IUN graduate research project results in state law change around churner properties
When Indiana University Northwest graduate student Victoria Travis first joined a research project looking into the approximate 7,000 properties that churn through Lake County’s commissioners’ and treasurer’s delinquent property tax sale processes, she could not expect where that work might lead.
Now, almost two years after the research project partnership between IUN, the Center for Urban and Regional Excellence, and the Lake County Board of Commissioners began, the results of the work have prompted statewide legislative change.
On April 20, Gov. Eric Holcomb signed Senate Bill 157, a measure dealing with parcels offered at successive tax sales, into law. The legislation was guided by work from Lake County Commissioners Attorneys Matt Fech and John Dull and written by Sens. Rick Niemeyer, R-Lowell, and Dan Dernulc, R-Highland, both who previously served on the Lake County Council.
The county has long dealt with the challenge of delinquent property tax sale properties and the best way to return them to the tax rolls. Part of the challenge was not having a clear view of the extent of the problem or an exact map showing where these properties exist.
Travis said she and her team had to pour through more than 4,000 paper deeds from the Lake County Assessor’s Office to compile and digitize the needed data. Those properties were then mapped through the surveyor’s office.
“We worked hard,” Travis said.
Ellen Szarleta, director of CURE at IUN, said the partnership was a collaboration with the county. Going into it, she said the team did not know exactly how many parcels were involved. The partnership was important because the county and other units do not have the crew to gather such an extensive compilation of data, but need the information to effectively deal with the parcels.
Once the data was gathered, the ultimate goal was to use the data to look at existing legislation and determine what barriers exist to converting these properties back to the property tax rolls and devise a solution to make that happen. That is what SB 157 did.
One way the new legislation will limit the churning process is the way it limits who may participate in delinquent tax sales. Any person who owns property offered for sale both at the treasurer’s and commissioners’ tax sales on two or more occasions without a bid is prohibited from bidding or purchasing any other tracks offered for sale.
The legislation addresses a handful of buyers who routinely scoop up parcels, never to complete perfecting the title or paying taxes on the land they purchased, while already owning dozens of similar properties on which they do not pay property taxes.
While the study examined five years of property tax sale data, Travis said they uncovered some properties that had been through the sales repeatedly for almost two decades.
“One of them had been through 19 times with the same named person on the sale. That’s 19 years,” Travis said.
Szarleta said the study did not focus on individuals abusing the system, but on the process in place to prevent the abuse from happening and to allow the units to convert the properties into taxable land.
Ken Iwama, chancellor at IU Northwest, said this is the first time a collaborative partnership with the university like this has resulted in such wide-reaching change.
“We often have local and regional impact. When you have a statewide impact, it’s really a story to tell,” Iwama said. He described the partnership as a perfect example of the university’s IU 2030 priorities of student success, the opportunity for relevant research and creative activities and service to state and beyond.
“A project like this just drives all three. You see the best of all those priorities in this one initiative worked on together with the Lake County Commissioners. It’s really been a story that may be unique up to this point. This is really exciting,” Iwama said.
Dull said the legislative change directly can be attributed to IU Northwest’s involvement. He said without the data gathered by the team that they were able to show legislators and illustrate the problem, the legislation would not have happened.
“We wouldn’t be off of first base if they hadn’t been involved,” Dull said.
Churner property tax sale parcels have long plagued Lake County, particularly in its northeast quadrant. There are approximately 7,000 such properties scattered throughout the county. The vast majority of those parcels are in Gary and Calumet Township. Once a parcel enters the tax sale process, it can languish there when buyers run out the clock on perfecting the title to take ownership and keep the parcel in a tax delinquent status.
Properties that are in a tax delinquent status, but owned by a nongovernment entity, remain on the tax rolls contributing to the overall assessed value of the government unit. Since those properties are delinquent, the government units are not collecting any taxes on them, Dull said.
Transferring a tax delinquent property to government ownership takes that parcel out of the tax rolls, reducing the unit’s assessed value and spreading out the tax burden of that parcel across all of the remaining active properties.
The ability to transfer property to the units can be used to help spur economic development. Travis said the team worked with the different cities and towns to identify the affected parcels in their communities and provide a map showing where they are located. The maps, which were made possible through the project, enabled the units to see which properties it would be of most benefit to convert.
They then took to the road explaining the data and information to legislators, town managers, mayors, community leaders, business owners and whoever would listen. Travis said informing people how the information could be used and why it was important for their community was a big part of the work.
The new legislation significantly reduces the notification requirements and thus the cost necessary to convert a property. Once the new law goes into effect July 1, it will cost units about $1,000 to $1,500 to cure title on an affected parcel and reduce the time it takes to do so from more than two years to just months.
“The only person you have to give notice is current owner of property. We don’t have to do title work,” Dull said.
