Thursday, April 21, 2011

Country loses Billions in property tax value. Are Cincinnati policies to blame? YES!

It was reported that the county lost over 5 billion dollars in assessed value. Now we all know that property values have declined across the country but are Cincinnati city policies accelerating property value decline? The answer is a resounding yes.

The cause of this is simple. If you look at city enforcements and overlay that with property values you can reach only one conclusion. The city's enforcement of the VBML ordinance/condemn orders, and nuisance demolitions is directly related to areas that showed the greatest decline in assessed values. In fact the areas with the largest numbers of VBML has the largest numbers of decline. North Fairmount experience a 32.2 percent drop in property value. Followed by Cumminsville at 20.02, South Fairmount at 16.55, Sedamsville at 16.34 and Riverside at 11.99 and Avondale at 11.63 all areas the city has targeted with heavy VBML enforcement.

These areas are an easy target because these are areas hit hardest by the foreclosure crisis, and slumlords milking property for Section 8 revenue(another HUD Program). Also residents are typically undereducated , not aware of their rights regarding their property. Far too often, a property goes from a broken window, while in the early stages of a foreclosure to VBML and then condemn, simply because the owner is in a "walked away" status and the bank has not yet taken back the property. Often this process happens in less that 90 days. Sometimes property has been finally listed for sale is pending in the MLS and the city demos the property while it is awaiting closing!
This N Fairmount Second Empire was demoed using federal funds while it was listed as PENDING  in the Cincinnati MLS!

Now city officials will argue that they are 'addressing blight" however what is really happening is city inspections is using the VBML as a way to justify greater 'need' for CDBG funding . The city retains a portion of those funds for "administrative overhead". Meaning that the greater "need" they demonstrate the more money they seek to apply for. Some areas like Fairmount and Cumminsville appear to be "targeted" by city inspections. For example a broken window on a pending foreclosure in Columbia Tusculum is far less likely to be taken to VBML status or escalated to condemn that it would be in the above mentioned neighborhoods. Essentially the city is engaging in "redlining" and their activities directly impact  property values. Make obtaining a mortgage or homeowners insurance impossible and result in housing discrimination and loss of housing opportunity. There is also a direct correlation to population drop in the city.

Part of the problem is the culture of city inspectors who view some neighborhoods as "disposable" or worthless. So if we "fast track" property to demo so much the better, its no big loss anyway, and we can seek more federal monies which pay our salaries.

When property is demoed, a single family house for example, it typically costs between 12-15,000.00 to demo. The city does not bid salvage rights as many cities do because they don't own the property when they demo it. In fact unlike Federal HUD CDBG guidelines which encourage the city to have a redevelopment plan for acquisition and reuse of the vacant lot. The City of Cincinnati routinely demolished property, often historic eligible property, with no plan to do anything with it. Neighborhoods that once had a potentially restorable property have that replaced with a undevelopable, impossible to acquire, vacant lots that will sit at a minimum for 5-6 years while the city applies its liens to it for the demo, and the property makes it to tax sale and eventually winds up on the city surplus property sale.

In fact, city records show that the city often demolishes property with no delinquent taxes! That's right, property that is current on property taxes is often demoed using your federal tax dollars. It gets worse, the city often demos property with HUD money that is owned by HUD that HUD is in the process of trying to sell! Sound incredible, incompetent? well it is.

If you look at the assessed value of property currently on the nuisance list, its assessed value is in the millions of dollars. Add in property that has a VBML or condemn order against it and the numbers are staggering!

Over the last several years the city has demolished several hundred properties worth millions of dollars in assessed value. The value of the vacant lot that remains? About 600-1200.00 dollars and the property owner, having already lost the house, never pays those taxes. Adjacent values of nearby property declines as well further depressing property value.

So who loses here? We all do. The county loses the opportunity to collect property taxes on a house. They have no control over city demos even though it affects the county tax base. We all pay more in property taxes because those special assessments must be applied to a smaller pool of properties. We all lose because the Federal tax dollars we pay, that winds up in agencies like Freddie Mac and Fannie Mae, that guarantee those properties to the lender. Your tax dollars reimburse the lenders and your tax dollars go to HUD who gives money to the city who demos the property, leaving an eyesore vacant lot in your neighborhood that drags down property values and your local tax base.

Neighborhoods that are trying to come back like Knox Hill are in a constant battle with city officials over the 'value' of their neighborhood and struggle to preserve housing stock that is viable and can be restored. Right Knox Hill is fighting over two properties the city we wants to demo, one of which is current on taxes and on the market for sale and assessed at over 60 Thousand Dollars. We may have to go to Federal Court to save that property because of misguided city policies.

Taxpayers need to say enough is enough and restore some 'common sense' to city Government. Either by seeking reform or by lawsuits and injunctions, this must stop.

No comments: