Thursday, October 7, 2010

VBML ordinance is costing City millions in lost Investment and Revenue

The VBML (Vacant Building Maintenance Licence) ordinance is costing the city of Cincinnati millions of dollars in lost investment and revenue.

For those not familiar with the VBML, the ordinance was created years ago and essentially was created for a good purpose. The city had a lot of property, mostly in OTR, that was basically undergoing 'demolition by neglect". These properties had been vacant for over a decade. The idea was that if there was a licencing
requirement on these vacant properties with an escalating fee structure that the 'economic advantage' of letting a property sit would be gone and property owners would either invest in the property or 'cut their losses and sell it to a responsible owner who would restore it.

Preservationists and community councils signed on to the idea and initially it had some effect. Some property owners fixed up property, others sold , but many held because property value was going up faster that the 'cost' of a VBML fee.

However in 2005 the real estate market began to show signs of unraveling. Large uptick in value and fast turnarounds of property stopped as lenders tightened loan practices and those who bought at the beginning of the decade saw their ARM's readjust. Many simply walked away from homes and many 'investor types" went under, leaving large numbers of foreclosures.

The biggest change however was with Vacant Building Task Force which began to see the VBML as an "escalation tool' rather that the original intent of the the Council and Community groups who wanted it to be used for the hardcore "worst of the worst properties". We began to see the VBML increasingly applied to foreclosed property where the owner has walked away and the bank had not yet taken possesion via a foreclosure filing. Some properties went from simply broken window complaints to VBML to Condemn in as little as four months!

The VBML/condemn list has grown from a few hundred properties to as of today:, 2572 properties. the city demoed over 160 properties in 2009, many of those without proper section 106 review and Preservationist contend were historic eligible and should not have been demoed with federal money.

The foreclosure situation which really is a crisis in many community could be an opportunity for Cincinnati. because of its architecture, Cincinnati has an advantage over many American Cities and thanks to active promotion by some in the Preservation Community. many out of state residents are "discovering' Cincinnati. What could be a boom or restoration for Cincinnati as people come in from out of state, move to this city, set up shop and businesses here adding to job growth, that potential boom, may become a BUST.

Why? The VBML. Right now, I am working with several out of state Preservationists all looking at Cincinnati. these are "old house junkies', people with proven experience in restoration, in neighborhood turnarounds, people who will be relocating here, paying taxes here and more importantly coming in to 'blighted' neighborhoods, bring their families with them and establishing a presence in the community are rapidly becoming fed up with useless red tape.

Right now combined, the various people I am working with will probably invest close to 10 million dollars in this city over the next decade. However those people may wind up elsewhere, perhaps right across the river in Covington or Newport, maybe a  more "preservation friendly"city like Louisville or the dozens of other cities across the country that are offering incentives like no permit fees, state tax credits programs or facade grants.

While other cities offer incentives, Cincinnati offers roadblocks like the VBML, bonding requirements , liability insurance requirements, unreasonable periods to complete repair orders, high permit fees. In a competitive market, Cincinnati is losing the battle. Neighborhoods are losing the battle. VBML and Condemn orders drive property values down, making it difficult or impossible for existing residents to get loans or even home owners insurance.

The VBML 'waiver' process in effective. Insurance Companies, because of tightening markets are no longer writing liability insurance when the property must remain vacant, or the cost of that insurance , if you can even find it, often exceeds the cost of the acquisition price of the home. In other instances because the city has gone to litigation with banks, they are requiring bond be paid that far exceed the value of the property. To expect property buyers to restore a house while not living there and being on site to protect their investment is ridiculous and it ignore the "real world' of the neighborhoods where people want to restore. While it would be 'nice' to put in a 10 thousand dollar HVAC system, copper pipe and electrical  ina house and be able to walk away from it and it still be there when you got back,  the real world is different. People restoring need to be on site in their house and that's not possible when there is a VBML or condemn order against a house when that order was merely and escalation because a prior owner failed to complete a  repair order in a time frame that 'pleased' the inspector, who then "escalated" that to a  VBML or condemn.

The net effect is that people who would come here, restore here, and rebuild our neighborhoods are simply walking away totally frustrated with the city's roadblocks and obstacles, and who could blame them?

The council needs to seriously look at this issue and it needs to determine if the VBML and the Vacant Building Task Force are helping this city or destroying it's chance of a Renaissance. The council needs to hear from Community leaders,  preservationists and the people who are trying to wade through the sea of red tape and hurdles that are being thrown at them. The council needs to look at Historic Preservation as an economic development too (New Orleans, Charleston ) or if they want to be Detroit. Great strides have been made in neighborhoods, but unless the council takes control of this situation and not be led by the city manager, all those strides may be reversed.


St Charles said...

Paul you are absolutely correct. Preservationist and lovers of Cincinnati must unite and present a comprehensive list of must dos for the City Council to implement to bring in investment and restoration.

The City Council needs to partner with City Planning and the police department to make some very real changes. Some hard decisions need to be made. Immediately!

The City needs to hire a lobbyist to demand the state of Ohio enact competitive Historic state Tax Credits that are transferable. State Historic tax credits for large and small projects will bring much needed development money to every corner of Ohio but will be a huge bonus to historic Cincinnati. Historic state tax credits create long term sustainable jobs.

Real programs to help the drug addicted and get them off the streets have to be passed. A lock down 120 day drug treatment plan with relocation to a new life would help the drug addicted and Cincinnati.

There are also needs to be an aggressive campaign to stop the human trafficking that is going on especially in OTR. I saw young girls one who did not even look like they had hit puberty prostituting themselves with aggressive pimps behind them right were we wanted to put our business.
This is unconscionable and can not continue. It is slavery and a health hazard and must be stopped. It is interesting to note the police drive right by the prostitutes who continue to waive down cars as they go by. They did not even stop. Ignoring the problem will not make it go away. Other cities have no loitering and an aggressive vice squad to stop the exploitation.

Other cities are using Stimulus money to aquire stabilize and find appropriate uses for forclosures. Why does Cincy only want to obtain demo money.

Cincinnati is not ready for prime time. We can make it ready with a petition to City Council to make drastic immediate changes.

Historic Cincinnati is far too valuable and has too much potential for Citizens to sit by on the sidelines and let bad government policy destroy her. Cincinnati is not only an asset to Ohio but to the Nation. Cincinnati needs a comprehensive organized plan, stabilization, a recruiter, incentives and aggressive marketing plan to return to being the Paris of America and the Queen City.

We need to have a meeting and invite everyone presevationists, realtors, architects, artist, Lawyers homeowners and all other interested parties to brain storm and make a comprehensive list of recommended changes. We all know what the problems are now we have to take action to change it.

I love Cincinnati! Together we can save our Queen City!

St Charles said...

I think Ed Cunningham would help us. He is a fine fellow.

St Charles said...

Did you know Ed is a historic Home owner and he is very proud of it. I know he will help us.