The recession is over and the economy is supposed to be improving, but a Dayton Daily News analysis has found that delinquent property taxes in Montgomery County — a key indicator of economic stability — have surged by more than 70 percent since the summer of 2010.
Fueled by an increase in residential delinquencies, the number of properties with overdue taxes has increased by close to 40 percent in the last 3½ years — post-recession years when some sections of the country have begun to show dramatic improvement.
The analysis provides a sobering view of economic vitality in Dayton and shows how damaging those delinquencies are to schools, human service programs and government offices.
At the end of 2013, more than 24,000 properties in the county owed at least $100 in property taxes, the newspaper’s analysis of data from County Treasurer Carolyn Rice’s Office found. That was a 37.5 percent increase in delinquencies from July 2010.
In all, owners of those delinquent properties owed almost $148.5 million in back taxes — enough to run the general operations of the city of Dayton for an entire year.
And almost all of the increase was due to mushrooming delinquencies among residential properties. More than nine out of 10 of the 6,612 new delinquent properties in the county are residential.
The dollar amount, as striking as it might be, isn’t the worst news. Most of the debt probably will never be collected.
At least half of the $148.5 million is from delinquencies that are more than six years past due. The county’s biggest delinquency dates to 1983,
The City of Dayton is owed about $38 million — nearly $30 million from special assessments often racked up by vacant and abandoned properties.
“That number has grown significantly in recent years,” Dayton Deputy City Manager Stanley Earley said. “And to be perfectly honest, I doubt that we will recover much of that if any, because they are abandoned houses and a lot of those people are not here.”
Richard Stock, director of the BusinessResearch Group at the University of Dayton, said the delinquencies are a reflection of the region’s economic woes.
“I’m not surprised we are seeing increases in those delinquencies because we are still sitting there with a great deal of pain from the Great Recession,” Stock said.
Job growth in the four-county metropolitan statistical area has been basically non-existent since 2010, according to data from the Ohio Department of Job & Family Services. While unemployment in the region has dropped — from a peak of 51,600 in January 2010 to 30,300 in the most recent report — the lack of job growth locally puts a negative spin on the unemployment numbers.
“What that means is they’re discouraged workers,” Stock said. “We are still sitting there with many people who have had to make tough choices about feeding their family vs. paying their property taxes.”
Beth Deutscher, director of the Homeownership Center of Greater Dayton, said homeowners who have lost jobs or are working less can find a property tax bill “easy to set aside,” especially if it’s not built into a mortgage payment.
“It’s a big bill when it comes,” Deutscher said. “If people are struggling, it would be natural for them not to have a significant chunk of money available to pay.
“It’s another indication that people in our region are still struggling.”
No single entity has been hurt more by delinquencies than the Dayton city school district, which is owed a whopping $46.9 million.
The city of Dayton comes in second with an uncollected total of $37.7 million. The Human Services Levy, which funds a number of social service programs, is next in line, losing out on $15.5 million, while Montgomery County is owed $6.9 million.
Almost two thirds of the delinquent properties — and more than 70 percent of the delinquent taxes owed — were in the city of Dayton. Trotwood was a distant second with just under 9 percent.
Craig Jones, treasurer of Dayton city schools, says the lost tax income trickles down to every aspect of public education.
“That’s money we don’t have to pay teachers, to pay utility bills, to get supplies for kids,” he said.
Earley said the abandonment of property in Dayton has increased the city’s cost of dealing with those properties, which is reflected in the totals for special assessments.
The costs of mowing, boarding up and in some cases demolishing the properties go on the assessments, Earley said. In addition, if an owner walks away from a utility bill, those will also go on the tab.
Getting owners to pay — or even finding the owners — can be another unrecoverable expense.
Earley said the back taxes and assessments are troublesome, but he is concerned more about what they reflect.
“What I’m most worried about are the implications of when people abandon their property,” he said. “What it does to a neighborhood, what it does to a street, and what the costs are for the rest of society.”
$74 million likely gone for good
There is no way of knowing for sure how much of the back taxes are lost, but the newspaper analysis has found that at least half — and probably much more — of the $148 million owed in property taxes and assessments countywide will never be collected.
When a consultant studied the county’s tax delinquencies in 2011, he found that if properties are delinquent more than three years, the chances of collecting “drops off significantly,” said Robinson.
The problem is, 81 percent of the total taxes owed are from delinquencies are more than three years old.
Even if you increase the odds and give the county six years to collect, almost half of the taxes are on properties that have been delinquent longer.
“Our experience, our non-analytical experience, will tell us that any given property that is six years delinquent, it’s very unlikely that that person is going to pay it off,” Robinson said. “If they’ve ignored everything, all the outreach that we’ve tried to do in our tax bills, it’s unlikely that that property is going to be paid.”
By far, the largest property tax black hole is the old Dayton Tire plant on West Riverview Avenue. The owner of the 37.5-acre site, now a huge vacant lot, is listed in county records as J V Properties and Bert Green & Co. of Akron. They owe $6.4 million in back taxes. The problem is, the property went delinquent 31 years ago, in 1983.
The most delinquent residential property is also a vacant lot — at 519 Norman Ave. in Dayton, north of Salem Avenue and east of Catalpa Drive. Its owners, Best Investments Realty LLC, with a post office box in Dayton, owe $184,550 on the property. The vacant double lot was once home to a 48-unit, U-shaped garden apartment building, according to county records. It’s been on the delinquent list since 2002.
“You’ve hit on a really great property to illustrate the challenges of looking at that delinquent list,” Robinson said. “You and I both know there’s no way we’re going to get that amount of money, because the property is not worth that anymore.”
The county, however, can’t just wipe 519 Norman or the Dayton Tire plant off the books. State law doesn’t give counties the option of writing off bad debts the way corporations can.
“There’s no means for us to say, ‘Oh this Dayton Tire, the 30-year debt, let’s just write it off,’” Robinson said. “There’s no mechanism in law that says we can do that.”
More online: Find out which area landlords are delinquent on their property taxes and how it affects you on our interactive page at MyDaytonDailyNews.com/investigations.