Civic Source: Services expensive, but worth it
Published 7:00 am Wednesday, February 24, 2016
On Friday the chief legal officer and the chief operations officer of Civic Source said they still had not received a letter from Bogalusa informing them that the city would like to sever its contract with the company.
Civic Source is an online marketplace operated by Archon Information Systems. The website is used by cities to sell tax-distressed properties. Communities across the state work with Civic Source to get these properties, known as adjudicated properties, back on the tax rolls.
In addition to bidding the properties, about a year ago the company began offering title insurance, meaning that whoever purchases the property will get a clear title and therefore be eligible for mortgages.
This service was intended to help cities, because cities have had issues with guaranteeing clear titles to distressed property.
“We couldn’t give the purchaser a good title,” said city attorney Dale Branch, in an interview. “We couldn’t give them a title they could borrow money on, because we gave them an unwarranted title.”
The mayor and others have said that when the city was handling its own adjudicated auctions, they moved very little property. Indeed, Mayor Wendy Perrette has pointed out some of the city’s abandoned properties date back to the 1930s.
But the advantage of getting a clear title could be the undoing of Bogalusa’s involvement with Civic Source.
Tuesday, the Bogalusa City Council asked Branch to draft a letter terminating services with the company. Although Civic Source has been working to secure title insurance on Bogalusa’s adjudicated properties for only about a year, council President Sherry Fortenberry said the company was raising the prices of the properties to far in excess of their actual value, and she believed the city could sell the properties for less money and therefore get more of them back on the tax rolls.
However, if the city does terminate the contract with Civic Source, Stephen Morel, the company’s chief legal officer, said the city is at risk of jeopardizing the potential sale of five pieces of property.
Morel said that after a year of gathering data on adjudicated properties in Bogalusa, the company had found five buyers for land. He said the process takes about 120 days.
Morel explained his company was ready to complete the sales, but Civic Source needed the city council to amend its current adjudicated property ordinances so they would be more in line with state laws. Branch updated the ordinance and presented it to the board at their first meeting in February, only to see the issue blow up Tuesday, when dozens of residents poured into the council chambers to protest the proposed ordinance.
Branch was surprised by the public outrage, as well as the council’s displeasure with Archon.
“I had no idea that we were not going to use that company any more and in fact I didn’t know that until today,” Branch said Tuesday.
Morel said on Friday that he, too, had no idea the city would not simply approve the updated ordinance.
He agrees that the properties are more expensive because his company provides title insurance. But Morel argues the insurance is worth the cost.
“The costs are not insignificant,” Morel said. “It’s one of the reasons why governments have been unsuccessful in the past, because it is expensive … And once we’ve incurred all these costs, it does inform the starting bid.”
Brian Danos, the chief operations officer at Civic Source, said cities that do not offer title insurance run the risk never getting rid of their properties.
“If an investor purchases a property without title insurance, you can’t do anything to the property and they’d allow those properties to get delinquent again,” he said.
Morel said if the board would simply approve an updated ordinance, his company could get at least five properties on the tax rolls immediately.
“There are properties that have already sold at our monthly adjudicated properties auction that have been delinquent from 2003,” he said.