It's Time To Look Inside The Box

[Bill Call]

A popular problem solving suggestion is to look outside the box.

It's usually good advice, but not always. Sometimes solutions are found close by.

The problems facing Lakewood are similar to problems facing many other communities in Ohio. Declining population, aging infrastructure, stagnant revenue, unaffordable labor contracts, inefficient allocation of resources, declining real estate values, increasing crime, loss of the middle class and economic stagnation.

The root cause of all of those problems in Lakewood is our failure as a community to commit to a housing program. City officials are taking step one. Getting the fiscal house in order. Step two is to build on that firm fiscal foundation.

The foreclosure "crisis" is an opportunity and offers a narrow opening for a housing program that could help the City realize its full potential.

The City should consider a temporary income tax increase. The money would be set aside to buy foreclosed and distressed properties. Money could also come from the $4 million in back property taxes due on Lakewood properties.

Some of those properties would be torn down. Some rehabbed in partnership with investors or as a City enterprise. The program should include both commercial, rental and residential real estate.

Why do I say look inside the box? Because we are on our own. The State, County and Federal governments take a great deal from this community and provide little in return. Our State representatives, Governor, Senators and Congressman fly into town every election year for a little slap and tickle and then move on.

It's time we realized that there won't be any help from other levels of government. We are on our own.

[Jeff Endress]

Bill

As you know, we have had differences of opinion on a variety of subjects, but on this one, you are spot on!

There are property bargains to be had if you have the fianancial backing. If there was a city source for those funds, foreclosed properties could be acquired, if economical, rehabbed and sold, if not, razed and added to a land bank. The rehab and sale would replenish the funds used. City ownership of vacant lots would give it a huge level of control over the redevelopment. One of my fondest dreams is that somebody will build aome smaller cluster/one story/no step homes or condos so that us aging boomers have options besides moving to the high rise condos or to Avon.

What would 1 mil cost? How much would it raise? It wouldn't (and shouldn't) be anything permanent. For two years? Also, it would have to be entirely separate from any general fund entanglements. Once funded, I think it could be made to be self perpetuating. At some point, there could even be a potential for grants back to homeowners for updates and repairs.

Jeff

[Lynn Farris]

Once a tax increase starts it is almost impossible to get rid of. So could this be done more like a bond issue?

Secondly, since the biggest problem in Lakewood is property tax, could we do this with the income tax where both citizens and people that work here but don't live here are taxed? The joint school and city levy that we tried years ago? Roll back some property tax and put them together.

That way also - it would go up for the schools automatically when the income went up and maybe slow down the levy cycle a little.

Actually I like the idea of providing some incentives for police & other employees to live in Lakewood. And I do think that was one of the Fitzgerald plans.

[Bill Call]

Once a tax increase starts it is almost impossible to get rid of. So could this be done more like a bond issue?....

Actually I like the idea of providing some incentives for police & other employees to live in Lakewood. And I do think that was one of the Fitzgerald plans.

The language of the tax issue should state a termination date. If a housing strategy succeeds, income tax revenues would increase, economic activity would increase and property taxes might be decreased.

I am not a fan of offering incentives to City employees to live in the City.

Would $1,000 a year be enough for you to sell your house and move to another City? $5,000? How many City employees would you like to attract? If the number is 100 the cost is $500,000 except that you would have to offer the same incentive to the 180 or so City employees that already live here so add in another $900,000.

If we are going to spend $1.5 million per year I't rather spend it on housing and infrastrucure than raises. $12 million dollars over ten years to City employees to temporarily move to the City?

If the Mayor wants a residency incentive how about this: Non resident City employees pay 50% of the health insurance premium and residents pay 25%?

On January 28th the office of State Auditor verified the existence of the $4.5 million dollar deficit. Surrprise, Surrprise!!

[David Anderson]

Bill –

“The City should consider a temporary income tax increase. The money would be set aside to buy foreclosed and distressed properties. Money could also come from the $4 million in back property taxes due on Lakewood properties.â€Â￾

Bill, I know you wrote this same comment in the “44107 Foreclosureâ€Â￾ thread. Aside from a few ideas, the bulk of that thread, unfortunately, turned into folks squabbling about “who’s to blame.â€Â￾ I repeatedly tried to turn it back toward “what do we do nowâ€Â￾ to no real avail.

Musing over your suggestion for a few days now, Bill, I would have to say that I don’t want to pay for others’ mistakes (banks, regulators or owners). I pay my property taxes and would not be in favor of a temporary income tax increase to pay for others’ unless all other options were exhausted.

One possible option I posted in the “44107 Foreclosureâ€Â￾ thread – Pass hard and fast ordinances in Lakewood that give banks and others who own decaying, delinquent and abandoned buildings a strict timeline - say six months - to bring the building up to code and become current on the taxes. If those owners fail, Lakewood can repossess and auction the property to a buyer willing to do bring the house to code and be responsible for taxes going forward. The proceeds can cover back taxes and the city keeps any balance to possibly purchase other foreclosed properties at the Lakewood auction.

Would such ordinances be constitutional? What does Lakewood currently have on the books to repossess decaying, delinquent and abandoned buildings?

While I don’t like your temporary income tax increase idea, I do agree with you that Lakewood should look at the following facts as an opportunity for progressive, “inside the boxâ€Â￾ thinking.

44107 foreclosure cases in 2006 and 2007 - 602
44107 properties currently in auction - 264
44107 properties currently bank owned - 622
44107 properties currently in pre-foreclosure - 417

[Bill Call]

Musing over your suggestion for a few days now, Bill, I would have to say that I don’t want to pay for others’ mistakes (banks, regulators or owners). I pay my property taxes and would not be in favor of a temporary income tax increase to pay for others’ unless all other options were exhausted......

to bring the building up to code and become current on the taxes. If those owners fail, Lakewood can repossess and auction the property to a buyer willing to do bring the house to code and be responsible for taxes going forward. The proceeds can cover back taxes and the city keeps any balance to possibly purchase other foreclosed properties at the Lakewood auction.

While I don’t like your temporary income tax increase idea,

The temporary income tax increase would be to fund the purchase of reposessed and auctioned properties. Some of these properties are beyond redemption, some could be gems.

I wouldn't give ten cents to "help" someone avoid foreclosure or to bail out the bank.

The problem is that some of those houses are going to be vacant eyesores for years unless the City takes action. If a housing policy is successful it will increase the City's population, increase tax revenue and pay for itself.

Some of the money should be used to purchase and tear down obsolete apartments. The land could be banked and eventually sold to or given to investors.

I would use some of the money to pressure commercial property owners to either update their properties or sell them at their taxable value. If the owner of building insists that his neglected property is worth two or three times the taxable value fair enough. The evidence of that should be presented to the County Auditor so the owner has the opportunity to pay the correct property tax.

[David Anderson]

Bill –

I misread your initial post and thought that part of the temporary income tax increase would be used to cover some of the $4 million in delinquent property taxes. I apologize.

Not to split hairs, though, but this could be considered by some as a publicly financed bail-out. Banks are stuck with properties the market doesn’t value. Here comes Lakewood’s government with taxpayer money.

I’m with you, though. Lakewood should have the vision to make lemonade out of lemons.

I would rather see Lakewood repossess the properties, auction the properties and use the proceeds to purchase properties for land banking purchases. I doubt Lakewood’s economic development/housing guru’s would be as interested in acquiring a house on Cannon Avenue as opposed to a building on Madison Avenue.

While I’m a little hesitant about giving our local government the reins over such a program, perhaps more of a public/market hybrid approach could work.

At any rate, I look forward to reading more comments.

[Bill Call]

While I’m a little hesitant about giving our local government the reins over such a program, perhaps more of a public/market hybrid approach could work.

I am too!

When Cities get hold of a large amount of money everyone wants a piece of the action so $1 million gets split into 2,000 individual $500 grants.

The hybrid approach makes sense to me because:

1. Vacant land is easy to develop and we don't have any. A private developer would rather take the easy path and they are right.

2. Some houses and apartments and commercial structures in Lakewood are obsolete. At some point the City has to take the initiative. I'm sure we all have our favorite "really ugly" group of apartments.

3. Private investors at some point collect the rent and let the property deteriorate. The building where the telemarketers are located just lost a good tenant. Too much trouble with other tenants and too few repairs being done by the owner. Bad neighbors drive out good neighbors and bad tenants drive out good tenants.

4. State, County and Federal governments are spending billions to open up outlying areas while doing nothing for Lakewood. We are on our own.

5. There are plenty of properties out their where the bank has a $100,000 mortgage on a house that is selling for $60,000. If the City buys it and rehabs it for $40,000 and sells it for $100,000 we aren't bailing out the bank we are maintaining property values.

6. Rockport, Rosewood and the Cliffs show the potential for private development and also the limitation. Perhaps a City & Developer partnership for development where the City shares the risk and the profit makes sense.

7. The City could also partner with current commercial property owners who don't necessarily have the resources to it on their own.

All of these ideas have flaws but:

Sometimes the risk of inaction is greater than the risk of taking action.

[Jim O'Bryan]

Bill/David

When it comes to our property and helping home owners would it not make more sense to make the city a historic district with the exception of the 40 or so homes that would not qualify.

This would allow homeowners to get as much as 25% back for any and all repairs in tax credits. Ohio was also looking at adding another 25% to that amount(not sure where that is).

This would seem like a better strategy than $500.

Merely thinking out loud on this.


.

[Bill Call]

... would it not make more sense to make the city a historic district with the exception of the 40 or so homes that would not qualify.

This would allow homeowners to get as much as 25% back for any and all repairs in tax credits. Ohio was also looking at adding another 25% to that amount(not sure where that is).

Designation of the City as an historic disrtict makes a great deal of sense. But we would be dependent on the Feds or the State to actually do something for us. That's not going to happen. We are on our own.