Lake County Council OKs ordinance to stop tax sale ‘churn’
The Lake County Council voted unanimously on Tuesday in favor of an ordinance meant to help prevent properties from being repeatedly listed at tax sales without selling — a phenomenon known as “churn.”
Tax sales seek buyers for properties whose owners have reached a threshold of property tax delinquency, and come in two varieties. A tax deed sale auctions off a property with the buyer shouldering its unpaid tax burden, while a tax lien sale sells the right to collect a property’s taxes to a third party.
Lake County has long struggled with a large number of tax delinquent properties that fail to sell — a study conducted by Indiana University Northwest’s Center for Urban and Region Excellence identified 9,231 properties with no buyer at either the Lake County Treasurer’s 2020 Tax Sale or the Lake County Commissioners’ 2021 Tax Certificate Sale. Breaking the “churn” cycle has become a goal of county and municipal officials, whose entities depend on tax revenue for funding.
The 2023 Indiana State Legislative session furnished a possible solution. Senate Enrolled Act 157, signed into law by Gov. Eric Holcomb in May, authorized the county to establish a process for transferring ownership of a property that has twice failed to sell at a tax sale to either itself or to a municipality for redevelopment.
The law sets out an array of criteria that a property must meet in order to be considered a “public hazard” and become eligible for the process. Among the conditions are requirements that it not be in bankruptcy, that it be unoccupied, and that no property tax assessments of it from the last two years have been appealed.
In September, the Association of Indiana Counties honored Lake County officials’ involvement with the development and passage of SEA 157 2023 with the organization’s 2023 Local Government Cooperation Award.
The ordinance passed by the council on Tuesday implements the law’s provisions at the county level. Council attorney Tom O’Donnell explained at the meeting that “public hazard” status will need to be determined by a court before the county can claim a property or grant it to a municipality.
