Update sought of 1941 use deed law

A nearly 70-year-old state law concerning tax-forfeited property needs a facelift.

The proposed use deed reform law, HF1395, sponsored by Rep. Joe Mullery (DFL-Mpls), would update a statute first enacted in 1941 and clarify how such land should be sold or transferred to cities or counties for public use.

The issue has been “troubling us for a number of years,” said Jason Nord, the Department of Revenue program administrator who oversees deed issuance and compliance with the law.

“There are all types of tax-forfeited land parcels, anything from small sliver parcels that are hardly worth anything to very valuable lands in very prominent locations.” Nord spoke at a Feb. 8 joint hearing of the House Civil Justice Committee and the House Local Government Division. No action was taken.

The law contains a tricky reverter clause allowing land parcels found to be out of compliance with the terms of a public use deed after three years to be conveyed back to the state for sale or other use. Because the terms “public use,” “public purpose” and “park” are vague, disputes over compliance have resulted in lawsuits. Because there is an option to withhold a parcel from sale that may be continually renewed, land that could otherwise be sold may be held in limbo for years.

Nord said the department hopes to uphold the law’s original intent to allow local units of government to create and preserve places of public enjoyment, and that providing such spaces was a public benefit offsetting lost receipts from selling the land at market value.

The bill would clarify conveyance procedures, define more clearly what is meant by “public use,” “public purpose” and “parks,” and provide options for local governments to move tax-forfeited properties into appropriate use, including market-rate development, wetland preservation, correction of blight and development of affordable housing. It would create a 30-year expiration on the reverter, but not until after 2015 in order to allow for possible compliance reviews of older deeds.

A companion bill, SF1126, sponsored by Sen. Mee Moua (DFL-St. Paul), awaits action by the Senate Judiciary Committee.