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Abandoned Property Owners Owe Louisville $42 Million. But That's Not the City's Top Concern

George Palmer pays a lawn service company to fertilize his grass. He keeps his shrubs neatly trimmed. And sitting on his front porch last week, he could rattle off the names of his neighbors.

Palmer, 39, bought his Shawnee house in 2004.  It's just a few doors down from his parents' home, the one he grew up in.

He's a proud homeowner. But there's one thing that irks him about his neighborhood: the abandoned, decrepit house next door.

"It's an eyesore. It's depressing," he said.

No one has lived in the house at 310 N. 41st St. since Palmer was in elementary school, he said. Old phone books are scattered on the porch amid broken glass, spider webs and empty soda bottles.

Vacant and abandoned properties, like the one next to Palmer's house, are an enduring issue in Louisville, said Jeana Dunlap, director of the city's Vacant and Abandoned Properties Division.

Owners of vacant and abandoned properties are on the hook to the city for more than $42 million in property maintenance fines.

"That's a huge amount," Dunlap said.

Louisville has about 8,200 cases of vacant or abandoned properties — mostly land with structures — spread throughout nearly every neighborhood and every Metro Council district, she said. While collecting the fines has its benefits, she said the city would rather just see the problems on each addressed.

A comprehensive report on vacant and abandoned properties released earlier this summer is giving city leaders a closer look to just how big the problem is. It's data they've never had before, Dunlap said.

Though vacant and abandoned property owners collectively owe the city tens of millions, getting the money isn't always easy.

Many fines will turn into liens if they go unpaid for some time. But a five-year statute of limitations on code enforcement and building and housing liens means some of those property owners aren't obligated to settle the bill, Dunlap said.

And accrued interest on the liens and fines aren't included in the $42 million total. That, Dunlap said, could change the total "a lot."

Also, no two code enforcement officers are the same. One officer would issue a citation for a violation, but other officers may instead issue a warning, she said.

Regardless, Dunlap said $42 million is a heap of money for which any city department could find uses. Her division's budget is just $2 million. A few million more could lead to a bigger staff, which could mean more efficiency in addressing the city's vacant property issue, for instance.

How Properties Are Abandoned

Many cases of vacant or abandoned properties are attributed to deceased property owners. Sometimes, family members aren't able to take responsibility for the property.

In other cases, investors may have had financial difficulty implementing a plan to redevelop a property, leaving it to deteriorate. As it sits unused and without maintenance, the property can pick up thousands of dollars of property fines.

Other homeowners strapped for cash will likely use the money they have to bring a cited property up to compliance in order to halt future fines — because fines turn into liens, which can turn into a foreclosure — but they will still owe the initial penalty, she said.

Some Progress

"Metro, just to demonstrate how seriously it wants to go after these fines, established a division where that's their sole purpose and function," Dunlap said. That took fine collection from a "sideline" task to a "full-time endeavor."

Now, through the office of management and budget, about $2.7 million is collected annually in fines from vacant and abandoned properties, Dunlap said.

Still, that leaves millions uncollected. But Dunlap said her office isn't too concerned with collecting all of the $42 million. "It's more important to us to have site control than it is for us to expect to get paid," she said.

In other words, city officials would rather have the power to address the problems on a property than collect the fines.

So how do they get site control? If a property owner fails to settle a lien, the city has the option to initiate a lawsuit against the property owner. That tactic wasn't really pursued until liens were given more priority in court in 2012, Dunlap said.

The lawsuit runs it course and the property eventually lands in the Master Commissioner's Auction "just like any other plaintiff in a foreclosure suit," and it's bid on, Dunlap said.

"More often than not, we are in the position of winning the bid," she said.

Once Metro government takes ownership of the property, all liens are "wiped clean" and it goes into the city's land bank, where officials can dictate where the property goes next and what it becomes, Dunlap said. The city has control of about 5,000 properties, some 450 of which are in the city's land bank.

"Is it a garden, is it a small business, is it a first-time home buyers' chance to step in?" she said.

As for the house that sits crumbling next to George Palmer's carefully tended home on 41st Street, its fate is not set. The owners owe nearly $14,000 in property fines, according to Metro data. They could not be reached for comment.

Palmer said he wants the property torn down. But Dunlap said destroying a standing home isn't the first option, especially when the need for affordable housing is so great.

"I don't think it's good stewardship to destroy perfectly sound buildings, but we can if we have to, particularly if there are other nuisance issues going on," she said.

Just last week, Palmer reported to the city's 311 hotline that the grass next door could use cutting. He said the towering weeds create a ripe environment for opossums, raccoons and other animals. Palmer said he has to tie down his garbage lid each night to keep them out.

That's not his only concern.

The grass may attract critters, but the shelter of an abandoned house can attract drug addicts, Palmer said. People have attempted to break into his own home in the past, he said.

"This is pathetic," he said. "I am a taxpayer, I am a concerned citizen. I'd like to see some accountability."

Photo of George Palmer by Jacob Ryan/WFPL News.

Correction: This story has been updated to reflect the correct number of properties in the land bank.

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.

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