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"The total market value of all property in Hamilton County this year is $49,474,502,743. That's a decline of $149,840,286 from last year. Residential property makes up 73% of this value. This information is included in the annual abstract which is prepared by our office and approved by the Board of Revision."
The Auditors office has laid out an issue that has been happening for years and if this trend continues the city is headed to a future budgeting issue which means either higher property taxes (which disincentivises home ownership) , or higher income taxes (which disincentivises business relocation).
The city " Ohio Moving Forward funds' Results in the demolition of 650 homes and the CDBG funding elimintated another 150. The MSD project in Fairnmount will remove over 100 properties from the tax roles PERMANENTLY, (many of them commercial business that paid substancial monies).
PONDER THIS: Not even looking at average home prices for moment, but a typical "blighted" home might be valued at 35K , that means it pays 850.00 a year in taxes. It costs 15-20,000 to demo (mostly federal monies, but that is coming from your federal tax payments). The owner of the property NEVER pays the demo bill either and typically doesn't pay the taxes. It takes usually 4-5 YEARS at which there is 8-15K in liens applied (from the demo) before the vacant lot gets tax foreclosed on. Offerred twice at sheriffs sale (no one will pay thousands for the lot to satisly the lien). Then it goes to Tax Forfeiture sale a year or two later. In that process ALL the liens are wiped out, so you buy it free an clear. Most vacant lots sold at the forfeited land sale sell for Five bucks! The vacant lots are typically valued at 500.00 to 650.00 , the new owner pays 12-15.00 A YEAR in propery tax. There is no incentive to redevelop it either. These lots, are NEVER cut and often become dumping grounds adding to FURTHER decline of the neighborhood and reducing the value of nearby houses. There are hundreds of lots in this city, that no one even bids on at 5 bucks which are sitting full of trash and debris.
Clearly, this approach/process, is broken. So what are your thoughts if you could suggest to the new council a new policy or approach on this matter.
I think we should be stabilizing most homes rather than demoing, placing liens against them for the repairs and use our new landbank to hold them. We could then institute a New Urban homestead program where "Qualified" people, or developers, can buy them at low cost, agree to pull permits within 60 days of close and restore them. If they dont? The city takes them back. I do think we should offer 1/2 price permitting fees as an incentive and remove the VBML/Condemn orders (converting those item to repair orders, in order to make it possible for new owners to get financing.
Thats my idea. Whats yours? This is a looming issue. We cannot afford these continuing property tax revenue declines, not to mention the negative impact these demos have on our communities.
What would have been the property tax collected on that $149 million in evaluation? Seems like a substantial sum to me. While the percentage drop is not too drastic, the fact it is going down is of concern. I would have expected it back in 2008 but not in a supposedly recovering economy in 2013. Where is the recovery?
Bear in mind that loss is inspite of many projects that you would assume would be generating revenues but most of the work done by developers in OTR and other 'big' projects is usually tax abated. Meaning either no tax or its capped at pre-project values for 10 years.
The only 'Bright spot' is many of the earlier projects done in Mt. Adams are at the end of their abatement and that is creating a turnover as many are selling rather than watch their property taxes go from a few hundred to dollars annually to several thousand a year. Some of those people are moving to Price Hill and my neighborhood , doing more restoaration but not enough to pick up the slack of losses. But still, almost everything being built new is tax abated,
Their will be big drops caused by the MSD project in Fairmount over the next three years. Of course that is based on the idea there will be development across the street on Queen City, BUT, the bad news is we will lose another 80 properties on Westwood Blvd to widen it to four lanes so there is another big property tax hit and sense it will be more limited access there wont be a lot of reconstruction there.
The city also had a record number of granted property tax appeals this year. Thre were over 5200 appeals filed and its growing every year as people figure out due to lower sales prices , they should be paying lower property taxes.
Its going to be big problem if we can't reverse the trend.
What would have been the property tax collected on that $149 million in evaluation? Seems like a substantial sum to me. While the percentage drop is not too drastic, the fact it is going down is of concern. I would have expected it back in 2008 but not in a supposedly recovering economy in 2013. Where is the recovery?
kjbrill--
There isn't any recovery. The economy is adding a few jobs, but only enough to break even with population growth, really. The headline unemployment number, the U-3 has been steadily declining, but that's only because people are giving up looking for work. The labor force participation rate is at a 20 year low and still falling. IIRC it was like 66% in 2007 and is around 62% now. If the participation rate was the same in 2013 as it was when the crash began, we would still have 11% unemployment.
And that's what's continuing to be drag on residential values. Of course, this decline of taxable value is in spite of the rising prices in OTR/CBD/CUF, which means the outlying areas of Cincinnati - the neighborhoods - declined even more.
Even more disconcerting: is this number indexed for inflation? If not, then property values in real dollars have dropped by 3-4% in the past year, not the 0.1% it seems to be (in nominal dollars).
One issue I see is that the current system provides an inherent disincentive to substantially improve property. Because the tax is based on the property value, if home is improved, the owner will not only be hit with the cost of improvements but potentially see their property tax increase as well. An owner may decide that, while they can afford to maintain or improve the property, the ongoing increased tax evaluation may not be worth it. Perhaps there is a better system to tax based solely on land and use and take the improvements (building) out of the equation?
One issue I see is that the current system provides an inherent disincentive to substantially improve property. Because the tax is based on the property value, if home is improved, the owner will not only be hit with the cost of improvements but potentially see their property tax increase as well. An owner may decide that, while they can afford to maintain or improve the property, the ongoing increased tax evaluation may not be worth it. Perhaps there is a better system to tax based solely on land and use and take the improvements (building) out of the equation?
I see nothing sustainable in this proposition. Look at the typical property tax evaluation. You have two components - the land value and the building value. Which one do you want to guess is the greater? The building value is typically 2-3 times the land value. So just how do you propose to remove it? I think this is a preposterous proposition. And what do you do with a vacant lot, increase its value to the point where noone can afford to own one?
i'd be very curious to see the numbers for the city, which is only about 1/3 of the total county population
I would be almost certain that the city proper makes the largest loss in valuation. Its interesting to note that for while I was keeping a tally of what the loses were to demolition in S Fairmount/Knox Hill and it was in the millions.
People have very short memory of neighborhoods so I went back and did some research on houses in my neighborhood based on transfers of ownership. In the late 1990's houses in my neighborhood were selling (on average) in the 60-90K range. By 2003 average sales were down to 20K. At the low point when the mortage crisis hit foreclosures were selling for 4K. This dragged down overall evaluations of otherwise well maintained properties in the area.
Losses in valuation were caused by three factors. 1. The city expansion of section 8 rentals out of OTR to the neighborhoods after the riots, resulting in illegal apartment conversions and creating another round of "flight" from the neighborhoods. 2.) Excessive numbers of demolition and over-use of the VBML ordinance (to demonstrate "need" for more federal funds), and 3, the housing bubble with the making of loans to 'investor types" who were in no way creditworthy.
My neighborhood is starting to come back from that because we are attracting restoration reinvestment, but other areas are not so lucky.
But, if I am also looking at trends of section 8 moving in towns like Cheviot and its moving into the townships, we may still see this downward spiral as some of the older suburban areas of the county go into decline. Once a neighborhood gets ravaged by section 8 (which brings in the slumlord/investor types). It is very hard to turn things around. Our approach, was to stop the revolving slumlord ownership by buying property, take it out of rental circulation and restore it back to single family. What my self and other members of our neighborhood group have done is to get about 20 of the illegal apartments conversions, out of slumlord hand by buying them out, and on their way back to single family and lobbied building inspections to go after ths other 'slum' properties with strict enforcement.Once you start getting responsible people back into the community who have money to restore, it modifies the behavior dynamic and many of the troublemakers leave for areas where no one challenges their behavior
Price Hill Will have been having an impact with their work too.
But still what everyone is doing is just pushing the problem around. Utimately the problem gets pusehed further and further out and it winds up in the suburban counties . Which you see in many cities that have turned around. So what may be near downtown neighborhood problems today, are Inner ring older suburban problems in a few years and I guess one day it gets pushed out of our county to surrounding counties?
I would be almost certain that the city proper makes the largest loss in valuation. Its interesting to note that for while I was keeping a tally of what the loses were to demolition in S Fairmount/Knox Hill and it was in the millions.
People have very short memory of neighborhoods so I went back and did some research on houses in my neighborhood based on transfers of ownership. In the late 1990's houses in my neighborhood were selling (on average) in the 60-90K range. By 2003 average sales were down to 20K. At the low point when the mortage crisis hit foreclosures were selling for 4K. This dragged down overall evaluations of otherwise well maintained properties in the area.
Losses in valuation were caused by three factors. 1. The city expansion of section 8 rentals out of OTR to the neighborhoods after the riots, resulting in illegal apartment conversions and creating another round of "flight" from the neighborhoods. 2.) Excessive numbers of demolition and over-use of the VBML ordinance (to demonstrate "need" for more federal funds), and 3, the housing bubble with the making of loans to 'investor types" who were in no way creditworthy.
My neighborhood is starting to come back from that because we are attracting restoration reinvestment, but other areas are not so lucky.
But, if I am also looking at trends of section 8 moving in towns like Cheviot and its moving into the townships, we may still see this downward spiral as some of the older suburban areas of the county go into decline. Once a neighborhood gets ravaged by section 8 (which brings in the slumlord/investor types). It is very hard to turn things around. Our approach, was to stop the revolving slumlord ownership by buying property, take it out of rental circulation and restore it back to single family. What my self and other members of our neighborhood group have done is to get about 20 of the illegal apartments conversions, out of slumlord hand by buying them out, and on their way back to single family and lobbied building inspections to go after ths other 'slum' properties with strict enforcement.Once you start getting responsible people back into the community who have money to restore, it modifies the behavior dynamic and many of the troublemakers leave for areas where no one challenges their behavior
Price Hill Will have been having an impact with their work too.
But still what everyone is doing is just pushing the problem around. Utimately the problem gets pusehed further and further out and it winds up in the suburban counties . Which you see in many cities that have turned around. So what may be near downtown neighborhood problems today, are Inner ring older suburban problems in a few years and I guess one day it gets pushed out of our county to surrounding counties?
When you get to be as successful as a New York City, I would imagine that then you *have* to rent-stabilize some buildings/apartments, as otherwise, all your "working-class" folks can't afford to live in the city. And cities always need people to drive busses (run street cars), be cops, be firemen, teach, pick up trash, maintain sewers and infrastructure, etc..
As far as the desperately poor - if they become homeless, likely they'll stay in the city (or hitchhike to another metropolitan area) - because what is there for them in semi-rural fringe counties?
As far as Section 8 goes, the problem is more the landlord than the lessee - many people on section 8 work hard (just for very little money) and it functions more as a rent-stabilization method. Again -you may try to move people into the suburbs, but if there is no work for them there (depends on the suburb) or transportation (your metro-wide bus system if kinda limited here) - that is not a recipe for success.
[quote=restorationconsultant;32359638The Auditors office has laid out an issue that has been happening for years and if this trend continues the city is headed to a future budgeting issue which means either higher property taxes (which disincentivises home ownership) , or higher income taxes (which disincentivises business relocation).
[/quote]
What about a reduction in government spending?
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