Distressed Property Progress Report

Newburgh Presentation

If you are interested in the initiatives being done in the City of Newburgh to get distressed properties back on to the tax rolls you should attend this meeting Wednesday, February 19th at the Newburgh Free Library.

7 Comment

  • I went to the presentation this evening. Everything they’re working on is nice and pretty and makes sense on some levels. Unfortunately, it took questions from the audience to expose the elephants in the room. As someone who has been responsible with all five properties I own/owned in the historic district, it is maddening to watch people fumble all over themselves trying to fix problems that they have no clue about. All the people presenting this evening do not live in the City of Newburgh. The only reason they’re here- no matter what they may say- is to collect a salary. Take the salary away and they’d be somewhere else in a quick minute. Here we are- in a tax crisis caused mostly because of an imbalance between home ownership, rentals and non-profits- forming yet another non-profit.

    The first elephant: taxes. My last property was one I took on partially because of the value for the price I paid. I put up with the nonsense violations that were used to try to shut me up. I even initiated the reconstruction of my carriage house because of a violation I received because of a caved-in roof- a violation that existed under 5 previous owners for the previous 40 years. After 10 years of stable taxes on the property- and after I had sunk close to $1million into it- my taxes proceeded to quadruple in a span of 5 years. After I sold it out of distress- partially because of the taxes, the taxes went up an additional 25%+ since. Thus, the reward for improving a property in the middle of a slum- surrounded by property owners who did not maintain their properties and were rarely issued violations- was an unreasonable tax burden. The person this evening who asked the question about taxes, requested that there be a 5 year projection so that anyone interested in buying a property wouldn’t be surprised after investing in improving their property. The two city spokespeople, the Fire Chief and the City Manager both waffled on the subject and basically said it wasn’t possible while mumbling some funny about not being able to see into a crystal ball. The City Manager even naively suggested that taxes would come down if we got more properties back on the tax roles- when pigs fly- they’ll only find more ways to spend the increase in funds. There is a way to project if they set an annual goal of getting x number of properties back on the tax roles and the city keeps the tax increases within the state-mandated 2% level. As the person who asked the question stated, why would anyone invest here without a reasonable projection for taxes that have proven to be so erratic in recent years?

    The second elephant: lead paint. The regulations on lead paint have changed recently and are egregious to historic preservation. There are very good reasons for abating the lead issue and strong regulations do need to be enforced (in spite of the fact that paint companies knew the dangers of lead before producing it for house paint and definitely by 1949). The problem is that the cost of the abatement is so high and very little public grant money is available to pay for the job.

    We learned tonight that a third of the vacant buildings were owned about equally between three parties/groups of parties: the city, private owners, banks. Many of the bank properties are in foreclosure limbo. The banks are paying the taxes but haven’t taken official ownership of the deeds- and as Mr. Vatter pointed out, are failing to maintain the properties. He mentioned that the State is taking that matter into it’s own hands. This is not a unique issue to Newburgh, it is a national one that’s out of our hands.

    The city cannot afford to maintain or be liable for the properties they own. A number thrown out tonight was 250 properties. As long as I’ve lived here for 25 years- in both good and bad markets- the city has consistently held over 200 properties. Any plan to get these properties back on the tax roles is a good thing but the city does not have a history of dealing with it in any sensible manner. Even recently, the city used $300,000 of CDBG monies to raze 3 buildings. These vacant lots will now be handed to the Land Bank and the city will not recoup that money. Talk about being irresponsible with public money.

    What was interesting to me is that there was nothing said about how the city is dealing with the privately owned buildings. The City Manager did say that the city is not interested in taking back more properties and has worked out deals with struggling property owners to come up with payment plans for back taxes. That’s all well and good but I would bet that the property owners who are struggling with paying their taxes are not vacant property owners. If they are struggling, it is because they are most likely living on their properties. If it was extraneous property, they would walk away or sell it. The problem is that the taxes on the privately owned vacant properties is so low that there is no incentive for the owners of those properties to sell or improve them. It is cheaper for them to speculate- at the expense of the community as a whole- than to do anything to them. I’ve watched this happen repeatedly while many of the buildings have gone from stable to crumbling shells. If there was ever a clear need for targeted code enforcement, it is on these private owners in that position. We may not be able to tax them out but we have the ability as a home rule city to fee them into action. The vacant building registry does nothing to change much except awareness. And, as pointed out tonight, there are obviously many (~100?) privately owned vacant properties that are for some reason not on the register. Instead of going after struggling homeowners with violations about weeds, some priorities need to be in order.

  • I cannot agree more with the substance of Michael’s comments. But we cannot just throw up our hands.

    Many of us have seen taxes go through the roof in Newburgh. It’s happening elsewhere, too, and it is what prompted the 2% cap by the Governor.

    In any case, I think some of the solutions offered were good starts:

    I liked that Chief Vatter mentioned the cleanup of dumping areas will occur, and the bill sent to the owner of a property (let’s hope, of course, that this is done carefully so that it is clear that the owner is not the one being abused by the dumpers and the city). I, and many others, would much rather see the city take care of garbage, sewer issues, and potholes. If they can just maintain the infrastructure, the properties will sell themselves.

    There is interest in Newburgh, but we have to put our best foot forward. A cumbersome process to purchase vacant city-owned properties will not succeed. We actually now have 60 MORE tax foreclosed properties added to the oft-quoted 200. The Land Bank has sold a few and in short order, with a more robust and clear process. In addition, they have earmarked some of the 2.4 mill grant from the state to remedy the lead and asbestos issues on some of the properties (which can cost upwards of 50k). This will certainly make buildings more attractive to potential investors/buyers/businesses.

    Moving some of the vacant city owned properties (which, collectively belong to US the residents and taxpayers) over to the Land Bank also discharges any liens on the property. While we will lose the potential to collect those back taxes, what we GAIN is that those buildings will not be paying school taxes from city coffers. Yes, we (the city) are paying school taxes on those vacant properties. The land bank has effective partners and active members on the board AND the citizen’s committees and welcomes MORE. They play well with others, and work with high quality planners.

    Habitat clearly has done much good for Newburgh, and by helping fix facades of shoddy properties through their
    “A Brush With Kindness” program, the new homeowners are not the only ones who benefit; those of us with less fortunate neighbors can help them hook up with these programs. It will only drive up our own property values if we help our neighbors take advantage of programs and tax breaks–even if we may not be eligible ourselves. WE can do well by doing good!

    With regards to owners struggling with back taxes, all I can say is they are working on it. Unfortunately, there is a 25% interest rate on a two year ‘payment plan’ that needs to be reevaluated and changed. No one who is in trouble could possibly get back on track with that non-plan.

    Vacant ‘zombie’ properties (I guess everyone watches the Walking Dead) will be there for now..and we can let the state try to work on that a bit, while boycotting those banks who are irresponsible. Some public ‘outings’ of the more undisciplined lenders would be a nice start.

    The city also needs help from the citizens. The citizens need to start helping themselves–even if ‘someone else is supposed to do the job’–I know that some of us differ on this point. But , hey, “If I am not for myself, who will be for me? But if I am only for myself, who am I? If not now, when?” Ethics of the Fathers, 1:14

    WE are it. That’s just the way it is.

    It’s time to get it together in Newburgh, let go of resentments, and make things happen.

    Share this list with neighbors. If they need help negotiating the forms, help them!:

    Help the city when needed:

    Set a good example:
    Help out at Habitat or Safe Harbors Community cleanup for April 26

    • You completely ignored my points, just like the people presenting at the meeting. A one day cleanup or interactive map will change nothing about our larger problems. Resentments? How about basic logic? If we had just half the resources and energy (and $millions) wasted on the landbank/gnp issues to deal with our foundational problems we would be well on our way of coming up with a plan to resolve them. Instead we get grants that are wasted on offices, murals, crosswalks to nowhere, undeserved salaries and all sorts of deceptive hoohah. Investors are not going to fall for the bs. As someone who is deeply invested here, even I would not recommend someone to invest here unless they were able to handle the risks of erratic taxes and the continued mismanaged codes department. The city is not committed to current residents, how foolish to believe that they care anything about new people coming in beyond unloading their distressed properties. This presentation further proved that they are not interested in dealing with the big issues.

  • For what’s worth…
    In reaction to the ‘financial crisis’, (caused by over leveraging of the credit markets, i.e. mortgages) the federal gov. changed the rules to accommodate the banks and all but eliminated their risk of taking a huge loss to their balance sheets. In short and simple terms, the banks were able to hold their portfolios of distressed mortgages at original values, aka “mark to fantasy”, thereby maintaining a solvent balance sheet. Prior to the rule change the free market would have taken its’ course and the banks would have been forced to sell their real estate holdings and/ or mortgages at marketable costs, aka “mark to market”. Many banks would have become insolvent. So be it. Real estate valuations would have, however, become affordable. As well, assessments would have declined and in like, theoretically, the property/school taxes levied on the taxpayer. The later cannot be allowed to happen if you are a municipality that over leveraged its’ spending during the “boom” years; over leveraged through RE development with a disregard to the infrastructure, expanded payrolls with unfunded future liabilities, and so forth. “Affordable” homes will never be seen until the banking industry deems that the rewards out weigh the risks. This scenario must simultaneously prove to be conducive to municipal and school budgets. As per Newburgh directly; I can relate to the tax increase Michael points to as my cost advantage of home ownership in Newburgh was eliminated after the first three years of residence, having patiently sat on the sidelines waiting for the financial crisis dust to settle. Insult to injury, the astronomical tax increase was rationalized through a whitewashing related to “poor record keeping”. Try understating your income and see if that excuse flys. Not, and you do not have a back stop, aka the taxpayer when “you know what hits the fan”. Regarding lead paint, isn’t it interesting how corporations, large corporations, receive various federal/state, taxpayer fueled, credits and funding to remediate ‘brown fields’ in the interest of economic expansion.
    In general, any government monetary distribution (i.e. supplements, grants, credits), be it on the federal, state or local level, are originated via the tax payer. In that consideration, I, you have helped the neighbor and, as long as I have no choice to the contrary, I expect that “someone else” to allocate it appropriately. Crazy thinking, isn’t it ? A diminishing inventory of distressed/vacant housing should be a reflection of sound economic policy. Force feeding the supply side onto a unable, undemanding, consumer brings us back to square one. Which, try as they might, hasn’t happened. Yet. ‘Careful what you wish for.
    Stay well all.

    • Walt, we all saw triple digit tax increases, and our less able neighbors being pushed out of their homes. Sure, we have helped our neighbors with the taxes we pay that are then redistributed back to the community in forms of supplement, grants and credits. There is too much chaos, and it runs too deeply and it is a Goliath…We are all paying taxes that are too high and often misdirected, that is a fight for another day-agreed!

      But complacency will not solve what we need to solve in our own city. And if it means giving more personally in time, effort, or money, there are so many ways, so many ways. Focus the time you volunteer and donate directly into Newburgh and I guarantee there will-and have been many- be positive changes.

      People don’t have to do large projects like the annual art tour run by Michael and Gerardo for example, but they can paint one lightbulb. You may not have the money to help a neighbor rehab their exterior, but you can make a small donation of time (or money) to Habitat and move that along. Thousands of small things…Tens of thousands.

      • I didn’t think my comment conveyed a sense of naivety nor self-pity with regards to the taxing issue and it’s broad effect on the community at large. I cannot reconcile your view of how raising public awareness, having an open dialog with and about governance is indicative of complacency. To the contrary, your statement “…a fight for another day” wreaks of complacency. Lastly, you seem to be making assumptions on how I or others spend their time, effort and/or resources. How obtuse. In fact, your entire reply was an act of deflection and self-proclamation.