The St. Petersburg City Council is voting Thursday on buying six vacant lots in a midtown neighborhood with Federal Money. The properties will be purchased using a share of $1 Billion in Federal Money under Neighborhood Stabilization Program created by the “Dodd-Frank” Bill of 2010. The properties will be purchased from the owners “New Villa Homes” controlled by Tampa’s Leonard Johnson, Steve Meacher and Timothy Mobley. These owners have not paid property taxes on the vacant lots since 2006 and owe over $21,000 in back taxes. As part of the deal, the city will forgive $167,000 in 0utstanding liens, assessments and interest and the sellers agree to pay delinquent property taxes. After obtaining the property, the City will sell it under the strict limits defined by the Federal Department of Housing and Urban Development (HUD).
The deal relies on property appraisals that compare the crime-ridden area with empty lots that range in price from $5,000-$16,000. The lots themselves were purchased for $1,300-$4,800 a piece at a total price of $15,300. At the time the County had appraised the market value at $67,000 meaning the lots were purchased during an escalating housing market for more than $50,000 below appraised value at the time. The total appraised value by the county for the six lots currently is $35,100 and the lots will be sold for just under $77,000. Thus, while other properties were selling for OVER appraised value in 2003, New Villa homes purchased the lots at under market value. While many other properties are currently selling under appraised value, these properties will go for over twice the appraised value assigned by the county. While it is known that true market values can vary significantly from the county’s appraised value (assigned for tax purposes mainly), this circumstance of buying well under and selling well over market value appears to be a significant aberration.
The actual appraisal on the lots raise questions. Again, the county estimates values of about $5,700-$6,400 per lot. The private appraisals obtained by the City indicate values of $12,780 each. A closer examination of the three comparable properties evaluated for the appraisals reveal that the most expensive lot in the comparison was valued at $16,000 and a second at $9,250. These two lots were in a higher end neighborhood located blocks away where more valuable houses were located in a neighborhood with a far lower crime rate. Sources for the Sun Beam times indicate that the area where the prospective vacant lots are located on 14th Ave. S. is known high crime areas with drug dealing visible. At least one house in the area was abandoned due to numerous break ins and a locksmith in the area had to close down due to high crime after 20 years of business. By contrast, the “comparable” lot valued at $16,000 was purchased at the same time (below) as the adjacent home was purchased for $163,000 and then money was spend on restoration of that home. Pictures of the house demonstrate a value that is obviously very different than the lots to be purchased by the city (at top). An inquiry to the City inquiring about the nature of the delinquent assessments, liens and interest on the vacant lots to be purchased has not been answered.
This is the third Neighborhood Stabilization Plan (NSP3) by the Federal government and each of the previous two provided over $1 billion each with the NSP-1 being creating by the American Recovery and Relief Act (ARRA) also known as the “stimulus Bill” of 2009. St. Peterbsurg has received over $3.7 million in Federal money for these programs and is obligated to spend it within 3 years of the award of lose the funds. So far the city has spent $189,000 of $489,000 obligated according to a Federal Website dedicated to the program.
The City purchase of these vacant lots is likely to lead to several unintended consequences and raises issues of fairness. The value of the lots themselves will artificially inflate the value of other property in the area. This could be used to raise property values of nearby houses and then raise their property taxes. It will also make these lots unaffordable to local residents who do not have the benefit of Federal “bailout” money to make their purchases. This is a specific example of money printed from the Federal Reserve that is borrowd by the Federal government causing inflation. This specific example of property value inflation will hurt the poor the most as all inflation does. It is also an example of wealth redistribution. Only in this case it is a redistribution of wealth from the poor to the wealthy through inflation. The property sellers who have not paid their taxes and assessments will get a bailout and be off the hook for what they owe the city. The ordinary taxpayer in the City is unlikely to have such forgiveness of liens and fines owned on delinquent bills to the city. There is also still concern about previous use of Federal Funds to buy an apartment building in south St. Petersburg at 13th Ave. S and 4th St. for Boley centers. Local residents were displaced for what has been described by a Sun Beam Times source as “transients” at Boley. In addition, one of the owners of the properties (Tim Mobley) has pled guilty in the past for illegal campaign contributions to the Republican party which should raise red flags on this deal. It is also not clear that creating new, but empty, “beautiful houses” on these empty lots under a federal program through HUD will benefit neighborhoods when there is already an abundance of empty stock that needs its own help.
The City Council should seriously evaluate all the details of this deal. They should determine if perhaps it would be more beneficial to our local economy and local neighborhoods to return the stimulus money to the Federal government. The Federal government can then provide some tax relief and stop burdening our children with debt and our poor with inflation while the wealthy get the bailout money. The City can then work out its own property markets without causing local inflation, participating in misallocation of resources and causing unintended consequences. The goal of improving “blighted” neighborhoods is unlikely to be achieved with more rounds of government spending. The true solutions will come from true police action to root out criminals, good use of infrastructure dollars and a return to moral and family values that will help people take pride in their own neighborhood and create prosperity in an ownership society.