Let’s Fix That Tax Sale: 6th in series by George Lumley

Surprise Surprise Surprise!

“Misinformation” seems to be abundant as I look into the supporting facts for the agreed upon (but not yet public) gifting of the tax delinquent properties to the Brownfields. Oh yes the Brownfields needs a new revenue stream and wants to be the collection agency or vehicle for collecting past due taxes and depositing those dollars into their (land) bank account. In return their private club will take over that function of government, fight blight, and play big brother as to who can buy these properties and what the buyer can do with them. Or if you are one of their special interest they may just give you a property and the cash to develop it.

The well-publicized call to stop the “tax sale” and behind the scene gifting of the properties is in concert with the proposed city gift of $1.7 million out of the Riverboat fund to finance the needed cash flow for the private Brownfields land bank expansion.

One of the supporting statements to promote this is the supposed fact that a huge number (60%) of the tax sale houses return to the tax sale in 3 years without paying any taxes and burdening the public resources.
I have been trying to get a little support for the positive side that if only sixty percent are returning that means 40 percent are being taken care of by private interest. That has not excited anyone but me. I thought maybe if I look at this huge number of properties that are repeat offenders I can find another angle.

The first step was to get a list of the houses that sold at the Commissioners excess property “tax sale” Auction. The “tax sale” is not a simple process and actually consists of two major components: Sale of the tax debt and sale of the property. Local media and many Officials are either confused or like to keep everyone else confused by comingling the 2 major components to create more of that “misinformation” to be distributed. One of the “tax sale” components, the sale of the debt is legally referred to as the “tax sale”.

At this sale the county does not sell the property, they sell the tax debt. The tax sale is simply someone paying the tax bill for the property owner and getting a secured interest in the property. Some properties go to the tax sale often, just as some people wait until the electric is cut off and then pay the reconnection fee. The tax sale is simply a collection vehicle that says to the delinquent owner: someone paid your taxes for you and we are going to give them your property if you do not settle with them. It is a simple debt collection method that has worked well for decades in most states.

The Commissioners excess property “tax” sale is where the actual property is sold if no one (owner or lender) pays the taxes. So within the tax sale process the taxes are paid on all properties except those ending up at Commissioners excess property (tax) sale.

Luckily I went to the Commissioners excess property (tax) sale and still have the information they handed out. Let’s see, what was that huge number of houses to be sold: 59? Yes that’s right. In all of Vanderburgh County the huge number of houses that no one paid the taxes totaled 59. Round that up to sixty and based on prior history that should be about 36 houses (60%) running through multiple times and 24 (40%) making their first appearance. I can simply look up the sales history of these 59 properties and find the 36 houses. Houses that have been cycled through in the past 3 years without payment of taxes. Maybe if I research these I can find a better solution.

Surprise, Surprise, Surprise (Gomer Pyle style)!  Those 36 houses cannot be found! They simply did not exist. After searching through each of the fifty nine properties, only eight (8) were properties with structures that sold in this sale that also sold in a previous sale. Now if I had a nickel for every time the Building Commissioner and DMD Director said 60% returned I could buy a soda pop. Looks like a little misinformation. I can only figure that they got this 60% figure when they went to Detroit. Evansville is not Detroit.

Back to the chase. The Brownfield land bank expansion supporters claim that people buy the properties who cannot afford to make repairs and they cycle back through. Let’s see who bought the 8 properties that cycled through and see if they have any resources. The first two, Marvin and Robert might be a little cash short. I do not see where they own other Vanderburgh county properties. They may not have the resources to make the house new again to suit the DMD director’s standards. In the older neighborhoods, I don’t think anyone would have the resources to bring them up to DMD standards unless it would be the taxpayers. The taxpayers, through the DMD, have spent two or three times the finished value to make an up to standards home in the special interest arts district.

Gawww-leee (Pyle Style) it looks like Marvin bought a pot of gold for only $1,700. His beautiful home is the cover photo for this article. Looks like new siding, new roof and replacement windows within the last few years. The electric is even hooked up. I rechecked, yes the commissioners sold it five years earlier and it was being recycled. Interestingly ECHO Housing had owned it nine years earlier. Maybe ECHO and the two owners afterward fit the category of not having the resources to rehab; however, it is clear that someone has sunk a lot of money into this beautiful 2,400 sq ft home and now Marvin for a mere $1,700 owns the best looking property on the street.

Robert’s house looks about average to the other houses on his street. No mansion but what can you expect for $100. Maybe he had lived there as a kid and thought for $100 bucks he would buy it and go back for one last look around. Or if he has the resources to pay rent somewhere maybe he could divert that resource to the house for a couple of months while he lives out of his car and then move into the house. The house has a good roof and couldn’t take much to make it better than many on the street.

Now Loretta, seems to know something about this process. She bought one of the recycled houses for $700 and one of the virgin arrivals for $3000 to add to her rental collection of 24. Looking at the assessed value of all her properties they total almost a million: $918,200 to be exact. I think she has the resources to take care of the properties.

Reyes, picked up a nice little 574 square foot house for $500. Although tiny looking next to the neighboring apartment complex, it did not look much worse than some of the occupied homes in the area. If anyone wanted to redo a house on a budget this would be it.

Andrew picked up one of the recycled houses and one of the new entries. Based on his resume I found on line he should not have any problems. He is one of those terrible out of town buyers, Newburgh, but in the carpentry business.

Angel was a big buyer. I guess after picking up a house that appears to be occupied and is listed as Angel’s address on all his tax statements for a mere $2800 there was money left for some of the other houses. Angel bought two of the recycled houses. I hope he kept his receipt and can return them. These two houses represent not a tax sale problem but a lack of code enforcement and demolition of houses beyond saving. As I pointed out to the County Commissioners, they do not have to offer these properties for sale. No reason to stop the whole sale for two bad apples – just pull those two apples off the market until the garbage is removed.

The last of the great number of returning houses, number eight, is very interesting. It brought a high price for a house returning to tax sale: $2800. Most interesting was the name of the buyer: Donald. No not Donald Trump. I remembered the name from last years “who owns that” video. And also from the list of owners letting property go for back taxes. That is not supposed to happen. The new law bars tax delinquents from making purchases. How did the county let this happen? A little more research and I found the loophole. Donald the Buyer was Donald Jr., the son of Donald the tax delinquent. I visited Donald Jr’s new purchase. Looks like a bargain to me and in much better shape than many on his street.

Looks like the tax sale causes blight about as much as a fan at the race track causes a crash. The non-payment of tax actually gives a new owner the opportunity to take over and improve the property. The problem properties are the blighted ones where someone is paying the taxes while holding the properties in limbo or allowing them to run down to the point of no return.

Another myth busted. There just is not a huge number of tax sale properties causing the blight problem here in Evansville. Where does the City and County get all the misinformation? I would suggest that maybe they should have looked to Indy rather than Detroit for blight solutions. They probably would not have come back with so much “misinformation” about needing to fund the Brownfields land bank expansion. The land bank in Indy did not work well. I think some “misinformation” actually landed the director in prison.

EDITORS FOOTNOTE:  MR. Lumley article is posted without editing, bias or opinion.   We encourage the Director of the Evansville DMD or the President of the Evansville Brownfield Corp. to submit a a letter to the CCO and we shall also post it without out editing, bias or opinion!