SPECIAL COUNCIL MEETING

What those 4 done last night was nothing but another smack in the face to the taxpayers.Just shows people what happens behinde closed doors at the city building.

GG...

"While I agree with others that the city handled this legislation is a very poor manner, I must disagree with your assessment that the land banking provides no solution to Middletown's woes. If I'm not mistaken, the first land bank was established in Genesee County Michigan about 8 years ago and has been so successful, that many states, counties, and minicipalities are scrambling to copy the concept. Below, are exerpts of an article that I found on the subject. As you will see, there are many listed benefits and I can think of others that are not listed"

That's right GG. Under NORMAL circumstances, this Land Bank idea may work for 99 44/100 of the communities including Genesee County Michigan. HOWEVER, keep in mind, this is Middletown and with Middletown you get city leaders who have a track record of screwing up most of what they try. Time will tell how well the city leaders will do on accomplishing success on this program (or where the money actually went when we discover they used it for other purposes) I would imagine most who can evaluate the city leaders and have a knowledge of their accomplishments, would come to the conclusion that, given time, they will add to their mistakes through sheer incompetence.

VV,

I'm sure that this is where we differ. Based on my limited amount of time following the city council, I am taking them at their word. They are on record that these funds will "ONLY" be used for this, specific, purpose and that they will only take possesion of the properties for a "BREIF" amount of time. I'm assuming that your experience tells you that it won't happen that way. For everybody's sake, let's hope that I am right on this one..... that stakes are big.

GG

TonyB, you make an excellent point which I want to amplify. The program is targeting for markets that have enormous problems in establishing market demand. Therefore, the solution, which arguably, is not even a band-aid, is to destroy capacity. In turn, some how, the economic theorists like Les Landen, which is not a macro-economist, states destruction of supply will spur elevation of valuation. That point, and fallacy, I have already made, as what remains unresolved, and simply, not properly focused, is the underlying need for demand.

And therein is the problem. Taking down houses in Middletown does nothing for demand, but diminishes  supply. If there was a reduction by 50% in supply, it would do nothing to elevate demand and valuation. A vacant lot isn't going to stimulate demand, in terms of new construction. There is an empty house now for two years, right across from Bill Triik who heads Middletown's Chamber of Commerce. Tearing down that house won't increase his valuation, as there is a glut of stable over-capacity around him.

Until Middletown can increase demand, which is highly unlikely, this program will accomplish nothing. And, it deploys capital that can be used for other purposes, into destruction that impacts only supply, but does not elevate demand. If anything, some % of funding should go to raising demand, but that is marketing, and heavy lifting, that the city cannot seem to ever get traction. The slow drip has become a fast drip, and exodus, with AK, Atrium, and others leaving. There has been no back-fill. Therein is the problem.

You bring up another good point on stabilization, but I am not certain if you mean stabilization associated with helping individuals avoid foreclosure or stimulating demand as you call it---rehabilitation. If I think I comprehend your term, the problem in that regard is quite simple. And that is you are using funds to fix up property that demand is just not there, in spite of the upgrades, and done at a capital loss, as the figures have shown. In reality, the rehabilitation efforts have driven valuation down, because the money put in makes that property, a more appealing acquisition target in a market full of over-supply, and just drives other property down associated with the investment in upgrades which aren't absorbed nor reflected, in higher price point.

This vicious cycle will never cease until demand increases. That is the chronic problem city leaders and council don't comprehend, and they simply don't know how to create market demand. Rather,its their  practices causing just the opposite, by lowering demand through higher taxation, no services, high water costs, and the other problems well documented.

Pushing a ton rock uphill by yourself at 90 degrees is an impossible task to accomplish. That is the demand problem Middletown has, the weight, the anchor, and the incline...just too steep to navigate and make progress and gain traction. One step forward, and four steps back, never gets the city up the hill to the summit. And so it continues.

Ever get your car stuck in snow 12 inches deep, and can't get out, the tires just spinning, going nowhere? That is Middletown's housing market. Demand is the removal of snow and a pull by a pick up truck to get back on dry asphalt. Supply fixation is plowing the main roads and awaiting for the temperature to rise in a few weeks, to melt the snow, to get your car moving again on a side road not plowed. Applying the wrong tool, and wrong use of capital to focus upon the wrong end of the problem.

As Bill Clinton would say, " its the demand stupid."  (not supply) Without demand, there will be a lot of houses being torn down...about 80% of Middletown---or the fire sale, which drives valuation downward. .Snow too deep, or quicksand, but the result is the same. You can't get traction, and just spin aimlessly.      

Acclaro,

You are, of course, correct.

City Hall just does not understand supply and demand.

There is a “niche market” in Middletown for arts, antiques, and what I refer to as the “olde tyme high life”.  That niche market is very passionate, and that is admirable.  However, it includes some at City Hall, and a few of their friends, and they think that by keeping ALL OTHER BUSINESSES away, they will somehow be creating a much greater demand, and thereby will follow more of the stuff that they want.  They can’t understand that it just doesn’t work that way and, in fact, keeping other businesses and industry away has just the opposite of the effect that they desire.

Well...not really. Assuredly Larry Mulligan and the council just think the public will approve the unneeded public safety levy, and they'll take that cash or a portion of it, to use for the matching grant, or replace the funds they advance themselves, from HUD. So the shell game fix is taken care of by the levy.

But, the levy goes down, a close eye kept on the HUD funds which HUD audits, and its a perspiration stare down at Donham Abby. Why pass a needless levy when they clearly have the money to waste, and took funds previously from the public safety funds.    

If the city is able to match the $1.1 million in grants, Community Revitalization Director Doug Adkins said 300 vacant and abandoned homes — about 10 percent of its such properties — would be demolished by Dec. 31, 2013.
Well Gentlemen the Land Banking Program legislation has passed and now it’s time for City Hall to put words into actions over the next 18 months. Mr. Adkins has stated that he will demo 300 homes over the next 18 months.
So that is 100 homes every 6 months.

He said the city is in the process of identifying possible dilapidated homes to be leveled.
Mayor Larry Mulligan said the city will seek the “worse of the worst,” and hopes following the demolition of the homes, property values in those neighborhoods will increase.
WHAT! I thought City Hall said we had 3,000 homes to demo! Do you realize what Mr. Adkins has spent on Code Enforcement over the past 3 years? He has allocated half the CDBG Funds this year to Code Enforcement to the tune of $326,565. (Oh yes we Feed the Beast very well)
Are you telling me after all this time and money they do not know where the worst of the worst are located?  

Like other forms of discrimination, redlining had pernicious and damaging effects. Without bank loans and insurance, redlined areas lacked the capital essential for investment and redevelopment. As a result, after World War II, suburban areas received preference for residential investment at the expense of poor and minority neighborhoods in cities like Chicago. The relative lack of investment in new housing, rehabilitation, and home improvement contributed significantly to the decline of older urban neighborhoods and compounded Chicago's decline in relation to its suburbs.

Redlining's negative effects remained largely unrecognized by policymakers until the mid-1960s. Banking practices were the first to receive congressional scrutiny. The Fair Housing Act of 1968 prohibited housing discrimination and the Home Mortgage Disclosure Act of 1975 required the release of data on bank lending. Unsatisfied by the practical results of these laws, community activists in Chicago spearheaded further reform, leading the nation in identifying and addressing the redlining issue. In the early 1970s, the Citizens Action Program, a cross racial group of community leaders from the South Side, developed a strategy of “greenlining” by asking residents to deposit savings only in banks that pledged to reinvest funds in urban communities. Chicago organizers were also instrumental in lobbying Congress to pass the Community Reinvestment Act of 1977 (CRA), which required banks to lend in areas from which they accepted deposits. The law had limited effect until the National Training and Information Center in Chicago, led by Gale Cincotta, put public pressure on Chicago banks to lend to distressed neighborhoods. Cincotta's group successfully negotiated $173 million in CRA agreements from three major downtown banks in 1984, settlements that served as models for other cities.

The extent of progress in ending redlining in the insurance industry remains an ongoing debate. In 1968, the President's National Advisory Panel on Insurance in Riot-Affected Areas found that insurance underwriting manuals explicitly instructed agents to use racial data in determining risk. While states passed laws prohibiting insurance redlining, federal legislation has never directly addressed the issue. Court cases, however, have forced change in both the banking and insurance industries. In the 1990s, prominent banks and insurance firms have settled several major lawsuits, agreeing to change their business practices to remove discriminatory policies and procedures.

D. Bradford Hunt

GG, I man no disrespect, but you sound like Nancy Nix on your postulation. Do you actually think a property owner would desire to accumulate property vacated, and add that cost to the valuation at 35% from the county? If so, I recommend you find another avenue to supplement your retirement income, but investment strategies is not one of them. This year alone, there are 10,000 cases before the OHIO BTA associated with property tax appeals originating from the BOR in Ohio counties. Simply adding land does nothing to stimulate demand, and therefore, valuation. All one would be stimulating is more artificially elevated valuation by land, but the price point on selling the land, will not rise when including it in the property. 4500 sq ft on 3.5 acres now in Middletown sells for about $150,000., so no one in their right mind, from a business acumen perspective, would absorb land thinking it pumps up their property value. And I assure you, 99% of Middletown home owners, and commercial owners as well, understand that. They would have no interest in absorbing the land, so the city will have it, and pay no taxes on it, and it will sit, and sit....just like the C State property will.

And with land, there is still mowing costs weekly. So, what is gained from the destruction of property? Vandalism reduction? There are more concerns about home invasions in Middletown, than vandalism to property vacated. And the upkeep on mowing will be a city responsibility. While you might buy the property, the vast majority will not, because of the burden of taxation with no upside return.

You need to begin thinking like an economist, not a CPA accountant, with all due respect.

Well, everyone should now know what the MMF business plan would be focused, and that is how to make $$$ off the buildings the city buys, and what return they will get. The cartel that drove the car into the ditch, now is driving your car into the ditch. And no one knows why there isn't market demand in Middletown?       

They think that, by driving everyone's cars into the ditch, they will create a demand for more ditches.

GG, I man no disrespect, but you sound like Nancy Nix on your postulation. Do you actually think a property owner would desire to accumulate property vacated, and add that cost to the valuation at 35% from the county? If so, I recommend you find another avenue to supplement your retirement income, but investment strategies is not one of them . This year alone, there are 10,000 cases before the OHIO BTA associated with property tax appeals originating from the BOR in Ohio counties. Simply adding land does nothing to stimulate demand, and therefore, valuation. All one would be stimulating is more artificially elevated valuation by land, but the price point on selling the land, will not rise when including it in the property. 4500 sq ft on 3.5 acres now in Middletown sells for about $150,000., so no one in their right mind, from a business acumen perspective, would absorb land thinking it pumps up their property value. And I assure you, 99% of Middletown home owners, and commercial owners as well, understand that. They would have no interest in absorbing the land, so the city will have it, and pay no taxes on it, and it will sit, and sit....just like the C State property will.

And with land, there is still mowing costs weekly. So, what is gained from the destruction of property? Vandalism reduction? There are more concerns about home invasions in Middletown, than vandalism to property vacated. And the upkeep on mowing will be a city responsibility. While you might buy the property, the vast majority will not, because of the burden of taxation with no upside return.

You need to begin thinking like an economist, not a CPA accountant, with all due respect.

Well, everyone should now know what the MMF business plan would be focused, and that is how to make $$$ off the buildings the city buys, and what return they will get. The cartel that drove the car into the ditch, now is driving your car into the ditch. And no one knows why there isn't market demand in Middletown?

acclaro,

I retired at the age of 50 and enjoy a six figure income from my real estate investments (90% of which are in Middletown). Unless you can state the same, I don’t need your advice when it comes to making sound real estate decisions. Your economic analysis makes sense EXCEPT it doesn’t account for the increased valuation as a result of removing the blight from your neighborhood. In addition, and over time, the demand that is lacking will come as a result. I said nothing about simply adding land…. I said that I would be adding land while removing nearby blight. That is the part that you obviously don’t understand. With all due respect…. this is what I know and if 99% Middletown homebuyers agree with you, then the odds are stacked in my favor. You should stick to business & leave the real estate to the pros.

GG

GG, having spent 5 years in PWC's Global merger/ acquisition practice doing due diligence on corporate acquisitions, I think I know a few things or two, about how to quantify valuation. I won't boast, but the numbers you reference are not even an associate level within these firms, let alone Partner level in top tier firms, I have been a senior partner at McKinsey and PWC, lets leave it at that on income. As for real estate pro, there is no upscale renatl property in Middletown. You own rentals, most are slum landlords. You aren't the guy who bought the Booth property on Rosedale are you, that's been empty for 3 months. If so, get a paint job on the two story colonial, that house is a mess.  They moved to Springboro and knew when to get out of Middletown.

 Wofford is a party school, and anyone can get it with money. Furmon is far superior.