Committee rejects bill that would stop donations of tax-delinquent parcels to government entities

House Bill 1121, sponsored by Representative Wayne Long, failed in the State Agencies & Govt'l Affairs House committee after an extended discussion about tax-delinquent property procedures and constitutional risk.

Representative Wayne Long told the committee the bill was prompted by a 2023 U.S. Supreme Court decision arising from Minnesota (Tyler v. Hennepin County), which he said established that selling or transferring certain tax-delinquent property without returning excess proceeds could constitute an uncompensated taking under the Fifth Amendment. Long said Arkansas law currently allows the land commissioner to donate for tax-delinquent parcels to state institutions, school districts or local governments and that, in some circumstances, that practice could leave former owners without recovery of equity.

Peyton Murphy, general counsel for the land commissioner’s office, explained current practice: the office may donate parcels instead of auctioning them; roughly 57 parcels were donated over the past 10 years. Murphy said if the donation authority is removed, parcels would be sold at auction instead, with proceeds applied first to taxes and liens and any remaining excess available for the former owner to claim. Committee members pressed officials on how valuation and proceeds are established, whether liens are paid before excess is returned, and how long owners have to claim excess proceeds. Murphy said the opening bid at auction is the amount of taxes owed and that owners have two years to claim excess proceeds; after two years, unclaimed proceeds are distributed to the tax district or county.

Several members raised policy questions and concerns: some said donating parcels allowed municipalities to clean up burned or abandoned properties quickly; others worried repeal would require the state to hold undesirable parcels on its books or force cities to purchase parcels they cannot afford. Representative Long and land office officials said cities could still acquire parcels by bidding at auction, and that the land commissioner practices steps to generate bids, including reducing starting bids where necessary.

Representative Long argued the statute invites litigation and said the office supports repeal of the donation authority; land office counsel confirmed the office is “100 percent okay with this repeal.” Members of the committee suggested narrower fixes and more transparency in the donation process rather than wholesale repeal.

Representative Long moved for a do-pass recommendation. The chair called for the vote; the motion failed after the panel recorded the result as “The noes have it.” The transcript does not include a roll-call tally.