What is a tax delinquent brownfield?
It is a property that is suspected of having environmental concerns that also has outstanding delinquent property taxes. Tax delinquent brownfields range from several acre parcels with multiple buildings to vacant lots of minimal size. While the City thinks they might be contaminated, they might not be. Only through environmental testing will it be clear if there are any environmental problems.
Why would I want to own one?
The City is able to begin foreclosure and then assign to you the foreclosure judgment under state statute section 75.106. One benefit of this process is that you can get the property free and clear of many of the liens that may now affect title (like certain tax liens, mortgages, judgments).
What tax deliquent brownfield sites are available?
The City maintains a list of tax-delinquent brownfields. You may also have this list sent to you by calling Matt Haessly at (414) 286-5736.
How might I be able to acquire one?
Realize that the City doesn't own the parcels on the "brownfield development opportunities list." But, under the right circumstances, the City could foreclose against the outstanding property taxes and assign its right to foreclosure judgment to you under state statute section 75.106. By getting the foreclosure judgment, you'd get the property.
How much do I have to pay?
Developers are responsible for the following expenses:
- $3,500 Application Fee
- Tax foreclosure expenses (ie. filing fees, court expenses, etc.)
- Environmental testing costs
- Environmental remediation costs (if any)
- Portion of delinquent taxes (usually the two most recent years)
- Land Price/Assignment fee (Market Value of Property)
Am I required to clean-up the property?
Yes. If the environmental testing shows that the there are environmental problems, and, if despite that, you still want to go forward with the deal, you'd have to agree to follow WI Department of Natural Resources (DNR) rules and clean-up the property. While this may sound daunting, DNR now allows for flexible environmental closure so that cleanup standards take into account the future use of the property. In addition, depending on the circumstances, environmental cleanup on these parcels may not be needed, may be minimal in cost, or may be eligible for grants and tax credits.
Can I test it first to see how dirty it is?
Yes. An environmental inspection contingency can allow you to get test results as a condition to going forward with the deal. That way, if you decide that the property is too expensive to remediate (i.e. the environmental problems are too expensive to deal with), you can walk away - without becoming owner or having clean-up responsibility. Entry onto the property to do environmental testing can be accomplished either by consent from the current owner or by having the City obtain a special inspection warrant from the courts.
How long does a 75.106 deal take?
Because a 75.106 deal relies on the City bringing a tax-foreclosure action, at a minimum it can take four months. Realistically, however, the whole process often requires 6-9 months. It begins with the negotiation of a "75.106 contract" between you and the City including price and other terms. That contract must then be approved by the City's Common Council. After approval, and after the contract is signed, the City can begin a property-tax foreclosure action that includes a filing period, an 8-week redemption period, and a 30-day answer period. Testing can occur at any time in this process.
Is it a sure thing?
No. There is always a chance that the current owner will pay up all of his or her back taxes, interest, and penalties before the redemption period is over. This would, in effect, put an end to any new proposed transaction. It is fairly simple, however, for a prospective purchaser to gauge how likely there would be a payoff by knowing the amount owed in back taxes and the financial status of the current owner.
What should I do next?
If you find a property you'd like to own on the "brownfield development opportunity list," download and complete an application for a 75.106 transaction (in pdf format) or contact Matt Haessly by phone at 414-286-5736 or by email at email@example.com .
Completed applications should be sent or faxed to the attention of Matt Haessly, 809 North Broadway, Milwaukee, WI 53202, fax 414-286-0395.