Tuesday, March 24, 2009

How to "FIX" the Vacant Building Maintenance Licenses (VBML) Program

F irst of all a little "background", two weeks ago we were told we needed a VBML on our property because in 2005 one was issued against the previous property owners, who inherited the property after their parent passed away due to some broken windows, long since fixed. the property eventually went into foreclosure and we bought it from Fannie Mae in November of last year. Now like most people who buy a house, you buy Title Insurance and the Title Insurance will tell you if there are any known "issues" with the home. However since the city "dropped the ball " in 2007 when the VBML expired and didn't file a lien for the unpaid VBML or fine as proscribed in the ordinance it never showed up on title search. Now the inspector explained I can pay a fee and apply for waiver which in all honesty will take at least a a few months, a lot of our time preparing the waiver and frankly a lot of time spent by an overworked inspector whom I have a great deal of respect for as he has a huge caseload and a difficult job.

So I have become something of an "expert" on the VBML I have spoke with city officials , I have spoke with community leaders and I have read just about everything you can "google" on this ordinance. I have in fact read the entire city municipal code relative to the subject. In conversations with city official, one said to me "if you can come up with a better plan for dealing with this problem, I'd like to hear it"

Well here you go. First of all some more background on me, I have sat on the boards of dozens of neighborhood organizations and community development groups, not only in Indianapolis But other parts of the country where I've lived. I have started 4 successful neighborhood groups over the years and have been directly responsible for developing and implementing plans that resulted in their turnaround. I routinely consult with community groups to develop action and development plans. I also have background in historic preservation, law and urban planning and zoning issues. lastly I own a historic restoration consulting company, and you can see by the blog posts on the restoration of our home, I know what I am doing.

I am not your 'average Joe" with an opinion.

The VBML program was started with the best of intentions. The multi neighborhood task force drafted a good idea. Deal with properties that have value but may not be economically viable at the moment. Basically the idea of the VBML was to do something with those "neighborhood eyesores" that are everywhere in the city.The idea was that a VBML at a cost of 900.00 a year would 'nudge' property owners to fix their properties up rather than deal with the costs of the fees. The theory was, that these properties would get fixed up to the 13 point preservation plan standard and go back on tax roles as a contributing part of the city. Basically the VBML shifted responsibility to the person causing the problem and not general taxpayers. The problem is, that there are not enough inspectors to do that job ( the city is hiring more). According to Ed Cunningham, of Building and Inspections, the city has 1831 buildings on its list and growing.

That's an caseload of over 400 properties per inspector! The city issued 3 VBML refunds last week meaning that those 3 properties met the 13 point preservation standard and had reached re-occupancy conditions within a 12 month period. while this is a positive step forward it is by no means a good 'success rate' when you have over 1800 properties to deal with. If you maintain that rate you are still at less than a 10 percent annual success rate. Clearly not what everyone had in mind when the idea of the VBML was conceived. There are also legal challenges to VBML and accusations of 'uneven enforcement" and some view it simply as a "tax" that affects low income property owners who often "walk away' from the property rather than pay it. "Investor types" share tips on investor blogs about how easy it is to 'stall' the city or how to avoid the VBML fees or even ignore them until you can "Flip" a property. These people have figured out how to play the system and the city lacks the resources to play hardball.

With the mortgage meltdown there are potentially hundreds, if not thousands of properties out there in the City of Cincinnati that are candidates for this VBML list. Even if the city could hire 10 more inspectors it is a losing battle.

So how to we "FIX" this problem? Well I have some ideas. First of all we need to get all the players on the same page, City Inspections, the Courts, the Council and Neighborhood leaders. I would propose a "VBML Project Review Summit". Lets bring together the people involved and look at ways to streamline the process, create some solutions, and develop a long range goal of eliminating the VBML system in the next 5 years. The following are "talking points" and potential solutions to get a dialog started.

Neighborhood level: Neighborhoods can't expect the city to do this job on its own. In order to turn neighborhoods around we need community involvement. Neighborhood organizations need to be the "eyes and ears" of building services. Neighborhoods should each develop a"Hit List" of say 10 problem properties or offenders that are the "worst of the worst". Neighborhoods also need to look at their own group's effectiveness. Many Neighborhood groups are simply "too large" and cover too large an area to be effective. Many larger neighborhoods should look to becoming "umbrella groups" and encourage the development of smaller Sub-groups or "block clubs" to deal with smaller areas. neighborhood turnarond typically occurs ona block by block basis. Neighborhood groups should appoint a Problem Property Liaison Volunteer who would coordinate with the city on the issue of problem properties. Neighborhood organizations should hold a twice a year 'walking tours" with city inspectors, health department and perhaps representatives of city legal and city council of their neighborhood.

Courts: The courts must take a tougher stand against out of state LLC's who operate in the city. Cases are routinely dismissed when out of state defendants fail to appear, rather than default judgements and contempt of court fines. Cleveland for example hit Destiny Homes LLC, a major player in Cincinnati as well, with a 140,000.00 contempt fine for failure to appear on a problem property there in January 2008. We need to put the 'investor types' on notice that it is not business as usual!

We need to modify the city approach to how they take known "serial offenders" to court. These investors count on dealing with one property ata time. We need to "bundle' these cases so clear patterns of abuse can be cited, mass inspections should take place on all properties owned by those companies. We need for fines on any "serial offender" to be raised. Judges who hear cases routinely should take the time to do a "ride along" inspection with city inspectors so they better understand what the inspector is up against. If city legal would take a tough stand against the dozen or so "investor groups" that own hundreds of these properties in the city of Cincinnati and bundle multiple property offenses, then we would make a dent in the problem.

City: The city needs to outreach to the community more. The city should set up a separate "Community Development Website" something different than CROP. Neighborhoods and block clubs could "register" with the city. In fact the city could provide web pages for neighborhood groups to promote their area and online forums to share tactics they are using to turn their neighborhood around. The city can directly update neighborhood groups en mass of upcoming hearings, new developments and changes in policy. The city should promote an "Endangered Properties Website" where owners of property hit with VBML's would have a option to place the property for sale and receive a reduced VBML fee while the property was on the market. This 'diversion plan" would require the owner to divulge the repair orders as part of sale to any buyer and require that buyer to sign a repair plan with the city and as part of a restrictive covenant attached to the deed and be required to pull permits and begin work within a period of time. A 'secure page' would be available for those Neighborhood Problem Property Liaisons to update inspectors on problem properties in their area and notify them of new situations, such as a property being open or illegally rented. The city should work with city water and sewer to flag any property with a VBML or Condemn order to keep water service off. This will prevent illegal renting of those properties. Also property owners who currently have VBML's or are arrears on property taxes , as many of these offenders are, would be banned from Sheriff's sales of foreclosed or tax lien property until VBML were closed.

Neighborhood groups that rehab or stabilize properties could also list the homes on this site. The city can create a "land bank' of available properties owned by the city for anyone wishing to purchase, owner occupy and rehab. The city can partner with historic preservation to promote these properties to the preservation community. The city should look for resources to establish a facade grant or additional paint-up/fix-up monies for low income homeowners

On properties that have changed hand and it is obvious that new owners are fixing the property, field inspectors should be given the authority to recommend that VBML be dropped in favor of a "Repair order" and buyers blindsided by VBML who are indeed fixing the property would sign a notification of orders and an agreement that if repairs discontinue, they will be liable for back VBML fees and fines. This will lighten the case load of overworked inspectors and allow them to concentrate where they are best needed. It will not hinder or slow down positive developments.

You cannot fix the VBML problem overnight! However the above suggestions can serve as a "dialog' with the city, the courts, and neighborhoods to "Really" tackle the issue. Pointing the blame for the failure of VBML at each other does not solve the problem. The real problem is the property owners who don't care about maintaining their property and have no interest in becoming part of or investing in that community.

If you think these points have merit please forward this or link it to your neighborhood leaders and/or city council persons, the time has come for serious discussions.

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