Apr 11


Judge gives City Hall an edict

The Brown administration has been pocketing the profits from the sale of foreclosed properties rather than returning the surplus to home owners. Now a judge has told the city it needs to deal with aggrieved property owners.

Last week a judge ordered the City of Buffalo to tell John Mahar — yes or no, one way or another — whether the city would give him the $131,ooo in profit it made by selling his house at a tax foreclosure auction almost three years ago.

He’s been waiting for an answer for 10 months, but has been greeted by what a state Supreme Court Justice Donna Siwek called “radio silence” from the city.

Mahar laid claim to the money last June, using an application process the city posted on its website in November 2021, instructing former property owners how to seek their share of the proceeds from the sale of their seized properties.

But the city never responded to — or even acknowledged — Mahar’s application, as Investigative Post reported last October

In February, his attorney, Jonathan Pincus of Rochester, filed a court action asking a judge to compel the city to make a decision. 

The Brown administration’s response: It pulled the program from the city’s website shortly after Pincus filed his petition to the court

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City attorneys then declared the program — which they themselves had designed — violated state law. As a result, they said, the city had no choice but to keep all the profit — $3.6 million — generated by the auction at which it sold Mahar’s and 102 other foreclosed properties.

To distribute any of the proceeds to Mahar and other former property owners would be an illegal gift of public funds, according to the city’s attorneys.

In court papers, the city claimed it owed no answer to Mahar or any other applicants because the program “lacks any legal basis as designed and is not supported by state law.” 

“[The City of Buffalo] is not required to act upon requests not grounded in the law, or to which the law provides no support,” Assistant Corporation Counsel Carin Gordon wrote.

The program was never formally adopted by the Common Council, according to Gordon, even though it was announced by the mayor’s office, published on the city website, and had accepted applications.

That argument didn’t wash with Siwek, who heard arguments from Gordon and Pincus on March 10. Mahar “is owed a decision” on his application, the judge said.

“Give him an answer,” Siwek told Gordon, according to a transcript of the hearing included in the judge’s order

“Someone respond to him in writing from the City about his application for a program that admittedly was up on the website, whether it was codified [or not].”

The city seized 134 Fargo Ave. in 2019 after Mahar fell behind nearly $4,000 in taxes and fees. Mahar used to live at that address, then kept it as a rental property after he moved to North Carolina. He claimed he didn’t learn he was in arrears until it was too late to prevent the foreclosure because the city’s notices were sent to the wrong address. 

The city sold the property at its annual tax foreclosure auction for $135,000 to a Buffalo police officer. That left $131,000 in “surplus” — profit above and beyond what Mahar owed the city.

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Prior to 2019, the city would have turned over the surplus to the Erie County comptroller. Mahar and any creditors with a lien on the property — a bank, for example, or a utility company — then could have applied for their share of the surplus by filing a claim in Erie County Court. Unclaimed funds eventually would be turned over to the state.

But early in 2019 the city changed its tax foreclosure procedure so that it could keep the surplus for itself. That idea provoked pushback from the Western New York Law Center and good government groups, as well as members of the Common Council. They argued the surplus should be returned to former property owners, particularly low-income owner-occupants, for whom home equity was a substantial asset.

In response to that criticism, the Brown administration said it would devise a program that would make it easier for former property owners to apply for surplus funds. In the meantime, the administration went ahead with its tax foreclosure auction that fall, using the new procedure, which involved the city taking title to foreclosed properties before they went to auction.

That fall, 103 properties — including Mahar’s — sold for a total of $4.3 million at auction. From that sum, the city recouped about $700,000 in back taxes and fees, leaving $3.6 million in surplus.

It took two years, but in November 2021 the Brown administration finally opened a process through which those who’d lost their properties in that auction could claim a share of that money. 

Pincus began filing claims for Mahar and 19 other former property owners last summer. 

“ … and then it’s radio silence from the City,” Siwek said during last month’s hearing. “They don’t hear a word.”

Siwek’s order applies only to Mahar’s application. But the judge told Gordon, the city attorney, that “it would probably behoove the City and Mr. Pincus to discuss” the 19 other applicants Pincus represents, as well.

“[A]ll these people are sitting out there,” Siwek said.

“[W]hen this got put on the website, people saw it as an official program that they could apply for funds. And they went down that rabbit hole only to find out later that the City had changed its mind on it.” 

Neither the mayor’s office nor the city’s law department responded to Investigative Post when asked for comment, nor would they say how many applications the city received. The Western New York Law Center assisted at least two other applicants, in addition to Pincus’s 20. 

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City officials should not “put their head in the sand and ignore them, they’re not going away,” Siwek said.

The judge commended the city for creating the program “to the extent that it was well intentioned.” 

But she also wanted to know how it was possible that the city’s attorneys had designed a program and invited applications for over a year, then concluded it was illegal only after Pincus began pressing for decisions on his clients’ claims.

“Carin, how did it get this far?” Siwek said.

Gordon argued the program was merely “a proposal,” never formally adopted. Pincus countered that the city had not included any caveats that the program “is under review, this is experimental, this may not comply with the law.”

Siwek asked Gordon how the program, if it was in any way provisional, had been published on the city’s website. Gordon pleaded ignorance. 

“I was not — I don’t know, Judge. Like everyone saw it on the website, we saw it on the website,” she said.

Siwek’s order was signed and issued on April 4. The city has 20 days from that date to provide Mahar a decision on his application. 

If the city denies his client’s claim, Pincus said, he would likely challenge that denial in court — an action he cannot take until the city formally issues a decision.

Investigative Post

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