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‘Good Neighbor?’ Nearly A Third of Former Land Bank Houses Are Vacant

A house on West Gaulbert Avenue sits vacant on Sept. 24, 2018. It was sold last December through the city's land bank.
Jacob Ryan
A house on West Gaulbert Avenue sits vacant on Sept. 24, 2018. It was sold last December through the city's land bank.

Ralph Thomas stepped through the tall grass and examined the busted and boarded-up house next to his own.

The front porch was crumbling. A pair of prosthetic legs lay tangled in the backyard. The unkempt lot attracts rodents, Thomas said, and strangers use the lot as a shortcut to the next block.

Thomas has lived on West Gaulbert Avenue in the Algonquin neighborhood for nearly four decades. The house next door became a problem only recently, he said. The former owner died a couple years ago.

“It’s an eyesore,” Thomas said. “It’s unhealthy.”

And it should have been fixed up by now.

The house was sold by the city’s land bank last December, part of a record year for sales praised by Louisville Mayor Greg Fischer as a “win for neighbors and for public safety.” New owners took properties for as little as $1, and promised to fix the exteriors of dilapidated homes within six months.

Instead, the house is vacant. It’s one of nearly a third of former land bank houses sold since the 2010 fiscal year with that designation, according to a Kentucky Center for Investigative Reporting review of Landbank Authority property sales and city vacant housing data.

Of the 316 properties the land bank has sold, code inspectors have deemed 92 to be vacant and in violation of the city’s property maintenance codes.

Asked to respond to these findings, Laura Grabowski, director of the city’s Vacant and Public Property Administration, said she would hesitate to make generalizations.

“I guess my response is, we need to look into what these properties are, what the circumstances are,” Grabowski said. “The thing about vacant properties is that there is a different story for each case.”

Some buyers have racked up thousands in property maintenance fines as they failed to pick up trash, cut the grass, and let their properties return to disrepair. Others appear to have never completed exterior renovations as required in the first place.

Many of the vacant properties fall into that category, as they were purchased in the last year and deadlines for exterior renovations have recently passed. History suggests the new owners won’t face consequences for slow progress.

The Landbank Authority has the power to take back possession of a property if the initial terms aren’t met, but it’s never done it.

Meanwhile, neighbors like Thomas say they are paying the price for the city’s inaction.

The deadline for exterior remodeling at the West Gaulbert Avenue house had already passed when code inspectors visited in July. It was the same week Fischer praised the rash of sales last year, which included this house.

The inspectors found the rear door ripped off and the windows broken. The dryer vent was exposed, allowing in birds and animals, and the gutters were dirty.

In an interview this month, William Schreck, chairman of the Landbank Authority, said the authority buys and sells properties for which there is otherwise little demand. Many of them are crumbling, dilapidated and long abandoned.

“The landbank is not a magical thing, and it’s probably not perfect,” Schreck said.

‘Dead property’

The city’s Landbank Authority was created in 1988. Its three members represent the city’s taxing entities — Louisville Metro government, the Jefferson County Public School district and the Commonwealth of Kentucky.

The authority approves the land bank’s acquisition of properties, which it gets largely through foreclosures or donations, and the subsequent sales.

Land bank staff initiated 162 foreclosures last fiscal year on properties rife with unpaid taxes or property maintenance fines, said Grabowski of the Vacant and Public Property Administration, which oversees the land bank program.

“We don’t foreclose on anything occupied, only longtime vacants,” Grabowski said. “It is very important to maintain property rights.”

The owners have seemingly gone missing on the houses the land bank takes, Grabowski said, and what’s left is “dead property.”

Grabowski’s team focuses its acquisition efforts on areas where the city government is already investing, she said. In the Russell neighborhood, the Landbank Authority recently acquired eight properties on a two-block stretch on Elliott Avenue, between 24th and 26th Street, according to Jefferson County property records.

The stretch is between the upcoming Heritage West sports complex and the planned Passport health corporate headquarters and new YMCA project.

“We have one mission and that is to get these properties back in to productive use,” Grabowski said. “Occupied, maintained, paying taxes.”

City leaders say the land bank properties have little market value. That’s why essentially giving them away can incentivize buyers to take on the rehabilitation projects.

“[These properties] have been sitting for some time, and if we’ve got somebody that is in compliance and is interested in turning them back in to something, then we’re going to give them a shot,” Grabowski said.

The only criteria for buying from the land bank are that the prospective buyer is current on taxes, doesn’t have an open property maintenance case and can show proof of funds.

“That’s it,” Grabowski said.

Once a buyer finishes the renovation, the deed is released fully to the buyer. But in at least a few of the vacant property cases, the renovations appear to have never been completed, and the deed restrictions haven’t been lifted.

Jordan Remodeling LLC bought a small, single-family home on Hale Avenue in Chickasaw for $400 in 2012. The company’s owner, Adam Alhamdan, promised to rehab the property and keep it clean and the grass cut, according to the deed.

Today, the house is boarded up, with a hole in the roof and charred siding from a recent fire. City crews cut the grass, according to property maintenance records, and code officials have visited the property nearly 40 times since it was purchased in 2012.

The Hale Avenue house’s deed was never released, and the property owner has accrued $18,000 in code violation fines. Alhamdan couldn’t be reached for comment.

Robert Kirchdorfer, head of the city’s Codes and Regulations department, said enforcement officers don’t keep tabs on which properties are sold by the Landbank Authority.

This means the land bank’s staff isn’t always aware when buyers fail to maintain properties. Even if they were, however, it’s unlikely they’d seek to reclaim the property. City officials said foreclosing to take back a property sold through the land bank can be time-consuming and costly.

The only time the authority asked for a property back, it was voluntarily returned. Andrew Hawes, executive director of The Housing Partnership Inc., said their restoration of a historic house on West Chestnut Street turned out to be too expensive.

“We did chat with the city, because technically it’d be cheaper to tear it down and build something new, but they didn’t want to do that,” Hawes said. “And we’re team players and happily gave them the property back.”

31 houses bought, few fixed up

Two weeks ago, the grass in the front yard at the house on West Gaulbert Avenue climbed nearly six feet tall, a sharp contrast to Ralph Thomas’s tightly trimmed lawn next door.

The boards on the door and windows were beginning to curl and blacken in the damp heat. A cat peered out from a dirty second-floor window.

Thomas hoped for a good neighbor when he heard the Landbank Authority had acquired and planned to sell the property.

“But as you can see, I’m still without a good neighbor,” he said.

The company that took on the West Gaulbert house — and 30 other land bank houses since 2017 — is Mirage Properties LLC. The house was assessed at $32,000, but it was in disrepair and eligible for demolition.

When the land bank deeded this house to Mirage for $1 in December, the company promised to fix the exterior within six months.

Schreck, the Landbank Authority chair, said the margins are small on these properties, and the land bank needs to give companies flexibility.

“So when we have a company that shows the wherewithal to take the properties that have just been sitting there, or even remove the blight, we would want that to occur,” he said. “The people that get involved in this are taking a huge risk.”

But most of Mirage’s properties showed little, if any, signs of ongoing construction when a reporter looked at them in the last two months. At the West Gaulbert Avenue house, the company has not yet obtained any building permits, city records show.

In an email, Will Ford, a spokesman for the Vacant and Public Property Administration, said Mirage Properties was the only company to apply for most of the properties it acquired through the Last Look program, which are homes that qualify for demolition.

“The alternative to working with Mirage is to allow the conditions of these properties to worsen, bringing down the neighborhoods,” Ford said, noting that taxpayers would pay $10,000 for each demolition.

In a brief phone interview this week, James Michael Burkhead III, the owner of Mirage Properties LLC, said he bought the properties to add to his rental portfolio.

“I want to see the West End improve,” he said. “I just love folks down there.”

Burkhead agreed to meet for a follow-up interview at a property that is undergoing renovation. But there, after a reporter asked about his open property maintenance cases, he objected to being recorded and ended the interview.

Burkhead’s Louisville-based company bought more properties from the land bank than anyone else in fiscal year 2018, according to Landbank Authority data, and they’ve bought 31 properties since 2017. The company has paid about $7,100 for the properties that, in all, have an assessed value of more than $743,000, according to county property records.

All but seven of Mirage’s land bank properties qualified for demolition due to their poor condition.

A two-story house on Louis Coleman Drive in Russell is barely visible behind a swarm of overgrown bushes and vines. On Cedar Street, in the Shawnee neighborhood, a squat shotgun house has a crumbling porch and a boarded window. The same goes for a house on Vermont Avenue, in Shawnee, where the street number is scrawled with spray paint on the particle board covering the front door.

The exteriors of all three houses should have been completely fixed up by last month, according to the deeds.

Ford said in an email that Mirage has been stymied by the bad condition of the houses it purchased and third-party liens still attached to the properties.

Burkhead, who said he manages about 800 apartments, single family and multi-family homes across western Louisville, didn’t mention lien issues in his brief interview with KyCIR. Instead, he said he hasn’t been able to fulfill his pledge because he can’t find anyone to do the construction work.

“I’ve met a lot of folks who won’t work in the West End,” he said.

Lessons from the past

Nearly a decade ago, in the wake of the Great Recession, a different Louisville company scooped up more than two dozen vacant lots with a promise to add new affordable housing.

The houses built by Oracle Neighborhood Revitalization stand out in the west end: where many of the homes are a century old, the new Oracle houses are two stories tall and painted bold colors with concrete porches. Oracle, through several LLCs owned by Caryn Winter, purchased 25 properties from the Landbank Authority since the 2010 fiscal year.

With the assistance of $8.1 million in federal funding, Oracle built single-family homes on those and other lots it purchased, most on the western side of Jefferson County.

Today, nearly a third of the 25 properties that Winter’s companies bought from the landbank are vacant. Some are boarded, with busted windows and overgrown lawns. Winter owes more than $13,000 in property maintenance fines, according to city records.

Winter did not respond to multiple calls seeking comment for this story.

Louisville Metro Council president David James said city officials should examine the results of the land bank program and “decide on a different or better path.”

James’s district includes portions of the Park Hill and Algonquin neighborhood. He said the land bank program should focus on building homeownership, instead of selling properties to investors and companies built on rental units.

James praised Oracle at a 2011 council meeting for their work to build affordable housing, and he didn’t know some of those houses are now vacant and in disrepair.

“It looks like we’ve made some mistakes,” he said.

Oracle subsidiaries own six houses on West Burnett Avenue in Park Hill, which it built on property purchased from the land bank. Three of those houses currently sit vacant, and have accrued nearly $5,000 in property maintenance fines.

Nicole Duvall lives in a rental home that’s tucked in between two of Winter’s properties on West Burnett, one of which is vacant. The neighboring houses were new when she first moved in nine years ago.

The block has changed over the years, especially at the Oracle houses. She said the grass has grown six feet tall, and the tenants haven’t been great either.

“It’s a sore thumb,” Duvall said of the house.

From her window, Duvall said she’s seen people break into the vacant house next door. On occasion, she’ll see random vehicles pull in to the backyard, and she suspects it’s for prostitution.

“They park right there and throw the condoms out the window,” she said. “It’s gross.”

Duvall shares her home with four children and her husband. They spend free time in the backyard, beneath the shade of a large umbrella.

It’s not her dream home, she said. But it’s clean and it’s full of love.

“It’s everything to me,” she said.

She said the house next door — and any house that’s being neglected — should be put to better use.

“It’s just sad,” Duvall said. “I’m tired of seeing it. Somebody needs to step up and do something with it, do something about it.”

Reporter Jacob Ryan can be reached at  jryan@kycir.org and (502) 814.6559.

Jacob Ryan is the managing editor of the Kentucky Center for Investigative reporting. He's an award-winning investigative reporter who joined LPM in 2014. Email Jacob at jryan@lpm.org.