Getting property taxation right

Why isn't the purchase price the permanent valuation for the length of time you own it?

Only in Dayton is the $10K house a reality

Are you your neighbors keeper?

Every week I look at the listings of homes sold in Montgomery County and marvel, because only in Dayton can you buy a home for less than the price of a nice used car.

This doesn’t happen in surrounding communities (other than the depressed ones- Jefferson, Trotwood) . Do you wonder why?

It’s all supply and demand would be the perfect capitalists answer. But, what drives demand?

In real estate 101 they say “location, location, location” – and people choose communities based on the schools. And to some extent this is also correct. Yet, my house, bought for $14,500 in 1986 is worth close to 10x that, and a slightly larger home 2 doors down, just went for the same amount 7 years ago. It shouldn’t have sold that low, but it was a foreclosure. And, my property value dropped- not just because the price was low, but because of the cancer that moved in.

Four doors down, a house sold for $95K 3 years ago. The new couple put at least $40K into it before splitting. It sold in a day- price unknown, but for well over $125K. And my property values are sure to go up.

Yet, I didn’t change locations, and my schools still suck. My investments in my house shouldn’t penalize me with higher taxes anymore than what my neighbors do. The value will come to me, and to the community, when I sell.

How and why do the actions of others affect my property values? If I own a share of stock in 3M, does my value go up just because Apple had a great year? No. Yes, if I go to sell my car, and someone else paid X for a similar car- that’s the price- but, I’m not selling my home, I just want to live here. Why should my value change until I do something?

Simple answer- it shouldn’t. And, this constant re-valuation of real estate based on the actions of others is causing gentrification, housing bubbles, foreclosures, and a mangled economy.

The purchase price of an owner occupied home shouldn’t change until the house is sold. The same should be said of rental property. When the government steps in and raises your property value for taxation purposes, they become an uncontrollable variable in a business equation. They distort markets. They screw existing businesses and property owners when they offer tax abatement to the new guy, while the long term investor gets shafted.

And, it’s almost counterproductive to do improvements to your property, if the tax man is just going to charge you more. But, what could be worse? Your neighbor doing improvements.

Case study: Dr. Michael Ervin, shadow mayor of Dayton before he left town for Scottsdale AZ, bought a dump of a bar in the Oregon District and poured $1.6M into it. This skewed the valuation tables for his neighbors, who were thankful the bar left, but were asked to pay more for Dr. Mike’s excess. Some, couldn’t pay the additional taxes and were forced to sell or move. Others might have spent more on a crappy house, because Dr. Mike did what he did. The market skewed. But, 10 years later, when it came time to sell, Dr. Mike got less than half his money back on his taj mahal. Yes, it’s still double the value of any of the other single family homes- and still skews things, but, the only person paying the tax on the new market rate evaluation- $725K , should be the new owner. Just as the neighbors who never left, shouldn’t have been forced to pay more when the $1.6 boondoggle went in.

The reason we pay property taxes is supposedly to support public infrastructure and government to keep our investments safe. Income taxes are supposedly a more progressive tax that are supposed to be based on ability to pay. When property taxes unfairly start to penalize people for making a long-term investment that they hoped to keep- it’s wildly unfair, un-American.

The fact that almost every office building downtown has been foreclosed on, while tenants have moved to fairer pastures funded in part by tax dollars- with more advantageous tax structures (both income and property tax) like Austin Landing is proof positive that our property taxation and income taxation hodge podge is causing more problems than it’s helping.

The value of the Kettering Tower, once the premier office space in Dayton, was decimated by Dayton’s high income tax (now 2.5%) and property taxes based on market forces beyond the owners control. Would Austin Landing have looked so good, without the huge investment in infrastructure by the county, or the income tax free zone for white collar workers (while the retail underclass pays 2%)? Probably not.

It’s time to realize that tax policy and abatement has serious consequences to the entire region, and we need to find a way to level the playing field and stop letting the choices others make, affect our tax rates.

Regional tax policy, from property to income tax, needs to be set and managed at the county level, and by fair market forces, for all of us to live within our means, and to stop changing the playing field in the middle of the game.

 

Government of the people, for the people reexamined

It was 2012. I ran for Congress. I made a video about the foreclosure crisis and called on the banks to admit responsibility for the properties they seize and let rot.

I didn’t go to the hardest hit parts of the city- I just went a few blocks from my house and office.

Occupied. Home owner. In progress.

Occupied. Home owner. In progress.

The house where I’m sitting on the porch, with the siding falling out on the side- has had occupants for about a year now. It’s still not painted, but, it’s back to habitable.

The guy who lives in it, is young, a contractor, he specializes in floor sanding and refinishing. He’s doing work around the neighborhood- and he, and his lovely girlfriend have been at a few neighborhood functions.

They like it in South Park.

The house had sold at one time for well over $150K- and been totally rehabbed. He bought it for a fraction of that.

What was red, and unsightly is now an Air B&B and architects office

What was red, and unsightly is now an Air B&B and architects office

The house where the sink, furnace, and wiring is cut- is now an architect’s office and Air B&B. People pay $90 a night to stay there. The owner, lives next door. It’s a total rehab- and completely finished. Cute. Friendly. A neighborhood asset.

Why am I pointing these two out?

Because, the city of Dayton did nothing for this to happen. The neighborhood is what made it happen.

People are still investing in South Park, wanting to live here, wanting to fix things up, because of the community we have created. Our public schools suck just as bad as they do for Westwood, or Residence Park or Dayton View- which has way nicer housing stock.

We all have the same crappy street cleaning, same crappy trash collection, same overburdened police, same poor parks and rec department- but houses that would have been doomed for demolition come back from death’s doorstep here. True, the historic zoning makes it harder to tear things down, but, in South Park things are happening.

We have a church- that houses an arts center. We may have another one on the way- right next door. The neighbors produce free Shakespeare in the park, we have progressive parties in the summer, an active neighborhood association. One idiot organizes social soccer on Sundays. We have a book club, hot toddy parties, the list goes on.

Since I moved here in 1986, we’ve been lucky to add places like Custom Frame Services, Halal International Grocery, Pizza Factory, South Park Tavern, Remember When Antiques, Coco’s, Jimmie’s Ladder 11, Spin City, Ghostlight Coffee and The Next Wave as locally owned, independent businesses. Unfortunately, we lost Graeff Hardware, Poppelmeirs, a shoe repair, a car parts store, a small bakery and a few others.

There are still opportunities here- and interest. Someone is thinking about a wine bar, another about a conference center/reception hall.

And all of it happens, without the help of an “Economic Development director” or the “West Dayton Fund” or ED/GE grants, or tax abatements or any of the other government “tools” that you constantly hear about as the reason for a “renaissance.”

On Monday the City Commission will swear in another pawn in the game, and re-seat a seat warmer. The Mayor will talk about all the things that she has accomplished- and yet, things are still grossly wrong in Dayton.

Property values are still moribund. Population is stagnant. Schools are the worst in the state. Our expectations from government are low. Taxes and fees are increasing. Service is lackluster.

The city has cut funds to neighborhoods considerably. Our police force is at record low staffing. Problems we had 25 years ago are still being dealt with- or pushed to the back burner, while we’ve added the heroin epidemic on top of it all. White-collar jobs are still fleeing downtown for Austin Landing, the Greene, and if it wasn’t for Obamacare driving the growth of CareSource, Dayton would be broke.

The focus always seems to be on buildings. We were told if we fixed the Arcade and built new “class A” office space downtown jobs would return, then we were told if we built new schools, performance would improve, now we’re looking at the Arcade again, we’re buying buildings with no public use for a premium over market value, we’re making holes in the ground on Ludlow street- all in the name of “economic development.”

For 2016, my advice to Dayton: go back to Lincoln and the Gettysburg address. Invest in community, in the power of people. Look at communities and figure out if the density is there to have them come back- or look to consolidate to other neighborhoods. Find ways to improve the quality of life. Stress pride in our community. Talk about what we have that’s working- and celebrate those that make living in the city awesome. Find ways to empower people who homestead. Look at empty houses as opportunities. And most of all, stop accepting mediocrity.

We need to dig in and find our collective integrity, a new respect for our citizens, innovate our way around the hand we’ve been dealt, inspire all to expect more, and bootstrap our way into being a city that is once again known as the cleanest, safest city in America. Invest in people, not in the buildings- and the return will surprise you.

South Park isn’t perfect, but, we’ve managed to buck all trends. It happened because we decided that we wanted something better, and came together to make it happen.

Of the people, for the people.

Why don’t bankers go to jail when breaking the law?

As a veteran, living in a military town, this story offends me.

That said- the inaction of our country’s lawmakers to enforce their own laws should bring questions of their fitness.

Despite having a law on the books to protect service members from losing their homes while fighting our war, the New York Times tells a sad story of our governments inability to hold anyone on Wall Street responsible- for anything:

While Sgt. James B. Hurley was away at war, he lost a heartbreaking battle at home.

In violation of a law intended to protect active military personnel from creditors, agents of Deutsche Bank foreclosed on his small Michigan house, forcing Sergeant Hurley’s wife, Brandie, and her two young children to move out and find shelter elsewhere.

When the sergeant returned in December 2005, he drove past the densely wooded riverfront property outside Hartford, Mich. The peaceful little home was still there — winter birds still darted over the gazebo he had built near the water’s edge — but it almost certainly would never be his again. Less than two months before his return from the war, the bank’s agents sold the property to a buyer in Chicago for $76,000.

via Foreclosure for Reservist on Active Duty Prompts 4-Year Legal Battle – NYTimes.com.

And, why is it ok to impose a 6% cap on home interest rates for the military- and not for all of us- while losing jobs because corporate chieftains failed miserably? We’re now paying millions to defend these arrogant, overpaid “executives” from prosecution- for fraud– instead of throwing them in jail and appropriating their assets.

If you rob a bank and steal a couple of thousand dollars- you go to jail with representation from a public defender. If you rob the bank of millions- in salary and by having the financial system tank- you get the best lawyers the taxpayers can buy.

The real risk in screwing our servicemen and women over- is they have the tools and the training to actually go take over Wall Street- and Washington- and give this country back to the people.

The tea party isn’t too far off of what is coming down the pike if the people in Washington don’t stop eating the lobbyists’ caviar, sipping the Kool-Aid and believing that they can continue to allow the rich to steal from the poor- especially those who are willing to die to protect our “freedoms.”

There may not be any greater travesty than what this solider has gone through- other than that the American public is asleep at the wheel.

Who is the thief?

A serial thief is accused of robbing an Oakwood bank of $1,610; he said in the note he had a gun, but didn’t show it:

This is not (Timothy) Stewart’s first bank robbery arrest. He pleaded guilty to robbing two Dayton-area banks in 1999 and was sentenced to 9½ years in prison. He was released in 2008 and was still on probation earlier this year when he was arrested for the RETS theft.

Oakwood police said Stewart faces minimum mandatory sentences of 30 years in prison if convicted of the new bank robbery charge.

via Alleged Oakwood bank robber indicted in federal court.

Yet, I have to wonder how many years in prison the “robo-signer” who worked for the banks is going to serve? Signing off on thousands of documents that took homes away from people, who often were already being charged premium interest rates for their homes, the “robo-signer” stole much more than a mere $1,610- and was well paid to do it.

Considering the scrutiny that the local board of elections uses to disqualify candidates from appearing on the ballots- it’s amazing that a person signing off on the foreclosure on a home isn’t held to a higher standard?

Apparently, not dotting your “i’s” and crossing your “t’s” is only an issue when you want to serve your country- not when your job destroys people’s lives. I’m not making an excuse for Mr. Stewart’s crimes- I’m just asking that banks be held to the same standard for crimes committed on both sides of the teller counter.

Our entire banking and monetary system is built on trust- just as our system of elections, when that trust is violated, the punishments should be equal for those in power and those without- for that’s the definition of justice.

[note- added later to comments- Angelo Mozilo, former CEO of Contrywide is fined millions for stealing billions, banned from financial markets- but- no jail time. Justice?]

Sheriff Plummer of Nothingham

The more we look at the involvement of the Sheriff in the foreclosure process, the more we wonder. Why do banks get this special collection agency service funded by the State, with a gun and a badge?

A home loan is a contract between two parties: the bank and the home buyer. No different than the loan for a car, or a contract between two parties. Why does the Sheriff enter into this process at all? And why do the taxpayers have to fund any of it? How does he get to hire his friends to do “appraisals” when none of us could hire the same unqualified people?

The whole premise of a Sheriff in an urban county seems to be an obsolete holdover from long ago. Why do we elect a Sheriff- when we don’t elect police chiefs?

Greg and I don’t know all the answers- but we’re sure some of you do. We hope you fill us in- and everyone else in, with your erudite comments below. Here is our video today: The Sheriff of Nothingham

Enjoy.

And, to the woman who called and left a message on my answering machine thanking me for this forum- thank you!