Rebuilding Place in the Urban Space

"A community’s physical form, rather than its land uses, is its most intrinsic and enduring characteristic." [Katz, EPA] This blog focuses on place and placemaking and all that makes it work--historic preservation, urban design, transportation, asset-based community development, arts & cultural development, commercial district revitalization, tourism & destination development, and quality of life advocacy--along with doses of civic engagement and good governance watchdogging.

Thursday, February 13, 2020

Slumlording in Akron, Ohio

Lower quality units rent at higher prices when supply is constrained.  Commenter Charlie has pointed out in the past that one problem with demand being greater than supply in housing is that non-premier and substandard units rent for higher prices than they should warrant, because people have little choice.

Lower quality units in weak markets are often rented to desperate tenants, who then are bullied to not complain for fear of eviction.  There is a kind of opposite problem too.  Desperate people will live in terrible quality housing because avaricious landlords will rent it to people below market prices, because they can't afford better housing.

But then tenants are in a bad position, because if they complain about the quality of the unit, even if not up to code, they face the threat of eviction.

OTOH, I do have a wee bit of sympathy for the property owner, because unless they are long time owners, they've bought dilapidated properties, which are expensive to fix, especially when rent revenue is low, and property taxes are comparatively high given the value of the property.  (Weak market cities tend to have high property taxes in a desperate attempt to raise the revenues necessary to pay for municipal services and operations.  E.g., we just spent a lot !! of money to get our house "up to code" to be able to rent it out, and it was in decent condition.)

Renter Anthony Williams gently lifts the hood over the stove as he talks about how it fell while his son was cooking in the dilapidated home he rents on Tuesday Jan. 28, 2020 in Akron.  MIKE CARDEW / AKRON BEACON JOURNAL

An Akron Beacon-Journal article ("Tenant hits 'slumlord' in the pocketbook") goes into great detail on such a slumlord, who also games his property taxes, figuring he can make more money by not paying taxes, although now the County is on to him, and is targeting his properties for code and tax enforcement.

It's worth a read.

One tenant has one upped the landlord through a housing court action, so his rent is being escrowed because the landlord hasn't cured building code violations. 

Interestingly, when the Summit County Land Bank has taken over properties with tenants, as a result of property tax foreclosure actions, they take great pains to sell the property to the tenant.

Receivership.  Ohio has a strong housing receivership statute, which allows nonprofits to take over properties and "cure" notorious nuisances.  When a property is fixed, the housing court can extinguish liens and debts on the property, and award ownership to the nonprofit, which then sells the property.

I wonder why Summit County and/or Akron aren't using this tool.

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At 9:19 AM, Blogger Kyle B. said...

Weak market cities tend to have high property taxes in a desperate attempt to raise the revenues necessary to pay for municipal services and operations.

When you're looking at housing prices and property taxes, don't these two factors work somewhat hand-in-hand? Yes, municipal costs are roughly equivalent and have to be raised off a lower tax base, raising the tax rate, but I've also noticed that some municipalities have lower housing prices because of higher property taxes than otherwise similar neighbors.

At 7:12 AM, Anonymous h st ll said...

@kyle b - yes! See for example PGC, the property taxes are so high it is a huge ceiling on property values. IE Mt. Rainier vs. across the DC border is a huge difference in values for this reason!

At 8:29 AM, Blogger Richard Layman said...

It's hard to say but it's definitely a factor.

In a city like Detroit, it's "lack of demand" relative to the metropolitan area, not high taxes, which depresses property values.

The funny thing is that I hadn't thought of the Mt. Rainier, Maryland add on tax as an element in the semi-permanent depression of housing values in that community, which I do have to point out, otherwise isn't a weak market. It's housing market is pretty steady, even if its commercial districts lag.

But the property taxes there are a real bite. (We had looked at houses there, but didn't buy, fortunately, because, as hstll points out, property values there don't appreciate.)

OTOH, Takoma Park Maryland's add on tax is much worse than Mt. Rainier's (Maryland doesn't have a lot of incorporated cities, but when they do, they have a city property tax along with the county property tax, but the county is supposed to rebate a portion--they do, but it tends to be less than they should).

Takoma Park property taxes are 2x DC's, and if I remember correctly, unlike DC Maryland doesn't have a homestead exemption either (which reduces your taxes by about $650).

OTOH, unlike Mt. Rainier, it's real estate market is both strong and housing values appreciate. BUT, maybe there is a kind of ceiling because of it, which I hadn't considered.

I remember a house we were in -- the ground floor was gorgeous but the upstairs needed work (it had been a separate rental in times past). It was more than double the size of our house in DC, same architectural style though, although the house backs up on Ethan Allen which is a major street and a major price (location, location, location) dampenener.

IT sold for $750,000, where our house, if fully renovated, much smaller, in DC, would sell for more than that.

Whereas in DC, in many neighborhoods now, prices can be about $1 million, houses in Takoma Park, while bigger and often on bigger lots, but not in the city, may top out at about $800,000.

That's probably because of the taxes, which I hadn't thought of.

Then there is the Philadelphia case. I don't know how their property taxes compare, but they have a wage tax that is assessed on all residents as well as nonresident workers.

It impacts the decision of companies to locate in Philly, which is one issue. But is it an issue too with property values?

For a long time, prices there lagged, but that isn't an issue now. (8-10 years ago you could buy massive houses in Mt. Airy and Chestnut Hill for less than $800K, and if you worked downtown, you could take the train!).

But for "new housing" Philadelphia had a very liberal 10 year housing tax abatement.

Baltimore had something similar too.

While these measures help to limit high taxes as a dampener, they do create market distortions and unfairness. Other houses at the same value, usually owned by long term residents, pay more in taxes.

At 8:30 AM, Blogger Richard Layman said...

But yes, Detroit's taxes are high, last I checked, double DC's. But then, houses for $300,000 there would definitely be worth more than double that were they in DC.

At 9:46 AM, Blogger Richard Layman said...

charlie might have some knowledge about Cleveland. I haven't been there for many years, but I learned that e.g., historic preservation investments don't pay off in increased housing values, because properties there are minimally valued.

Is it because of high taxes, or just because with population outmigration and minimal growth, the city's housing stock has been in effect abandoned?


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