Milwaukee officials outline ordinance changes after state Act 207 reshapes tax-foreclosure sales

Milwaukee city attorneys and Department of City Development officials told the Common Council Judiciary and Legislation Committee on Oct. 26 that 2023 Wisconsin Act 207 and the U.S. Supreme Court decision Tyler v. Hennepin County require changes to how the city handles properties obtained through tax foreclosure.

Evan Goike, Milwaukee city attorney, said the state law and the Supreme Court decision “preclude foreclosing jurisdictions from retaining any equity in the property.” He told the committee the statute sets firm deadlines and valuation rules that force municipalities to move properties into sale listings more quickly and list them at an appraised or fair-market value.

The committee heard three practical changes staff are building into a proposed city ordinance: (1) a shortened listing window (the statute moves the standard deadline to 180 days from judgment, down from 240 days this year), (2) a requirement to list properties at an appraised or fair-market value, and (3) a statutory right allowing former owners of single-family owner-occupied homes to buy the property back for taxes, costs and fees owed.

Assistant City Attorney Alex Carson and Dave Misky of the Department of City Development (DCD) walked members through common scenarios. DCD will sort foreclosed properties into statutory buckets — for example, vacant lots and properties with substantial code violations are eligible for an extended 36-month listing period under specific exceptions, while most other properties fall under the 180-day deadline. Misky said the department will still be able to pursue DNS (Department of Neighborhood Services) enforcement for health and safety violations while a property is in the city’s ownership.

The ordinance draft also proposes to repeal the prior vacate/vacation process in section 304.50 of the Milwaukee code because its application fee and process could conflict with the statute’s requirement that surplus be returned to former owners. Under the proposed approach, single-family owner-occupants who can pay the debt plus costs may be sold the property directly, without listing, while other sale-backs (including investor or non–single-family requests) would be subject to Common Council approval.

Committee members and staff debated the extent of council oversight. Goike and Carson described the statute’s language as ambiguous on some points, but staff and several aldermen said they want continued council review of sales to investor owners and all sale-backs that are not single-family owner-occupied. The committee expressed interest in codifying buyer preferences — including consideration of prior DNS violations or tax delinquencies — into the ordinance so council members and staff have clearer criteria when reviewing prospective buyers.

Officials also described the practical listing process under the draft ordinance: the initial listing period would be 30 days, with subsequent listings open-ended and permitting the city to accept offers below appraised value if a public explanation is posted on the city website. The comptroller and treasurer will compile taxes, costs and holding expenses to determine any surplus owed to a former owner after a sale.

No ordinance vote was taken at the committee meeting; staff said a draft will be circulated to aldermen for additional feedback and that they may return with a revised ordinance to reflect council preferences for sale approvals.

Ending: City attorneys and DCD asked the committee to consider buyer-policy language and council oversight as staff finalize an ordinance to comply with Act 207. Officials said they will follow up with draft language and meet with aldermen to clarify how sale-backs and investor sales will be handled under the new statutory framework.