Lexington crackdown on abandoned properties is likely to bring higher taxes for violators

bmusgrave@herald-leader.comAugust 4, 2014 

The lime-green Seventh Street Community Center sticks out in the strip of vacant and abandoned houses on Lexington's East Seventh Street.

For Christin Helmuth, a longtime volunteer at the nonprofit organization that serves free meals and offers after-school and summer programs for the neighborhood's kids, those vacant properties are not just eyesores and havens for crime, they are a missed opportunity.

"We have such a huge deficit of affordable housing," Helmuth said. "We have approached some of the owners of some of these vacant properties to see if they would allow us to fix them up so we could put some of our families in them. We've only gotten one response, and it was negative."

Under a new city program, the 12 suspected vacant houses on East Seventh Street could face a property tax increase by October 2015 if the houses have been vacant and blighted for more than 12 months.

Five years after passage of an ordinance that allows Lexington government to increase property taxes on blighted and vacant property, the city is going after property owners who allow their properties to become eyesores.

The city's Vacant Property Review Commission, which became active in December, recently released a list of 330 residential and commercial properties suspected to be vacant and blighted.

Most of the 330 properties are single-family residences, but 22 are commercial and 12 are multifamily buildings, such as apartments.

The list is the first comprehensive inventory of suspected vacant or abandoned property ever developed in Fayette County.

The ordinance regarding vacant and blighted properties was passed in 2009 under then-Mayor Jim Newberry, who lost a bid for re-election in 2010.

Mayor Jim Gray said the vacant property commission was dormant because the city's attention was focused on other issues — mainly budget shortfalls during the first two years of his tenure. The city also needed staff to help the all-volunteer commission do its work.

"By 2012 we were ready to hire the city's first commissioner of planning, and brought Derek Paulsen on board," Gray said. "Derek identified the need to activate the commission. It took some time to find the appropriate mix of board members, but once that was complete, the board began to meet."

It was an arduous task at first.

"When we started, we didn't know how many properties we were looking at," said Chip Crawford, chairman of the seven-member commission and a local home builder. "More than 330 properties is a lot, but when you consider that there are more than 110,000 residential properties in Fayette County, it's actually a very small subset."

It's less than 0.3 percent of the total residential properties in Fayette County.

Jonathan Hollinger, an administrator with the city's planning department who is assisting the commission, said the 330 properties that made the list have not had water service for more than 12 months, have had previous building-code violations or have been reported by the public as vacant or abandoned.

Letters to property owners should go out in coming weeks. If the owner can show that the building is not a blighted and vacant property as defined by statute, it will be removed from the list, Hollinger said.

He stressed that the list consisted of suspected vacant properties. Many will come off the list; others probably will be added, he said.

After hearing from property owners, the commission will certify by Jan. 1 which properties have been vacant and blighted for more than 12 months. The Urban County Council will vote before tax bills go out Oct. 1, 2015, to increase the property taxes for those properties.

"There is an appeals process," Hollinger said.

Owners of property still on the list after the first round of letters will receive a second notification letter in February. There will be time to appeal the commission's decision before the special property tax is assessed in the fall.

The exact amount of the increase in the property tax has not been set, Hollinger said. Ultimately, the Urban County Council will decide.

But the city's law department has recommended that the maximum additional assessment for a vacant and abandoned property be $1 for every $100 of assessed value. For a home with an assessed value of $100,000, that's a $1,000 increase. The current tax on a $100,000 home is about $1,164. That same house with a special vacant-property assessment would have a bill of $2,164.

Crawford said the program was not meant to be punitive. The city hopes that the threat of a larger tax bill will spur property owners to repair properties, sell them or seek help returning them to productive use.

"No one wants to appear on this list," Crawford said. "The list itself is an incentive to either fix up the property or sell it."

Council member Shevawn Akers, who is on the commission, said the city was trying to go after properties that are irritants and eyesores, not all vacant properties.

Some properties are vacant but not considered blighted. Sometimes there are reasons a property has been vacant for more than 12 months. For example, it could be in the process of foreclosure, part of an estate or recently purchased.

"We are targeting properties that are causing problems for their neighborhoods and are a haven for crime," Akers said.

She asked to be on the commission after she noticed many vacant and blighted properties during her campaign for the 2nd District Council seat in 2012. The 2nd District includes part of downtown and stretches north to include Masterson Station.

"There are a lot of known abandoned properties that are used for drug-dealing and prostitution," Akers said. "We want them to be returned to productive properties."

Council member Chris Ford's 1st District contains the highest number of suspected abandoned properties, according to a Herald-Leader analysis. It has more than 75 suspected vacant and blighted properties — twice that of any other council district.

The 1st District includes much of the city's East End neighborhood and stretches from downtown to New Circle Road.

Ford said the problem of abandoned and blighted properties was one of the top issues in his district.

But it's a complicated one, he said.

There have been property owners who have been cited repeatedly for building code violations. At the last minute, they will pay all the fines and avoid losing the property to condemnation proceedings.

But in some cases, the owners pay the fines but never fix the problems, Ford said. The properties deteriorate, become uninhabitable and then become vacant, he said.

Hollinger said the city also was also looking at tightening ordinances governing code-enforcement violations to ensure there are no loopholes for scofflaw property owners.

Many cities condemn vacant and blighted properties through eminent domain. Lexington can and has done that, Hollinger said. But that doesn't necessarily fix the problem; the city then has to maintain the property.

"It's not returned to productive use," Hollinger said.

Gray agreed that increasing code-enforcement efforts was part of the overall goal to restore blighted properties to productive use.

"The commission is another tool in the tool belt to help promote infill development, value neighborhoods, stop demolition by neglect and make our city safer — all priorities," Gray said. "In addition, we're approaching code enforcement with a renewed focus on investigations and abatements."

The program also has to "address that some people are not being intentionally negligent, they financially can't afford to fix their homes," Ford said.

Crawford said that was on the top of the commission's to-do list.

"We are working on trying to figure out if there is money or resources available to help them with renovations, whether it be state, local or federal funding," he said

Other possibilities include partnering with nonprofit organizations that have programs for home rehabilitation.

At the same time, Ford said, the program shouldn't force poor homeowners out of their neighborhoods.

"We don't want this to become an avenue for gentrification," he said.

Many renters on East Seventh Street complained about the vacant properties on the street and the city's slow response to targeting scofflaw property owners. Others bemoaned the conditions of the rental homes there. Because so many homes are in disrepair, utility bills are notoriously high.

But no resident wanted to be quoted because they feared angering landlords.

Helmuth, the volunteer at Seventh Street Community Center, wasn't surprised.

"If they move out, there will be a line of people wanting to take their place," she said. "They don't want to leave here. There's a lot of joy in this community. There are so many in the East Seventh Street community with jobs or Social Security money to spend but no housing to spend it on for less than 30 percent of their income."

Beth Musgrave: (859) 231-3205. Twitter: @HLCityhall.

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