IS IT TRUE? Part 2 June 3, 2011 “What About Habitat for Humanity?â€
IS IT TRUE that the City County Observer has discussed the scheme being used with the Front Door Pride program where new houses are held by Hope of Evansville, a 501c-3 non-profit during the time that the properties are being built and a buyer is being sought?…that by doing this the tax liability is eliminated not only during the holding period but that it takes the assessment and taxation processes followed in the State of Indiana up to two years to get these properties back onto the tax rolls?…that this little scheme allows buyers of these homes to benefit financially by paying ZERO real estate taxes for either three or four payment periods depending on the timing of their purchase?…that what is good for one 501c-3 should be good for another 501c-3?…that begs the question “What About Habitat for Humanityâ€?
IS IT TRUE that Habitat for Humanity is a Christian based national non-profit organization that has been granted 501c-3 status by the IRS?…that there are local affiliates all over the country that are formed the same way and that according to the audited financial statement of Habitat for Humanity of Evansville that they are also have been granted 501c-3 non-profit status by the IRS?…that Habitat for Humanity of Evansville is a very transparent organization that has helped many local families attain the American dream of home ownership?…that these families are all required to invest at least 300 hours of sweat equity into their homes and to pay for them in full over a 25 year period?…that Habitat for Humanity is a “hand up†organization as opposed to a “hand out†organization?…that the City County Observer became curious yesterday after several Front Door Pride discussions about whether or not Habitat was being granted special deductions under the category of “other†during the holding period making the transfer to their buyers tax free for two years too?
IS IT TRUE that the Vanderburgh County Assessor’s website comes back with 97 properties when queried with the owner name “Habitat for Humanityâ€?…that a cursory look through the 10 pages of results show a large number of homes and maybe 10% – 20% empty lots titled under ownership by Habitat for Humanity?…that our particular areas of interest are the deductions for taxes and the cap rates associated with the taxation?…that going into this our expectation is that this 501c-3 will be paying no taxes through the same preferential treatment that is granted to Hope of Evansville for the 6 Front Door Pride homes that it is the holding company for?…that the first set of results chosen randomly are as follows:
IS IT TRUE that the home located at 1680 Elliot Street and owned by Habitat is assessed at $28,200?…that there are exactly ZERO deductions of any kind granted to this property?…that the tax cap is set at 2% which is the appropriate tax cap for a for-profit rental property?…that the gross tax liability is $777.28 but that due to the 2% cap the tax liability is capped at $570.82?…that the taxes are current?
IS IT TRUE that the home located at 507 East Riverside and owned by Habitat is assessed at $26,200?…that there are exactly ZERO deductions of any kind granted to this property?…that the tax cap is set at 2% which is the appropriate tax cap for a for-profit rental property?…that the gross tax liability is $722.16 but that due to the 2% cap the tax liability is capped at $530.34?…that the taxes are current?
IS IT TRUE that the home located at 1726 South Morton and owned by Habitat is assessed at $64,800?…that there are exactly ZERO deductions of any kind granted to this property?…that the tax cap is set at 2% which is the appropriate tax cap for a for-profit rental property?…that the gross tax liability is $1,816.40 but that due to the 2% cap the tax liability is capped at $1,342.00?…that the taxes are current?…that this house sold $19,400 in 2006, $40,000 in 2009, and then for $7,000 in January of 2011 but is assessed at $64,800?…that we wonder how that constitutional mandate for market value assessment was applied to this property?...that the current and past Vanderburgh County Assessors have some explaining to do on this one?
IS IT TRUE that we have looked at other properties and have not yet found even one case where a special deduction has been granted to Habitat for Humanity?…that it certainly appears as though that equal protection under the law that we all take for granted is not being followed in Evansville when it comes to taxation?…that for one 501c-3 to get a free ride that gets passed on to a buyer and for another one to be treated like a for profit rental real estate company really begs the question “WHYâ€?
IS IT TRUE that the sources we used to gather this data are the Vanderburgh County Assessors website, the Habitat for Humanity website, and the links to the tax bills for the properties that we have profiled?
Okay, let me ask a dumb question. On these homes where the owner is allowed up to two years property tax free, are there signed contracts that prohibit the owner from selling the home for a certain number of years? Does the owner have to live in the home for a certain number of years under a signed contract? Or can the owner obtain a home through these programs, go tax free for two years, and sell the home or rent it out?
Seems like there’s more to this story, such as incentives to get an inner city property upgraded and owner occupied for a set number of years while adjoining or neighboring properties are subsequently upgraded in an orderly urban renewal type program. Is that the case, or am I missing something more sinister?
Good questions that we do not have definitive answers for. It seems as though there should be a time of residence requirement but what about job transfers etc. Isn’t getting a house that costs $200k to build for $130k enough of an incentive without abatement of taxes on residential real estate? The two years of taxes that are abated by a strange way that does not require an abatement application are a drop in the bucket when you compare them to the losses that the city incurs on the home itself.
I do not think this is sinister, but it does seem to be selective or an exploitable quirk in our law. Habitat repopulates and improves the same general area that FDP is in. Why don’t they get the same deal? Residential tax abatement is a slippery slope and as the population decreases it shifts even more of the burden onto the areas that are not “preferred”. If every neighborhood in the City of Evansville that is in need of upgrading and owner occupancy was abated for taxation the remainder of the people would truly have a crushing tax liability to deal with.
Seems to me that Habitat builds on much more scattered and varied sites than does Front Door Pride, which seems concentrated on blighted areas. Again, maybe I’m missing something.
And isn’t Habitat a national or international organization operating under much different rules and purposes than FDP?
With regard to the property tax issue, it seems that’s just a byproduct or loophole associated with Indiana tax law.
My questions about residency longevity remain, because what I’m wanting to know is whether the FDP housing rehab program results longterm in revitalizing blighted areas, and attracting and holding resident owners whose efforts result in restoring the property valuations of our older neighborhoods.
I didn’t agree yesterday that there was anything sneaky about the transfer to a nonprofit like HOPE, but the differing treatment of a similar nonprofit does definitely warrant more questions and answers as to why? Maybe there is something sneaky that we are unaware of.
I still disagree with they way you are reporting and interpreting the 2 yr tax abatement. The installments that we pay this year are for the previous tax year. If you owned and lived in my home in 2010 and then I bought it from you earlier this year, should I have to pay the 2011 installments which are for the 2010 tax year when you owned it?
Only if the sales agreement binds you to that tax debt. Otherwise I agree with your hesitance to agree with the reporting of this particular issue. I think there’s way more to the story, and that there should be some balance offered in the reporting of this program. Surely it cannot be all bad.
We welcome a supportive argument for FDP from Mr. Barnett and will publish it without edit or bias.
This is just my opinion but I think what the editor is trying to say is that every piece of property has a tax liability owed, if you buy a house the taxes have been paid either buy the seller or the bank depending on ownership, there is no property tax abatement for anyone just because no one lives in the home or that the property has been foreclosed by a lending institution, or just abandoned….bottom line taxes are owed and due or you suffer the hammer of the sheriff.
The more interesting point to me is the transfer to a NFP like Hope, the use of exorbitant amount of funds (public money) to tear down and build a housing unit that not only cost way to much to build but can’t be supported by the neighborhood as far as appraisals, no one in their right mind would spend $200k to build or buy a property and turn around and take $80-$140k for their investment….well that is unless it wasn’t their money to begin with…..the nagging question is of the $200k how much is siphoned off as salaries, and kick backs under the table.
Again this is JMHO
I would not necessarily equate the government with someone in their right mind. I wonder what these FDP houses would resell for if one of the early buyers was put in a position that they had to sell. My guess is $80,000 based on private transactions in those neighborhoods.
How much is siphoned off? If you mean how many of the contractors got the job because they are on some politicians list of approved contractors and make donations to certain campaigns I would not be surprised if the answer is all of them.
Isn’t this the same city government that is redoing some apartments in a safe house for a quarter of a million each? Now there is a place that a dishonest person can make some money!
“Isn’t this the same city government that is redoing some apartments in a safe house for a quarter of a million each? Now there is a place that a dishonest person can make some money!”
Yes in a building that wasn’t suitable to house criminals and was part of the master plan for the need of a new jail…..which is always full….so it was built to small, kinda’ reminds me of our new arena. LOL! I believe CCO has mentioned most of the details before and that it would be cheaper to buy existing apartment buildings and gut-refurbish them, but then we run into the same kind of mentality we have with the FDP homes, it ain’t their money! so the cost isn’t really a factor is it? 🙂
How’s any of this any different in the overall scale of things than a large corporation getting a 10-year tax abatement? I mean jobs are jobs, taxes are taxes, and development is development. It’s just a matter of degrees and precentages.
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