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Legislation #: 140983 Introduction Date: 11/13/2014
Type: Ordinance Effective Date: none
Sponsor: COUNCILMEMBER WAGNER AND COUNCILMEMBER SHARP
Title: Amending Chapter 56, Code of Ordinances, by repealing Article VII, Vacant Building Receiver, and enacting in lieu thereof a new Article VII, Vacant Property Receiver, which updates the vacant property receiver process. 

Legislation History
DateMinutesDescription
11/13/2014 Filed by the Clerk's office
11/13/2014 Referred to Neighborhoods, Housing & Healthy Communities
12/3/2014 Advance and Do Pass as a Committee Substitute, Debate
12/4/2014 Councilmember Wagner (Second by Ford) Move to Amend
12/4/2014 Passed as Substituted and Amended

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140983 PRESENTATION.pdf Other 1059K 140983 Presentation
140983 Fact Sheet.pdf Fact Sheet 154K Fact Sheet

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COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 140983

 

Amending Chapter 56, Code of Ordinances, by repealing Article VII, Vacant Building Receiver, and enacting in lieu thereof a new Article VII, Vacant Property Receiver, which updates the vacant property receiver process. 

 

COMMITTEE SUBSTITUTE FOR ORDINANCE NO. 140983, AS AMENDED

 

Amending Chapter 56, Code of Ordinances, by repealing Article VII, Vacant Building Receiver, and enacting in lieu thereof a new Article VII, Vacant Property Receiver, which updates the vacant property receiver process. 

 

WHEREAS, the increasing number of vacant properties and properties in the process of foreclosure have created serious concerns on the national and local levels; and

 

WHEREAS, the presence of vacant properties discourages potential buyers; and

 

WHEREAS, in many instances, the owners fail to adequately maintain and secure these vacant properties; and

 

WHEREAS, the presence of vacant properties encourages crime, contributes to the decline of neighborhoods, creates an attractive public nuisance, and negatively effects property values; and

 

WHEREAS, the City of Kansas City, Missouri desires to protect against crime and the decline and devaluation of property; and

 

WHEREAS, the ordinance has been in effect for over 5 years and changes are needed to make it more effective for dealing with vacant nuisance properties; NOW, THEREFORE, 

 

BE IT ORDAINED BY THE COUNCIL OF KANSAS CITY:

 

Section 1. That Chapter 56, Code of Ordinances of the City of Kansas City, Missouri, is hereby amended repealing Article VII, Vacant Building Receiver, and enacting in lieu thereof to read as follows:

 

ARTICLE VII.

VACANT PROPERTY RECEIVER

 

Sec. 56-600. Purpose.

 

The purposes of this article are:

 

(1)               To enable the city to petition a court for the appointment of a receiver to rehabilitate a vacant nuisance property, to demolish it, or to sell it to a Qualified Buyer.

 

(2)               To protect neighborhoods from vacant nuisance buildings or structures which constitute a blight or pose a threat to the health, safety or welfare of the public.

 

Sec. 56-601. Definitions.

 

The following words, terms and phrases, when used in this article, shall have the meanings ascribed to them in this section, except where the context clearly indicates a different meaning, and any words not defined here but defined elsewhere in this chapter shall have the meaning ascribed to them previously:

 

Blight means a condition or influence that lowers the value of real estate or that adversely affects property values.

 

Director means the Director of the Neighborhoods and Housing Services Department or his/her designee.

 

Nuisance means any property which because of its physical conditions or use unreasonably interferes with rights common to the public such as the public health, safety, peace, morals or convenience, and which annoys, injures, endangers, renders insecure, interferes with, or obstructs the rights or property of the community; any property which constitutes a blight on the surrounding area; or any property which is in violation of Chapter 48 or Article V of Chapter 56.

 

Party in Interest means any owner or owner of record, lessee, mortgagee, trustee, trustor, property trust trustee, personal representative, agent, lien holder, judgment lien holder, beneficiary, heir, a receiver appointed by the court or other party having an interest in the property as shown by the land records of the recorder of deeds of the county in which the building or structure is located or by court order.

 

Vacant means a property which is lacking constant presence of human beings who have a legal right to be on the property, or at which substantially all lawful business operations or residential occupancy has ceased. In determining whether a property is vacant, it is relevant to consider, among other factors, the percentage of the overall square footage of any building on the property to the occupied space, the condition and value of any items in the property and the presence of rental or for sale signs on the property; provided that multi-family residential property containing five (5) or more dwelling units shall be considered vacant when the majority of all of the dwelling units become unoccupied and a majority remain unoccupied.

 

Qualified Buyer means any individual, entity, municipal body, or neighborhood or home owner’s association that meets the following:

 

(1) Buyer must demonstrate evidence of financial ability to complete the renovation of a property in receivership within 12 months,

 

(2) Buyer has business experience as demonstrated through knowledge of and/or experience in real estate transactions, the rehabilitation and/or the development of vacant property; by providing addresses where renovation or development work was completed; and by demonstrating a history of permit compliance,

 

(3) Buyer has no unpaid tickets, administrative citation fines, nor convictions for Chapter 48 or Chapter 56 within the twelve (12) months preceding the application to be a bidder, and

 

(4) Buyer has no delinquent City and county taxes, unpaid liens, or unpaid water bills.

 

(5) Buyer complies with all business licensing requirements for the City and state.

 

(6) Buyer must disclose and be in good standing after consideration of the following:

 

a. All properties owned, in whole or in part, by the members, principals, partners, and/or resident agents of the corporate entity, including LLCs owned in whole or in part by said corporate entity.

 

b. All properties owned, in whole or in part, by the individuals and/or members of the individuals’ immediate families, including LLCs owned in whole or in part by said persons.

 

c. Any and all relationships with any individuals and/or corporate entities that have been disqualified by the receivership program in the past.

 

d. Any and all civil litigation, including filings of mechanic liens in last 12 months.

 

Serve or Service means written notice by United States regular mail to the last known residential or business address, by personal service, or by posting at the property if reasonable efforts do not disclose a residential or business address for a Party in Interest.

 

Sec. 56-602. Authority.

 

(a) When the Director of the Neighborhoods and Housing Services Department identifies a property as vacant and a nuisance, the Director may request that the city attorney petition the circuit court in the county in which the property is located for appointment of a receiver to rehabilitate the vacant nuisance property, to demolish the vacant nuisance property, or to sell the vacant nuisance property to a Qualified Buyer.

 

(b) The Director is authorized to select a receiver for recommendation to the court. Additional criteria that the Director shall consider when recommending a receiver include:

 

(1)        Whether the potential receiver has the capacity to carry out a rehabilitation plan, complete a demolition, or perform the sale of the property including evaluation of Qualified Buyers.

 

(2)        Whether the potential receiver’s plan for the property leads to owner-occupancy or a lease-to-purchase arrangement before the receivership ends.

 

(3)        Whether the potential receiver has demonstrated success with similar projects.

 

(4)        Whether the neighborhood association representing the area in which the project is located, if one exists, recommends the potential receiver.

 

(5) Whether it is a non-profit corporation.

 

(6) Whether a Qualified Buyer can be found.

 

Sec. 56-603 Notice to Parties in Interest.

 

At least 60 days prior to the filing of a petition for appointment of a receiver, the Director or his/her designee shall serve each Party in Interest with written notice of the City’s intent to file the petition and include the following information:

 

(1)  The common street address or legal description of the property;

 

(2)  A description of the nuisance condition(s), a description of how the property or use of the property creates a nuisance, and if applicable, the citation(s) to the ordinances those conditions violate;

 

(3)   That, if the conditions described in subsection (2) above are not abated, remedied or repaired, the City intends to file a petition for the appointment of a receiver;

 

(4) The name, address and telephone number of the division(s) of the department where additional information can be obtained concerning the violations and the City’s requirements for their abatement, remedy or repair;

 

(5) That the work to abate or renovate the premises and structure must be substantial and continuous; and

 

(6)  That 60 days after service, the Director has the right to file with the court for the appointment of a receiver if the nuisance is not abated, remedied or repaired.

 

 Sec. 56-604. Contents of petition.

 

If the nuisance conditions are not abated, remedied or repaired within 60 days from service to the Parties in Interest, the Director may request that the city attorney file a petition for appointment of a receiver to rehabilitate, demolish, and/or sell the property in the circuit court of Missouri in the county in which the property is located. The petition for appointment of a receiver must be verified by the Director or his/her designee, and include the following information:

 

(1) For each Party in Interest, the date and manner of service of the notice of nuisance conditions and intent to file the receivership petition;

 

(2) The legal description or common street address of the property;

 

(3) A description of the nuisance condition(s), and, if applicable, the citation(s) to the ordinances those conditions violate, as stated in the notice of intent to file a receivership;

 

(4) A description of those nuisance condition(s) which were not abated, remedied or repaired within the time(s) required by the notice of intent to file a receivership;

 

(5) That those nuisance condition(s) have not yet been abated, remedied or repaired as of the date of the filing of the petition; and

 

(6) The name of the proposed receiver and its qualifications for the position.

 

Sec. 56-605. Named defendants.

 

The petition for appointment of a receiver must name as defendants all Parties in Interest of the property which can be identified by using means reasonably calculated, under all the circumstances, to identify those Parties in Interest. The summons shall be issued and service had as in other civil cases.

 

Sec. 56-606. Effect of failure to name a Party in Interest.

 

Failure to name a Party in Interest does not prevent the action from going forward, but does prevent the receiver’s lien from having priority over that party’s lien interest, if any exists. Notification to the prior and only publicly recorded Party in Interest shall apply as notice to all unrecorded successor Parties in Interest.

 


 

Sec. 56-607. Notice of pendency of suit.

 

(a) The City shall file for record, with the recorder of deeds of the county in which the building or structure is located, a written notice of the pendency of the suit pursuant to the requirements of section 527.260 RSMo. From the time of filing such notice, the pendency of the suit shall be constructive notice to persons thereafter acquiring an interest in the building.

 

(b) A copy of the written notice of the pendency of the suit shall be posted to the building or structure.

 

Sec. 56-608. Appointment of Party in Interest as a receiver.

 

(a) A Party in Interest may be appointed to rehabilitate, demolish, or sell the property to a Qualified Buyer if that person:

 

(1)   Requests the appointment to be a receiver;

 

(2)       Demonstrates the financial ability to complete the rehabilitation, demolition, or sale within a reasonable time;

 

(3) Agrees to comply with a specified schedule and scope of work for rehabilitation, demolition, or sale and abatement of vacancy; and

 

(4) Unless waived by the court, posts bond or enters an escrow agreement, in an amount determined by the court as security for performance of the required work in compliance with the specified schedule and scope of work.

 

(b) On appointment of a Party in Interest as a receiver to rehabilitate, demolish, or sell the property, all other Parties in Interest are divested of any authority to take any actions regarding the property without court approval.

 

(c) If it appears to the City that the Party in Interest appointed as the receiver is not proceeding with due diligence or in compliance with the court-ordered schedule and scope of work, the City may apply to the court for immediate revocation of that person’s appointment and for appointment of a new receiver. The bond posted under this section must then be applied to the subsequently appointed receiver’s expenses in rehabilitating, demolishing, or selling the property.

 

Sec. 56-609. Appointment of non-Party in Interest as a receiver

 

(a) If no qualified Party in Interest is appointed as receiver to rehabilitate, to demolish, or to sell the property to a Qualified Buyer, or if a Party in Interest acting as receiver is dismissed, the court may then appoint a new receiver of the property for the purpose of rehabilitating and managing the property, demolishing the property, or selling it to a Qualified Buyer. Any proposed receiver shall submit to the court a schedule and scope of work for the rehabilitation, demolition, or sale of the building or structure and present evidence that the receiver has adequate resources to execute his/her plan and thereafter manage the property.

 

(b) On appointment of a receiver who is not a Party in Interest to rehabilitate, demolish, or sell the property, all Parties in Interest are divested of any authority to take any actions regarding the property without court approval.

 

(c) If it appears to the City that the receiver appointed is not proceeding with due diligence or in compliance with the court-ordered schedule and scope of work, the City may apply to the court for immediate revocation of that receiver’s appointment and for appointment of a new receiver.

 

(d) A receiver appointed, who is not a Party in Interest, is not personally liable for acts done and losses sustained in administering this receivership, provided the receiver acts in good faith and in ordinary care and prudence.

 

Sec. 56-610. Powers of receiver.

 

A receiver appointed by the court, in addition to all necessary and customary powers, has the right of possession of the property with authority, subject to court approval, to:

 

(1) Contract for necessary labor and supplies for rehabilitation, demolition, or sale;

 

(2) Borrow money for rehabilitation, demolition, or sale of the property and may use the receiver’s lien against the property as security;

 

(3) Receive and accept grants or donations;

 

(4) Enter into leases or other agreements in relation to the property and apply the rent received to current operating expenses and to repayment of outstanding rehabilitation expenses;

 

(5) Pay all expenses associated with the operation and conservation of the property, including, but not limited to, all utility, fuel, custodial, repair and insurance costs;

 

(6) Pay all accrued property taxes, penalties, assessments, and other charges imposed on the property by a unit of government, as well as any charge of like nature accruing during the pendency of receivership;

 

(7) Dispose of all abandoned personal property found on the property;

 

(8) Sell the property to a Qualified Buyer as defined in 56-601 via a judicial deed in one of the following manners:

 

a. Sell the property to the high bidder at public auction, after publishing notice which must include the date and Instrument Number of the Notice of Pendency of Suit filed pursuant to 56-607, the court and case number for the action where the sale was ordered, the names of all Parties in Interest, the time, the terms and place of sale, and a description of the property to be sold. Such publication shall be given by advertisement, inserted for at least ten times, and discontinued ten days prior to the day of the sale, in some daily newspaper; or

 

b. Sell the property privately, after publishing notice which must include the date and Instrument Number of the Notice of Pendency of Suit filed pursuant to 56-607, the court and case number for the action where the sale was ordered, the names of all Parties in Interest, the time, the terms and place of sale, and a description of the property to be sold. Such publication shall be given by advertisement, inserted for at least ten times, and continued to ten (10) days prior to the day of the sale, in some daily newspaper. Sale shall be for fair market value if no party to the receivership objects to the amount and procedure. Objections to the amount of the sale and the sale process shall be ruled on by the court;

 

(9) Foreclose on the receiver’s lien or accept a deed in lieu of foreclosure;

 

(10) Demolish the building or structure; and

 

(11) Exercise any other power deemed appropriate by the court.

 

Sec. 56-611. Sale Requirements.

 

(a) In cases in which the receiver is to sell the property:

 

(1)  Notice of sale. The receiver shall publish notice pursuant to 56-610(8). In the notice, it is sufficient to describe the property by a street address and by legal description on the title deed last recorded in the recorder of deeds for the county in which the property is situated.

 

(2)  Buyer qualifications. Ten (10) days before any sale, the applicants to bid in a public sale or the proposed buyer in a private sale must demonstrate to the Director that they are a Qualified Buyer as defined in 56-601.

 

(3) Court Approval. The court shall approve the sale if it deems the amount of the sale and the sale process were fair and appropriate and the buyer is qualified. 

 

(4) Application of sale proceeds. After deducting the expenses of the sale, the amount of outstanding taxes and other government assessments, and the amount of the receiver’s lien, the receiver must apply any remaining proceeds of the sale, first to the petitioner’s costs and expenses, including reasonable attorney’s fees, then to the liens against the property in order of priority, and then to the owner(s) of record.

 

(b) Within 30 days of completion of sale of the property, the receiver must:

 

(1) File with the court a final accounting; and

 

(2) At the same time, file a motion with the court to dismiss the action.

 

Sec. 56-612. Tenure of receiver appointed to rehabilitate.

 

The tenure of any receiver appointed to rehabilitate a vacant building or structure shall extend no longer than one year from the time of the court appointment, unless after a subsequent hearing no sooner than 6 months after court appointment, in a hearing on the evidence, the court finds good cause to extend the tenure beyond one year. Evidence must show due diligence and substantial progress. At any time after rehabilitation, any party to the receivership may file a motion to dismiss the receiver upon payment of the City’s outstanding costs, fees and expenses, including attorney’s fees, and the receiver’s outstanding costs, fees, and expenses.

 

Sec. 56-613. Recordkeeping.

 

(a) The receiver shall keep all income generated from the property and any other monies received in relation to the property in a separate account, designated specifically for this purpose.

 

(b) The receiver shall keep a record of all moneys received and expended and all costs and obligations incurred in performing the abatement, rehabilitation, management, demolition, and/or sale of the property. Records shall be kept in a form agreed upon by the receiver and the Director or ordered by the court, and copies shall be provided to the Director upon request.

 

(c) The receiver shall file with the court a quarterly report of its rehabilitation and use of the property, including a statement of all expenditures made by the receiver and all income and receipts from the property for the preceding quarters, unless otherwise directed by the court.

 


 

Sec. 56-614. Final accounting.

 

Within 30 days of the end of the receiver’s tenure, the receiver must file a final accounting with the court.

 

Sec. 56-615. Receiver’s lien for costs.

 

Any costs or fees incurred by the receiver are a lien against the property until paid. The receiver’s lien has priority over all other liens and encumbrances, except taxes or other government assessments or as provided in Section 56-606. The receiver must allow the City’s costs and expenses, including reasonable attorney’s fees, to be paid to the extent that the proceeds of a sale or rental permit.

 

Sec. 56-616. Restoration of possession, compensation for rehabilitation.

 

If the approved plan is for rehabilitation of the property, the owner, within the 180 day period following entry of an order appointing the receiver, may file a motion with the court for a hearing requesting restoration of possession of the property. If the court determines that the rehabilitation work has been completed by the receiver or that the owner has the capacity and the resources to complete the rehabilitation, the court may then determine proper compensation to the receiver for its expenditures, including management fees, based on the receiver’s reports to the court. After the owner pays the compensation to the receiver as determined by the court, the owner shall resume possession of the property, subject to all existing rental agreements, whether written or verbal, entered into by the receiver.

 

Sec. 56-617. Expiration of Restoration period.

 

If an owner does not file a motion requesting a hearing to regain possession of the property pursuant to Sec. 56-616 in the 180 day period following entry of an order appointing the receiver,

 

(1) the receiver may foreclose on its lien by a sale of the property at public auction following the notice provisions in 56-610(8)(a). After deducting the expenses of the sale, the receiver must apply the proceeds of the sale to the liens against the property, in order of priority, or

 

(2) the receiver may file a petition for judicial deed and, upon due notice to the named Parties in Interest, an order may be entered granting a quitclaim judicial deed to the receiver. A conveyance by judicial deed shall operate to extinguish all existing ownership interests in, liens on, and other interest in the property, except tax liens. Any Party in Interest of the property shall present any claim for compensation prior to the entering of the court order conveying title to the receiver.

 


 

Sec. 56-618. Termination of Receivership.

 

The receivership authorized pursuant to this article shall terminate only by an order of the court after:

 

(1)   A showing by a Party in Interest or the receiver that the abatement, rehabilitation, demolition or sale of the property has been completed and the costs and obligations incurred due to the abatement, rehabilitation, demolition or sale of the property and receivership have been paid by a Party in Interest and the Party in Interest will manage the property in conformance with this Code; or

 

(2)   Sale of the property; or

 

(3)   Foreclosure of the receiver’s lien; or

 

(4)   Conveyance of the property by judicial deed.

 

Sec. 56-619. Possession, control and ownership by the City.

 

Any action taken pursuant to this article shall not constitute an act of possession or control of the building or structure by the City, unless the city applies to be and is appointed receiver of the building or structure. Any action taken pursuant to this article shall not constitute an act of ownership of the building or structure by the City, unless the City accepts a deed transferring ownership.

 

__________________________________________

 

Approved as to form and legality:

 

 

________________________________

Holly Dodge

Assistant City Attorney