Senate panel hears testimony to make municipal land-bank purchase rights permanent

Senate Bill 538 would remove a sunset provision and the interim report requirement that otherwise would end municipal land banks’ and land reuse agencies’ right of first refusal on certain tax‑delinquent municipal property.

The right of first refusal allows municipal land banks or land reuse agencies to purchase tax‑delinquent property located inside municipal boundaries at the base bid before it is sold at public auction, supporters said. “The right of first refusal is critical for land banks to succeed,” said Kim Reed, city planner and executive director of the Nitro Land Use Authority, who testified before the Senate Government Organization Committee.

The bill, as explained by committee counsel, eliminates language that would have caused the right‑of‑first‑refusal provisions to sunset on July 1, 2025, effectively making the authority permanent. Counsel said the county sheriff must maintain a list of properties that qualify under the statute and that the original sunset was enacted in 2020 and later extended to 2025.

Reed told the committee the provision helps municipalities reacquire abandoned, vacant or dilapidated properties that the private market will not rehabilitate. “We have been given the delinquent tax, the maintenance of these abandoned and vacant dilapidated properties,” she said. Reed said private, often out‑of‑state, speculators frequently bought tax liens sight unseen, then failed to take title or improve properties; that practice can leave properties in limbo and neighborhoods blighted.

Members pressed Reed on how revenue above outstanding taxes is handled after a sheriff’s sale; she said she understood surplus proceeds go to the county and cited local examples where surplus funds support countywide services. Senators also asked about adjacent‑owner purchase rights: under current law, adjacent property owners have a four‑month offer period at a land bank’s base cost after a land bank acquires a deed, and the committee discussed widening the statutory criteria to bar certain “bad actor” adjacent owners from purchasing (for example, owners delinquent on other taxes or otherwise meeting disqualifying criteria in code section 11A‑3‑45).

Reed and committee members described the operational timeline and costs: land reuse authorities can spend years obtaining a deed through the tax sale process, incur title‑search and legal costs, then must offer the property to adjacent owners after they take title. Reed said smaller municipal liens often are wiped out in the tax‑sale conveyance process; larger liens such as IRS liens may survive and complicate rehabilitation.

The committee discussed a possible amendment to broaden existing disqualification language so that adjacent owners who meet any of the bad‑actor criteria in code 11A‑3‑45 could be refused. Committee members agreed to work on specific statutory language together off the floor.

The committee did not adopt final passage; at the end of discussion a motion was made to lay the bill over for further work and drafting of amendments. The motion to lay over was announced in committee and will be reflected in committee records as the next procedural step.