Land banks submit ‘trump bids’ in Luzerne County delinquent tax auction

Eighteen properties have been removed from Thursday’s Luzerne County free-and-clear delinquent tax auction because land banks have exercised their authority to acquire them through “trump bids,” the listing shows.

The revelation they were no longer available for public sale prompted behind-the-scenes complaints from some regular tax sale bidders this week.

Authorized by 2012 state legislation, land banks take possession of rundown parcels and attempt to get them back into productive hands.

The North East Pennsylvania Land Bank Authority covering Pittston area communities has been in operation for years. More recently, Hazleton City created a land bank, followed by formation of the Lower South Valley Land Bank that includes Ashley, Nanticoke, Wilkes-Barre, Kingston and the townships of Newport and Hanover.

Thursday’s auction, formally known as a judicial sale, sells properties cleared of liens and back taxes because they were not purchased at a first-stage upset sale.

With trump bids, land banks have authority to acquire the judicial sale properties by paying the starting bid.

Advocates say this trump bid power prevent blighted properties from ending up in the hands of tax sale buyers who may not commit to needed repairs or demolition. Critics say the government shouldn’t interfere with open competition because many auction buyers fulfill their promise to use private funds to fix up properties.

Due to increased popularity of auctions, bidding competition often escalates the purchase price, in some cases high enough to end up covering all outstanding delinquent taxes and liens.

Representatives of county tax-claim operator Elite Revenue Solutions LLC said the county is obligated to accept trump bids from established land banks under the state’s real estate tax law.

Beyond making sure the trump bid is in order, tax claim has no responsibility or ability to investigate the reasons land banks are choosing particular properties. Land banks are required to follow their own mandates under state law.

Elite Revenue encourages bidders interested in properties to contact land banks directly to discuss any properties of interest.

The Lower South Valley Land Bank submitted trump bids to acquire nine properties, including four in Newport Township with starting bids ranging from $1,360 to $1,710.

Township Manager Joseph Hillan said one is a blighted, unoccupied structure on Newport Street that had been eyed for demolition for two years and was further damaged by fire on July 4, 2022.

“It’s a big eyesore. It’s our number one target,” Hillan said.

Another structure on Arch Street may require demolition, although the township will consider rehabilitation and a sale to put it back into productive use. The other two are lots.

Hillan said the land bank is giving municipalities more control over problem properties.

“We’re trying to clean up the township, and other places are doing the same thing,” Hillan said.

Nanticoke City Manager Donna Wall said she is pleased the city now has the land bank option because there have been too many cases of irresponsible tax sale bidders buying properties without advance research and then abandoning them once they see the condition of their purchases.

“I had one close to me with no foundation and raccoons coming out of the roof. The person bought it from a tax sale sight unseen,” she said.

Wall said responsible tax sale bidders are free to inquire about land bank properties they’d like to acquire.

One Nanticoke property on East Washington Street was among the 18 trump bids, but Wall said she was informed Wednesday afternoon it was removed from the sale entirely because a party related to the deceased owners obtained a court order seeking a temporary reprieve to address the delinquent taxes.

The city, through the Lower South Valley Land Bank, had wanted to acquire the property due to its deteriorated condition, with plans to demolish it, she said.

The remaining nine trump bids in Thursday’s auction were submitted by the Pittston area land bank.

Regular tax sale bidders are privately maintaining the removal of auction properties by land banks could cause taxing bodies and lien holders to lose out on an opportunity to recoup past delinquent payments and start receiving real estate tax revenue again through auction sales.

Auction bidders also must now register in advanced due to state legislation passed in 2021 aimed at cracking down on irresponsible bidders who contribute to blight. The law requires county tax claim offices to cut off bid registration sooner so municipalities have time to research whether prospective buyers have code violations. Bidders must provide more detailed information under these reporting requirements.

To help educate bidders on what they may be acquiring, Elite Revenue also worked with the county’s GIS/Mapping Department to provide online maps pinpointing each property listed in the auction.

County council demonstrated its support for land banks by earmarking $500,000 in federal American Rescue Plan funding to each of the three established in the county.