11-A-1 Homestead ProgramDRAFT PROCEDURE, HOMESTEAD PROGRAM
Obtain copy of all properties located within the city limits of the City of Paris that have
been foreclosed on for delinquent taxes.
Incorporate location information on lot inventory into the City's GIS system to enable us
to identify the location of the properties.
Identify properties which appear to be suitably located adjacent to or with access for
utility services of all kind, including sewer, water, electricity, gas, etc., and other criteria as
designated by the committee for consideration as candidates for including in the
homestead program.
The taxing entities must now be prepared to convey the property by general warranty
deed in their respective interest of the property (perhaps as determined by the relative
amount of taxes owed on the property at the time it was foreclosed) to make the property
suitable as collateral for a home construction loan. This is a risk item; it will entail a
certain level of risk (although relatively small) on the part of the taxing entities m be
prepared to convey their interest by general warranty deed. There are also constitutional
implications in this step, dealing with the gift of public funds (Artide III, Section 51) and
extending of public credit to a private entity (Article III, Section 52), but it is believed
that under current law these considerations are manageable.
There must be a screening process established to identify potential participants in the
homestead program. Perhaps the current programs administered by the city or others
could identify qualified potential home buyers based on the criteria established through
this process. Moderate income would obviously be one consideration. This program
would also lend itself very will to individual housing for the elderly.
There would have to be a process to match up qualified candidates for participation in the
program with the preferred housing and an available lot. This would be the time when
the financial institutions would have to be involved, as the candidates would have to have
a sufficient available income to qualify them for a reasonable loan for construction of the
new house. The warranty deed provided by the taxing entities would serve as the
collateral and down payment of the loan for construction of the house. The full
involvement and participation of the various financial institutions would be an absolute
necessity at this point, from the perspective of interest rates, qualifications for loans,
ability to pay, etc.
There would also be the questions of closing costs and how those closing costs could be
minimized and still satisfy the requirements of the lending institutions.
As in any other circumstance, the construction loan would be linked to a mechanics and
materialman's lien contract for the construction of a new house. This would require the
full involvement of the various local contractors and some pre-qualification process for
those local contractors to be participants in the construction program.
Construction of the home.
POTENTIAL POSITIVE IMPACTS OF THE PROGRAM:
1. Begins the process of recycling properties currently in the hands of taxing entities.
Provides an opportunity for low cost housing for the elderly and for the low to
moderate income.
3. Provides the opportunity for significant construction work for local contractors.
Provides the opportunity for lending institutions to be involved in public service
programs.
Will generally assist in the betterment of the appearance of the community by
having new homes constructed and presumably having those homes maintained by
the home owners.
6. Removes such property from non resident landlord ownership.
7. Should avoid the need for the city to do future mowing on the property.
8. Places property back on the tax roll.
POTENTIAL NEGATIVE IMPACTS OF THE PROGRAM:
The program may be in competition with current landlords, such as for apartments
or rental properties, if the individuals occupying those properties chose to qualify
for and do qualify for the program and buy a home. The level of impact on
current property owners is difficult to ascertain.
Requires the taxing entities to be prepared to relinquish possible proceeds from the
purchase of foreclosed properties, although it has been proven offers to purchase
are very low amounts. The long term benefit of a new home on the property
dearly outweighs the prospect of collecting long-term delinquent taxes.
The program would require full cooperation of the taxing entities, the financial
community, the social service community, and the construction community.