Kriseman seeks to reclaim hundreds of 'dead' properties using outside legal help

St. Petersburg wants to take over dormant properties to spur reinvestment.
Published February 17 2015
Updated February 18 2015

ST. PETERSBURG — The city's latest idea for breathing life into "dead" properties: Ask a judge to force them to auction.

The largely untested plan being put forth by Mayor Rick Kriseman could be used on more than 400 properties in legal limbo sprinkled across nearly every city neighborhood. No one can buy the properties because it's unclear who owns them, or the owner is unreachable or unresponsive. The Midtown neighborhood, one of the city's poorest, has the greatest concentration, stymieing reinvestment there, officials say.

St. Petersburg is banking that it has standing with the court thanks to about $4 million in unpaid assessments and liens on the properties, with individual properties' tallies often higher than the properties' worth. And it appears the city would be the first in Florida to pursue such a broad legal strategy to get dormant properties back in play for private investors or nonprofit affordable home builders.

"We need to be more aggressive in freeing up these lots because nothing is going to happen if we don't do it," said Mike Dove, the city's administrator of neighborhood affairs.

Shell companies — often defunct — own by far the biggest bunch of these long-vacant lots. Created to bid on the tax deeds of delinquent properties at auction, limited liability corporations often walk away from lots they can't flip quickly, leaving an eyesore and economic albatross behind.

It then often falls to the city to mow tall grass or fix other code violations to keep the properties from becoming public safety hazards. Sometimes it leads to demolition of derelict homes and all of it leads to thousands of dollars in liens and assessments.

But city attorneys don't have much experience plowing through the legal thickets to bring these cases to court, Dove said.

Enter Matt Weidner, a St. Petersburg lawyer who has gained national attention defending homeowners from foreclosure, and whom Kriseman's administration now wants to hire for this project along with another lawyer.

The administration will seek City Council approval on Thursday.

Weidner has also been a big financial supporter of Kriseman, donating $2,000 to his 2013 mayoral campaign.

The city code exempts its legal staff from having to solicit bids for outside legal counsel, but Weidner said he's become an expert on the problem. Too many times in foreclosure proceedings, he heard the city's name come up as an interested party, but no one from the city is ever in the courtroom to press its legal claim, Weidner said.

Part of Weidner's contract will be to train a city attorney to eventually take his place. His typical fee — in most cases 33.3 percent of whatever the city collects — will be on about 10 cases initially. He predicted his typical take would be about $1,200 per case.

"This is not a plum deal, which is going on forever or one that involves much money at all," Weidner said.

Council member Karl Nurse, who rehabs houses and has led efforts to solve the city's housing problems, said he's not concerned about Weidner's financial tie to Kriseman.

"To me, this is an expert who is passionate about this," Nurse said. The city stands to gain thousands per case and save money on demolitions on transfers to private investors, he said.

Part of the confidence this plan will work comes from the city's recent success persuading Wells Fargo to repair and maintain its "zombie" properties, where the owner has long since left but the foreclosure isn't yet final. That legal limbo was successfully resolved by the city, officials say, because banks don't want any more bad publicity after a decade of public relations stumbles since the housing bust.

But real estate speculators, their identities carefully protected under layers of shell corporations, don't have that fear.

"They don't have the reputational risks that encourage them to be good citizens," Weidner said.

As the city slowly shed its foreclosed properties — still between 4,500 and 6,500 at any one time— these speculators are the next target.

"It's part of the natural progression of the foreclosure crisis," Weidner said. "That's one of the sort of shocking things," that cities got into the habit of not really pursuing these properties. He said that has allowed tens of millions or even more dollars in liens to accumulate across the state.

Most cities still are waiting passively for the market to get hot enough that private investors will snatch up dead properties, pay off the liens and build a house. But city officials are tired of waiting.

"What is the final solution on this? We just can't go on forever," said Todd Yost, the city's codes compliance assistance director.

Contact Charlie Frago at [email protected] or (727) 893-8459. Follow @CharlieFrago