Newport officials leading effort to clean up the city, make derelict properties 'productive' again

Posted at 7:00 AM, Oct 12, 2017
and last updated 2017-10-12 07:00:05-04

NEWPORT, Ky. -- Newport officials are cracking down on homes and buildings that owe back taxes and fines in an effort to clean up the city and collect about $1.2 million.

The majority of the 365 structures on the list are vacant or rentals, and some are falling apart as they stand empty.

Most are on the city's west side, a location that is on the verge of renaissance, said Mayor Jerry Peluso, where everyone is pushing the slogan "invest in west."

Newport officials have created a task force to work on the citywide cleanup effort that will address many vacant and dilapidated properties. Photo provided

But at the same time, at least 30 foreclosures are possible, said assistant city solicitor John Hayden, which is "holding the community back."

A 2016 Kentucky state law and a push by residents and city government to clean up and renovate the west side is driving the crackdown.

The state law makes code liens payable in a foreclosure after back taxes. Previously, code liens were never paid.

"The time is right to put this together," said Peluso. "The bottom line is that it's going to improve the overall qualify of life and improve our community ... and it's going to happen."

Residents of Newport's west side are generally happy about the project. Ed Davis, who lives on York Street in the new local historic district, said there's a group effort to change the area's perception.

"People are wanting to move into urban areas," he said. "We're closer to downtown (Cincinnati) than any neighborhood, not counting The Banks and Downtown."

The city created a task force from all departments to work on the issues. The task force also will identify landlords who don't have a rental license and determine which sites have had multiple police and EMS calls, said Tom Fromme, city manager. The theory is that not all landlords know what their renters are doing on the property.

Although the city wants to collect delinquent property and occupational taxes, Fromme said they also "want to work with property owners to develop volunteer compliance of code requirements."

Many targeted structures have been on the list for years, but the new state law gives Kentucky cities more teeth to collect the taxes and liens. It's a slow process, Fromme said, noting that it can take months on end.

The $1.2 million the city seeks includes everything from back taxes and code liens to uncollected garbage fees, which are $200 a year for houses.

Some owners owe very little, while others owe thousands of dollars on their property, Fromme said, adding that officials are also leaning heavily on commercial properties.

Several empty buildings are already in foreclosure.

"Historically, fines would aggregate from chronic abusers and they wouldn't have to make a payment for code compliance," Thomas Guidugli Jr., a member of the city commission, said. "If they were never going to comply, it was a problem."

But the state law will change the dynamics on how effective officials can be, he added. "The issues will be handled in the same way, but the outcomes will be different," Guidugli said.

The overall goal of the ongoing effort in Newport, city commission member Thomas Guidugli Jr. said, is to make these delinquent properties "productive again." Photo provided

Ever since an August mailing was sent out, about 10 to 12 percent of the notices have been returned due to lack of a proper address for the owner, said Hayden.

Meanwhile, officials have collected $27,000 and put a handful of people on payment plans, he added. Any payment plan includes staying current on upcoming taxes.

City officials have said that property owners have found ways to beat the system, including paying only county taxes which can be sold to a third party for collection, using the rental property's address for the owner, or trying to pay one amount to ease the strain on money owed on several properties.

And while this recent push doesn't mean that everyone in arrears will automatically go into foreclosure, officials will approach it on "a case by case basis," Fromme said.

"We may never see all the money, especially when a property sells for $2,000 at auction," said Hayden. "But (the properties) are bringing down the neighborhood."

The city will also look at potential areas that can improve quickly.

If there's a handful of properties that could potentially change a neighborhood, Fromme said, then that will be considered moving forward, as the city prioritizes.

Typically, many of the problem properties are also undervalued on the property tax rolls, hence the considerably lower property and school taxes, said Fromme.

"When you have a house on a street with $100,000 homes and it's valued at $40,000, then that's an issue," he said.

He and Hayden both noted that they are working with the county Property Value Administration to correct some of the issues.

Inside city hall, the end result of the task force will be a set of policies and procedures that go after delinquent properties consistently.

Until now, "it's been catch as catch can," said Fromme, but that's going to stop.

"The overall goal is to make these properties productive again," said Guidugli. "Some people who own these properties will move and at the same (time), opportunity has to present itself."

He added that housing stock varies on the west side from large Victorians to small, working-class houses.

This whole endeavor is going to require investors and it will take some time, Guidugli said, "but it's time to invest now."