Will Mortgage Companies Get the Right to Redeem in the Tax Foreclosure Process?

By Jacob Wolf, GOPC intern The Ohio Supreme Court will hear the appeal of a case that could have a major impact on efforts to redevelop foreclosed properties in the state. Under Ohio law, a property owner whose property is in danger of foreclosure due to unpaid taxes may pay off those taxes and keep the property without it going up for auction at a sheriff’s sale. This is called the right of redemption. The issue in this case—with the unwieldy name of In the Matter of the Foreclosure of Liens for Delinquent Taxes v. Parcels of Land Encumbered with Delinquent Tax Liens et al.—is whether a mortgage company has the same right of redemption as a property owner.

Coshocton County started tax foreclosure proceedings on the property in question in April of 2011. Six months later, the property was sold at a sheriff’s sale.  Two weeks after the sale, the company that held the mortgage on the property—Vanderbilt Mortgage and Finance—filed motions to vacate the sheriff’s sale and to redeem the property by paying the delinquent tax bill. The trial court accepted Vanderbilt’s redemption and voided the sale, but the county appealed. The 5^th District Court of Appeals sided with the county, overturning Vanderbilt’s redemption.

In its appeal to the Ohio Supreme Court, Vanderbilt argues that it was protecting its mortgage interest in the property. However, the appellate court found that Vanderbilt could have protected its interests in one of two ways:

1. by advancing the tax money to the homeowners and allowing them to exercise their right of redemption before the sheriff’s sale, or
2. by bidding on the property at the sheriff’s sale.

The land sold for more than $15,000 at the auction. Conversely, the homeowners owed only $825.84 in taxes; and Vanderbilt paid a total of $6,000 to the county in their attempt to redeem the property. It appears as though the Court of Appeals thought Vanderbilt was attempting to take ownership of the property without bidding at the sheriff’s sale.

If the Ohio Supreme Court rules in favor of Vanderbilt, it will allow banks and mortgage lenders to acquire foreclosed properties at deep discounts. Currently, these properties often wind up in city and county land banks, where they can be prepared for redevelopment. This court case, and its decision regarding property acquisition by private lenders, will influence the future of urban redevelopment and revitalization efforts in Ohio.

Weinland Park Study Featured in Dispatch

A recent Columbus Dispatch editorial, "Weinland Park effort will pay off," featured Greater Ohio's study of investments in the Weinland Park neighborhood:

"The community may have a clearer picture soon of what’s working. [...] The nonprofit Greater Ohio Policy Center has been evaluating the Weinland Park efforts undertaken since 2007.

Hard data on which programs and improvements really are improving quality of life will help guide all the efforts and spending yet to come.

It’s a smart way to avoid wasting time, effort and money.

And it’s another indication that the Columbus community is determined to win the battle for Weinland Park."

GOPC is currently undertaking analyses of investments in Columbus' Weinland Park and near South Side neighborhoods, and plans to release the findings by the end of the year. This research is being supported by The Columbus Foundation.

Around the World in Several Days: GOPC Travels to Philadelphia and Germany

This past week, GOPC traveled to conferences on both sides of the globe. Executive Director Lavea Brachman participated on panels at both the Reclaiming Vacant Properties Conference hosted by Center for Community Progress in Philadelphia and the Shrinking Cities in Europe conference held in Essen, Germany.

Brachman moderated a panel in Philadelphia titled “Aligning Financial Institutions and Community Development Goals: Building Strategic Coalitions to Move a State Level Vacant Property Revitalization Policy Agenda.” The panelists, including bankers and community development leaders from Ohio and Pennsylvania, discussed coalition-building strategies that they have used to leverage relationships between the private, non-profit and public sectors to generate a strategic statewide policy agenda that addresses the acquisition, demolition, foreclosure, redevelopment and prevention of vacant properties.

Shortly afterward, Brachman flew across the Atlantic to Germany, where she participated in the conference roundtable on “The global challenge of Shrinking Cities.” As a former Fellow of the German Marshall Fund and a delegate of the Cities in Transition initiative, Lavea contributed her knowledge of legacy cities in the U.S. while learning from other experts from around the world. The conference marks the conclusion of the 4 year European COST Action “Cities Regrowing Smaller” initiative.

GOPC’s involvement in these events has enriched our network of relationships as well as our working knowledge of how to address the challenges and promote the strengths of legacy cities.

Attorney General's Demolition Program Extended

Ohio Attorney General Mike DeWine has announced that he will be extended the deadline for counties wishing to apply for demolition funds under the Moving Ohio Forward Program.  The program has been a rousing success so far, demolishing almost 5,000 blighted properties across the state. With the deadline now extended to May 31, 2014, communities will have an opportunity to apply for the full amount of funds allocated to them.  According to records posted by the Attorney General's office, almost $5 million in funds are currently unclaimed. 

The Greater Ohio Policy Center has been providing technical assistance to counties applying for and utilizing the Moving Ohio Forward funds.  For more information on GOPC's relationship with the Attorney General's office, please see our web page, which gives a background on our role in this program and includes resources that can help communities make strategic use of their demolition dollars.

For more information on the program extension, please visit the Ohio Attorney General's website.

Columbus Welcomes CoGo Bike Share

The city of Columbus is one of 15 bike share programs around the United States with the most recent opening being New York City.  This form of alternative transportation has become a hit in larger urban cities like Chicago and New York because of the generational shift of preferences for transportation.  The Millennial generation prefers alternatives to driving a car and bicycling offers both exercise and efficiency on roads that are becoming safer for multiple modes of transit at the same time.

Alta Bicycle Share headquartered in Portland, Oregon; will be running the bike share in Columbus with 30 stations and 300 bikes to start off.  Memberships for a year are $75 while daily membership is $6.  Greater Ohio supports increased transit options and commends the city for taking action into their own hands.

CoGo has a mobile app that offers maps, station information, and history of trips taken on your bike.  Tracking the bikes will bring information about potential expansion.

Visit http://cogobikeshare.com/ for more information!

Brachman Discusses How to Rebuild Legacy Cities

This morning at 10am, Executive Director Lavea Brachman will be featured on WOSU's All Sides with Ann Fisher show, discussing Detroit's potential for a comeback despite the city's bankrupt status.

You can listen to the show, "Low Times in Motown: Detroit Files for Bankruptcy," by tuning into WOSU (89.7 FM) or you can listen to the live stream online.

On Saturday, The Boston Globe published Brachman and Alan Mallach's article, "Gateway cities don’t need a silver bullet," about the report they wrote together - Regenerating America's Legacy Cities - for the Lincoln Institute of Land Policy.

The report explores the challenges of regenerating America’s legacy cities—older industrial cities that have experienced sustained job and population loss over the past few decades. It identifies the powerful obstacles that stand in the way of fundamental change in the dynamics of these cities, and suggests directions by which cities can overcome those obstacles and embark on the path of regeneration.

Ohio CDC Association Recognizes GOPC's Work

The Ohio CDC Association recently highlighted GOPC's work in their newsletter:

"OCDCA, in partnership with the Greater Ohio Policy Center, Heritage Ohio, Ohio Capital Corporation for Housing and Habitat for Humanity Ohio - recently saw the introduction of an innovative tax credit program to assist communities with physical and economic revitalization."

"The Neighborhood Infrastructure Assistance Program (NIAP) is intended to help leverage private dollars for community projects critical for the attractiveness and economic competitiveness of the state."

GOPC Co-Authors Policy Brief on Revitalizing Legacy Cities

"The Greater Ohio Policy Center (GOPC) released a report titled Regenerating America's Legacy Cities. The report, co-written by GOPC's Lavea Brachman and published by the Lincoln Institute of Land Policy, finds that enduring assets such as downtowns, parks, transit systems, and academic and cultural institutions are the key to revitalization for struggling industrial cities."

Chicago-Columbus Passenger Rail Studied

The Northeast Indiana Passenger Rail Association released the feasibility study and business plan of a potential connection for passenger rail between Columbus and Chicago.

It is important to note that there is not currently a straight highway from Columbus to Chicago as this new train route would provide.  The rail service would dramatically decrease the travel time between Columbus and Chicago in all transportation modes except air.  According to All Aboard Ohio, Columbus is the largest city in America without access to passenger rail.  The report indicates that private companies may want to invest in the project that will be 80% funded by the federal government.  This could mean that the states will not have to put much money into the project.

Below are some of the benefits of the proposed rail line:

• 12,000 temporary jobs and 26,800 permanent jobs resulting from  this project;
• Generate $7.1 billion in increased output for the region’s businesses;
• Generate $6 billion worth of direct user benefits over the 30-year life of the project;
• Start-up costs estimated at $4 million per mile vs. 10 times that for Interstate highway construction;
• For every $1 invested in this project, an economic return of $1.70 is forecast.
• 2.1 million riders in 2020, rising to 3.3 million by 2040, with 79% of riders diverted from cars;
• Reduced emissions, traffic and dependence on expensive fuel; and
• Rail fares set at 2/3 that of air fares will generate annual farebox revenue of $116 million in 2020 rising to $190 million by 2040.

Columbus gave $15,000 in the budget to help pay for the feasibility study.  The next step in the process is to conduct an EIA, known as an Environmental Impact Assessment.  The EIA will most likely be commissioned to a private firm that the states agree upon and will take a year or two to accomplish when the appropriated funds get approved which could cost a couple million of dollars.

The Columbus Dispatch reported on the rail line 7/17/2013.

GOPC Presents to Ohio Constitutional Modernization Commission

GOPC's Executive Director, Lavea Brachman, and Associate Director, Alison Goebel, presented to the Ohio Constitutional Modernization Commission yesterday, providing an overview of local government throughout the state.

Click here to view GOPC's presentation to the Ohio Constitutional Modernization Commission

Highlights from the presentation are included below, cited in the Hannah Report article, "Constitutional Modernization Commission Stops Recording Hearings after Questions Arise":

Brachman said, “Ohio’s current local government structure impacts sustainable growth: communities and taxpayers face the legacy costs of a 19^th century structure in a 21^st century economy.” She said, “Ohio’s population growth is stagnating … [while] fragmented and duplicative local governments prevent effective economic competition on [the] world market.”

Goebel said Ohio has 3,702 local government jurisdictions, including 88 counties, 940 municipalities, 1,308 townships and 614 traditional school districts. Ohio has the eighth highest number of local governments per square mile in the U.S. In addition, there are over 4,000 special district governments, including 75 metropolitan housing authorities, 90 park districts, 97 airports, 145 joint fire or ambulance districts, 165 municipal and county courts, 251 library districts, and 450 senior centers.

Ohio is the 34^th highest for state taxes, and has the 20^th highest local tax burden in the U.S., said Goebel. In 2011, monthly payroll expenditures for local government in Ohio were $1.82 billion, while state government payroll was $0.65 billion. While the $157.49 per capita cost of local government in Ohio was slightly below the national average of $160.58 per capita, it was 29 percent above the peer state average for Indiana, Michigan, Pennsylvania, Kentucky and Illinois.

Responsibilities and powers of local governments vary by type, said Goebel. Municipalities have home rule powers. Townships are a “creature of statute” but can have limited home rule powers. Most counties are governed by general rules of the state, while there are two charter counties (Summit County in 1976, and Cuyahoga County in 2010) with home rule powers. In one pair of graphics, she showed that there are more townships than municipalities with populations between 500 and 10,000.

Goebel said GOPC studies have found that successful collaborations and efforts to become more efficient often require a leader or steward (such as a metropolitan planning organization, education service center, county engineer, county executive, county commissioners or major city); such efforts are often prompted by economic changes; and comparing local governments and measuring efficiency can be difficult due to the lack of a set standard reporting instrument for a detailed breakdown of local government expenditures.

Brachman said that intergovernmental collaboration can result in economies of scale, improved government accountability, equalization of service quantity and quality, coordinated economic competitiveness, and the ability to retain local community character and flavor.

Brachman said loss of population, an aging population and failure to attract Gen-Y are demographics of concern for Ohio.

The invitation to present to the Ohio Constitutional Modernization Commission further confirms GOPC’s expertise in Ohio’s local government structures as well as the value of our data-driven, impartial analyses of the current state of affairs.

The Metropolitan Revolution

Bruce Katz and Jennifer Bradley co-authored a new book, The Metropolitan Revolution, published by Brookings Institution Press on June 17th.  The book is about Northeast Ohio's revolution to become a network that sustains economic prosperity.  Since the release, Katz and Bradley have been traveling across the nation on a tour, talking with reporters and stakeholders about the process underway around Cleveland.  Below are some excerpts from their book.

"Metropolitan areas are so big, complicated and diverse that they don't need heroes.  They need networks."

"Enter Voices and Choices, a two-year effort to develop a regional economic competitiveness agenda for Northeast Ohio.  Throughout 2005 and 2006, the Fund connected with more than 20,000 residents of the region in one-on-one interviews, town meetings and workshops about the region's assets, challenges and priorities.  With these insights gathered, Fund collaborators were able to distill four goals to guide regional action: business growth, talent development, racial and economic inclusion, and government collaboration and efficiency."

"Stakeholders in the region started BioEnterprise, a non-profit that helps inventors connect with experienced managers, venture capitalists, production facilities, other inventors, state and federal grants and whatever else they need to build their company."

"The Fund estimates that, during its first nine years, the work of its grantees helped add 10,500 jobs, $333 million in payrolls and $1.9 billion in investments to the region."

"Too many metros are still looking for the next Bill Gates, Michael Dell or Mark Zukerberg.  But there is a growing appreciation for the power of networks, and we need look no further than Northeast Ohio to see why.  These efforts to use networks to bring about a new economy - built on the foundations of the old economy - are aligned with powerful social, economic and cultural forces."

To listen to a podcast of Bruce Katz talk about the book and its findings on NPR's "All Things Considered," click here.