More is owed in Montgomery County than in Hamilton County, or even in Franklin County, though both are much larger in population. Montgomery County property owners went from owing $73.5 million in delinquent property taxes in 2008 to $168.9 million this year, according to data from the Ohio Department of Taxation.
The 130 percent increase is more than double the increase statewide, and is behind only tiny Meigs County for Ohio’s highest percentage change since the height of the recession.
The troubling increase comes too as some counties — such as Warren and Butler — recorded decreases in the amount owed during that span.
Thomas Traynor, department chairman and professor of economics at Wright State University, said the increase in delinquencies in Montgomery County is at least partly a result of the Great Recession, which started in 2007 and officially ended in 2009.
“The recession clearly reduced ability to pay relative to other years,” Traynor said. “In 2007, we had 403,400 workers in the Dayton metropolitan statistical area, and now we’re just under 380,000. So that’s pretty far from recovery, and that certainly does have an effect on the ability to pay property tax.”
Real estate analyst Doug Harnish, principal of Market Metric$, said the Dayton region was built as more of a manufacturing hub than most Ohio cities. While many of those jobs went away over time, the factories and houses remain, leaving behind a huge stock of delinquent, abandoned properties.
To reduce the delinquencies, said Harnish, the housing and industrial stock that is sitting empty will have to either be demolished or put to reuse so that it fits with the structural change taking place in the economy.
“But it will probably take many years and deliberate effort to turn around,” he said.
Large ‘tumble’
Montgomery County’s percent growth in delinquencies during the seven years was highest of the 10 largest counties in the state. Cuyahoga County led the state in total delinquencies, but its percent growth during the period studied was 110 percent — 20 points lower than the Montgomery County percentage.
On the other end, Butler and Warren counties led the state in decrease of real estate tax delinquencies from 2008 to 2014. Butler County’s delinquencies shrank during the period by more than $7 million, or 18 percent. Warren County came in second with a decrease of just over $1 million or 7.7 percent.
One of the reasons Butler County looks better in the delinquency data is that some of its worst economic blows came before the recession, said Thomas Hall, professor of economics at Miami University.
“The Hamilton-Middletown area had already gotten a lot of their bad economic news before the recession hit,” Hall said. “The closing of many businesses in Hamilton and the downsizing of the AK Steel plant in Middletown, the really serious economic problems in Butler County predated the recession.”
In comparison, Montgomery County’s bad news — led by GM’s Moraine Assembly plant closing in 2008 – came during the depths of the recession.
“My guess is Montgomery County took a larger tumble in economic terms than Butler County did as a result of the recession,” Hall said.
In addition, he said, Butler and Warren counties have strong economic ties to the Cincinnati metropolitan area.
“And the Cincinnati metropolitan area is actually doing fairly well during the last few years,” Hall said.
‘A lot of people lost their homes’
Dayton’s current problems have roots years in the past, said Sam Braun, finance manager at the Montgomery County Auditor’s office.
“A lot of it is because of what happened with the (housing) boom and the bust. A lot of people lost their homes, so speculators have moved in,” Braun said. “That’s some of it. You combine that with the fact that you had a lot of white flight in the ’80s and ’90s, and that emptied out a lot of areas and led properties to cycle through to slumlords and flippers.”
Braun said Montgomery County’s land bank is working to get control of many properties in that situation — some to tear down, some to rehab — but he said those efforts take time.
Eric Sells, delinquent tax supervisor for the Franklin County treasurer, said some of the decline in delinquency in his county came from backlogged cases finally being cleared off the books.
While an owner is contesting the value of their property, or applying for a tax exemption as a nonprofit, they often pay taxes based on their proposed lower value, while the Board of Revision hears their case. The difference between the stated tax and what they’re paying during the case shows up as delinquent until the case is resolved.
“I think some of our drop is related to that,” Sells said.
Meanwhile, Cleveland’s increase reflects the financial distress that has impacted the state’s largest metropolitan area, said Claudia Coulton, professor of urban social research at Case Western Reserve University.
Most homeowners fall behind on their property taxes because of job loss, medical bills or falling earnings, she said. But the Cleveland area also has seen another, more cynical factor at work, she said: “out of state speculators buying up foreclosed properties at cheap prices, but then not paying taxes.”
“I can’t say how much this is happening in Montgomery County, but that happened big time in Cuyahoga County,” said Coulton, who is the co-director of the Center on Urban Poverty and Community Development.
Properties were foreclosed on, taken back by the banks, and then sold at a fraction of their last sales price at sheriff sale. That’s a scenario familiar to Montgomery County’s urban real estate market as well.
“Investors, especially out of state investors, have purchased (abandoned houses) sight unseen or in bulk,” Coulton said. “That’s been a problem then of them not paying the taxes.”
Coulton, whose center has studied the problem, said there could have been several reasons behind the delinquencies.
“It could be they bought the property not knowing what they were going to do with it and then, as they got deeper into it, decided it was kind of worthless,” she said.
“There may have been unscrupulous things going on. Probably each case is a little different, but this pattern of investors buying up properties and then them going tax delinquent, we’ve seen that in Cleveland.”
Collection chances: ‘About zero’
Ohio Department of Taxation spokesman Gary Gudmundson said county-by-county comparisons of the tax delinquencies should be fair, as all counties report their data on the same form.
But Montgomery County Chief Deputy Treasurer Paul Robinson mentioned some approaches that could differ by county.
As part of its total, Montgomery County lists $49.4 million in delinquent special assessments, much higher than every county except Cuyahoga. That category can include many things, from a fee for streetlights or sewer service to mowing or demolition charges for abandoned properties.
Braun said the two highest delinquent assessment categories in Montgomery County are $12 million for demolition and $11 million for mowing vacant properties, largely in the city of Dayton.
Robinson said the chance of collecting those assessments is “about zero.”
“If we don’t collect a delinquent tax within three years, the rate of collection falls off,” Robinson said. “We try to focus on those first three years.”
‘Nobody’s going to buy it’
Some of Montgomery County’s unpaid tax debt stems from long-term delinquent properties, such as the 38-acre former Dayton Tire site on West Riverview Avenue. A company called JV Properties owes almost $7 million on the property, records show.
But JV walked away three decades ago, and Robinson said the site may have environmental issues and is not really viable today.
“The treasurer could foreclose on that property,” Robinson said. “If it goes to a sheriff’s sale, I think you and I both know nobody’s going to buy it. Then it forfeits to the state of Ohio and the delinquent taxes get wiped out. … But we didn’t solve the problem.”
Robinson said Montgomery County could lower its delinquency totals by following that pattern on numerous abandoned industrial sites, but each tax foreclosure would cost $2,000 to $5,000.
“We’d be spending money and have nothing really to show for it,” he said. “It would look great (on the chart), but it’s not so helpful.”
Robinson said Montgomery County’s focus is more on areas where it can produce revenue.
“(JV Properties) is not really a delinquency that we focus on,” he said. “Does Montgomery County have more of those type of sites than other counties? I don’t know that. We might have more intractable parcels – harder problems to solve.”
What the state data suggests is that the recession has lingered longer in some areas than in others, and where the housing crisis hit hardest, such as in Dayton, the recovery has been slower to take hold.
“We know that Dayton and Cleveland were hard-hit by the mortgage issues,” Robinson said. “Everybody has a different opinion on whether it was the banks’ fault or the owners’ fault or somewhere in between, but the outcome is pretty much not in dispute.”
Staff Writer Cory Frolik contributed to this story.
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