Monday, November 16, 2015
Ind. Gov't. - How our government helps investors profit from neigborhood decay
This lengthy, front-page Sunday Indianapolis Star story by Brian Eason was the first of a series this week on urban blight. A few quotes:
The story of urban blight is all too familiar. Indianapolis is pockmarked with 6,800 abandoned homes that stunt property values, attract crime and destabilize neighborhoods. But one of the primary causes is mostly hidden. And it is, in large part, enabled by our own government.
An Indianapolis Star investigation has found that, increasingly, the empty house next door is not owned by a bank or an individual, but by one of many investors, often from out of state, who are enticed by the prospects of cheap homes that can be purchased — sight unseen and in bulk — at government tax sales.
A few big companies such as Mt. Helix have amassed hundreds of houses in Indianapolis’ poorest neighborhoods by taking advantage of government sales that have destructive, if unintended, consequences.
The Star found that oftentimes these companies don’t make the needed improvements or even maintain their homes. Many of the houses languish neglected and empty for years. Some for as long as a decade. And the system makes it easy for investors to walk away without paying their taxes. In some instances, homes go to tax sale again, and again, and again.
As the houses cycle in and out of the system, neighborhoods decline, and taxpayers pick up the costs.
The Star’s examination of eight years of tax sale data showed investors walked away from more than 6,000 properties and stiffed Marion County for at least $28 million in uncollected taxes. Meanwhile, our government spends millions every year cleaning up trashed properties, issuing code violations, subsidizing redevelopment and responding to emergency calls to unsecured empty homes. * * *
[E]xperts in the fields of law, property taxation and redevelopment told The Star that tax sale systems like Marion County’s actually create disincentives to responsible behavior.
Investors are now responsible for at least 40 percent of the abandoned home problem, the Star found, and their influence is growing. While 57 percent of the properties at tax sale were last owned by an individual, more than 9 out of 10 buyers were investors.
Other cities and states across the nation have acknowledged the corrosive effects of the tax sale system, and been far more aggressive about seeking remedies. In many cases, experts told The Star, even those measures don’t go far enough. Some who have studied the problem nationally say the system’s use of tax liens — its key feature — has such a perverse effect on real estate markets it should be abolished.
Yet here, county treasurers have resisted relatively modest reforms. And stronger proposals have been stymied in the legislature under pressure from investor lobbying groups. Even the city, which has recognized the need for neighborhood revitalization and advocated for reforms, has failed to use all the weapons available. And it budgets far less for blight reduction than any major city in the region.
We’ve all heard the story of urban blight, of fear and frustration in our neighborhoods.
But it’s also a story of our government and the exploitation of a flawed tax collection system. It’s the story of how, with the government’s help, irresponsible investors are chipping away at our quality of life, one abandoned house at a time.
Posted by Marcia Oddi on November 16, 2015 10:55 AM
Posted to Indiana Government