Lien waivers, foreclosures among strategies to fix up neighborhoods
COVINGTON, Ky. - Neighbors know them well.
Strung around the city, they're the houses that have sat vacant for years - essentially abandoned, seemingly forgotten and often slowly deteriorating - a source of frustration for not only those who live near them but also City Hall, the legal system, and sometimes even those who own them.
"It's safe to say there are hundreds of such buildings around Covington, and maybe more," said Neighborhood Services Director Ken Smith.
That should soon change.
The Covington Board of Commissioners on Tuesday night approved a new policy that allows the City's legal staff to waive or reduce "nuisance code liens" in cases where such forgiveness facilitates the sale of eligible properties to developers and rehab-minded owners.
At the same time, the City is preparing a stack of foreclosure actions it intends to file to address vacant properties that have been long-standing problems and the greatest sources of aggravation.
The multi-faceted effort has many goals: Remove blight, abate nuisances, fix up neighborhoods, reduce crime, and create affordable housing by returning vacant and abandoned properties to functional use.
The disparate tools are tacit acknowledgement of the many different reasons why properties remain vacant:
- Some vacant properties have absentee owners who steadfastly refuse to fix up their buildings, refuse to pay fines associated with unsafe conditions, and refuse to reimburse the City for maintenance it's performed to protect neighbors, such as cutting grass and boarding up windows.
- Other properties are completely abandoned, with owners who are dead or can't be found.
- Still others are in limbo because of so-called "dirty," disputed or unclear titles.
- And still other properties - for whom the new nuisance lien waivers might be helpful - have well-meaning owners who want to sell but can't find buyers because the outstanding financial obligations attached to the property are worth more than the assessed value.
"Each property is different, with different ownership issues and titles and history," City Solicitor Michael Bartlett said. "There are so many categories, so many different aspects."
Bartlett said the City has at least 10 such foreclosure actions ready to file when the state reopens courts that are temporarily closed because of the coronavirus pandemic. These cases are primarily situations where foreclosure is the only way to get eyesores cleaned up.
And that number is expected to grow: Smith's staff in the Code Enforcement division said they've identified at least 40 more properties where a foreclosure action would be appropriate and overdue.
The strategy is part of a larger effort.
Bartlett said the Legal and Neighborhood Services departments were also working on overhauling the City's policies and fine structure for nuisance violations to better accomplish the goal of removing blight and creating affordable housing.
"We're serious about enforcement against the worst of the offenders and getting these properties back into productive use - the neighborhoods deserve that," he said.
How the waivers work
The newly approved Lien Waiver and Adjustment Policy - aka OR-73-20, which can be seen HERE
- is tightly focused.
Essentially, the City is willing to waive or reduce nuisance code liens attached to a property to facilitate the sale of that property to someone who will fix it up. Nuisance code liens are attached for two reasons: when a nuisance fine is assessed, or when the City is trying to recoup costs it's incurred while performing maintenance - such as cutting grass, boarding up windows or stabilizing a structure - that the absentee owner is unwilling or unable to do.
The new policy does not apply to liens assessed for outstanding taxes, mortgage payments, or unrelated court judgments - all obligations that the City legally can't waive.
The policy creates two options, one that essentially benefits the seller and one that benefits the buyer:
- The "no net proceeds" option: If a property is being sold for less than or equal to what the seller owes on various liens, including nuisance liens, the City will require payment by the seller of only that lien amount that represents net proceeds from the sale.
- The "residential rehabilitation" option: If a developer or rehabber is buying a residential property for rehab or new residential construction, the City will "forgive" the nuisance code lien to support the developer's ability to complete the project.
"I like to say these properties are stuck in purgatory," Smith said. "And we're telling owners, here's a way out."
People who want to apply for a nuisance code waiver or reduction or has questions should send an email to email@example.com
or call (859) 292-2311.
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