accepted and the Private Sale is hereby approved:
RAIN FINANCIAL SERVICES, INC. offers to purchase that tract identified as
"Lamar CAD No. 12932, `MARTIN BLOCK ADDITION, BLOCK A, LOT 1
THRU 20, NW 7TH', approximately 8.020 acres of real property located in Lamar
County, Texas, and more specifically identified in that Special Warranty Deed
filed with the Lamar County Clerk on January 31, 2011 as Instrument No.
085347-2011." for $75,000.00, per the terms specified in that PRIVATE OFFER
TO PURCHASE BID -OFF PROPERTY attached as Exhibit "A" [Ref.: Cause No.
87473, City of Paris vs.wProVerty Partners I. LLC]
Section 2. That the City of Paris accepts that PRIVATE OFFER TO PURCHASE BID -
OFF PROPERTY, attached as Exhibit "A", and authorizes the City Manager to execute it on
behalf of the City of Paris.
Section 3. Subject to the Private Sale also being approved by Lamar County, Paris ISD
and Paris Junior College, and the receipt of the consideration offered by the Buyer(s), the Mayor
is hereby authorized to execute a tax deed conveying the Re -Sale Properties to the Purchaser or
designee. Any prior approval to re -sell this Trustee Property is hereby withdrawn.
Section 4. The proceeds of the Private Sale shall be distributed in accordance with the
Texas Property Tax Code and the orders of the District Courts of Lamar County, Texas.
Private Pro )erty Tax Re -Sale Resolution, Page 1 of 2
PASSED AND APPROVED this day of �, 2020.
CITY OF PARIS, TEXAS
BY
Steven J. Clifford, M.D., Mayor
ATTEST: APPROVED AS TO FORM:
BY BY
Janice Ellis, City Clerk Stephanie H. Harris, City Attorney
Private Propert Tax Re -Sale Resolution, Page 2 of 2
Exhibit "A"
PRIVATE OFFER
TO PURCHASE A BID -OFF TAX PROPERTY
PARTIES:
• SELLER (hereinafter the "Seller"): City of Paris, Trustee„ as trustee for itself,
Lamar County, Parisendent School District and Paris Junior Collee,e.
• BUYER (hereinafter the "Buyer"): Rain Financial Services Inc 1615 Randol Mill
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2. IDENTITY OF PROPERTY (hereinafter the "Property"):
Lamar CAD No. 12932, "MARTIN BLOCK ADDITION, BLOCK A, LOT 1 THRU 20,
NW 7TH", approximately 8.020 acres of real property located in Lamar County, Texas,
and more specifically identified in that Special Warranty Deed filed with the Lamar County
Clerk on January 31, 2011 as Instrument No. 085347-2011.
OFFER: Buyer offers to purchase the Property from the Seller for $75,000.00.
a. Buyer acknowledges that the Property was bid -off to Seller pursuant to a tax lien
foreclosure sale, per the judgments and orders of Cause No. 87473, City of Paris vs.
Property Partners I, LLC (the "Tax Sale"), and by that Tax Deed recorded by the
Lamar County Clerk as Document No. 20-168006-2020 (filed January 27, 2020).
b. Buyer acknowledges that although the City of Paris, acting by and through its City
Council, may accept this Offer, final approval of this sale is conditioned upon the
Offer also being approved by Lamar County, Paris ISD and Paris Junior College; this
offer shall be deemed re j ected and immediately terminated if this Offer has not been
approved by all taxing units within six months of the City of Paris' approval (unless
such approval period is extended by mutual written agreement of Buyer and the City
of Paris, acting by and through its City Manager or his designee).
c. Buyer acknowledges that any conveyance of the Property shall be made "as -is"
"where -is" without warranty express or implied (including but not limited to that of
title, description of the Property, the size or dimensions of the Property, or fitness for
any use), and subject to the following covenants, conditions and restrictions: (1) the
prior owners' rights of redemption, (2) rights of the public to any portion of the above
described Property lying within the boundaries of dedicated or existing roadways or
which may be used for road or street purposes, (3) visible and apparent easements
over or across subject Property, (4) rights of parties in possession, (5) the Property is
free from encumbrances to the extent that they have been released or extinguished by
the Tax Sale, (6) the deed shall be prepared by the Seller or its attorney on a form and
in a form of its choosing, and (7) post judgment year taxes are due on the Property,
the payment of which shall be assumed by Buyer.
d. Buyer acknowledges that (1) Seller does not possess a survey of the property and
shall not provide Buyer with a survey of the Property, (2) Seller shall not provide
Buyer with a UCC search associated with this Property or the current or past owners
Private Offer to Purchase Bid -Off Pro Lierty, Page 1 of 2
of the Property — the Buyer is responsible for determining the legal status of all real
and personal property being purchased, (3) Seller cannot guaranty if or when Buyer
may be able to acquire title insurance for this Property, and (4) Seller may not possess
keys or other access to the buildings and improvements on the Property and that
gaining access to these buildings and improvements shall be Buyer's responsibility.
e. Buyer is responsible for all of its own costs associated with this transaction, including
but not limited to the payment of commissions, legal fees, or other compensation
associated with conducting this transaction.
f. Buyer may terminate this Offer until accepted by the City of Paris. As an inducement
to enter into this transaction, Buyer shall deposit 11fQ00.00 (20%) as earnest money
with The Pounders Law Firm within 3 business days after submitting this offer to the
Seller, to be held in said law cum's IOLTA Trust Account. Should the City of Paris,
Lamar County, Paris ISD or Paris Junior College fail to approve this transaction, this
offer shall terminate and the deposit shall be promptly returned to the Buyer. Should
the sale be approved by all taxing units, the funds deposited shall immediately
become the property of the City of Paris, Lamar County, Paris ISD and Paris Junior
College to be distributed as required by the Texas Property Tax Code, and shall be
applied against the purchase price of the Property.
g. Buyer accepts responsibility for determining: (1) the condition of the Property and
improvements, (2) the existence, if any, of any hazardous conditions or the presence
of any toxic waste on the Property, and (3) any other fact or condition that might be
considered a detriment or other deterrent to Buyer taking possession of the Property.
Seller has made no representations to the Buyer about the Property, and Buyer is not
relying on any representation made by Seller, its officers, employees, agents or
lawyers prior to submitting this Offer to the Seller.
4. This offer is enforceable by specific performance. It shall be construed under the laws of
Texas. Venue shall be the state district courts of Lamar County, Texas.
RAIN FINANCIAL SERVICES, INC. THE CITY OF PARIS, TEXAS
BY.... �.,o,�.
Printed Name: �L.
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Grayson Path, City Manager
Date: .2020
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