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Nuisance Properties Challenge Little Rock CoffersLock Icon

6 min read

The largest city in Arkansas is working through fiscal issues inherited by a new mayor and concerns about an out-of-balance budget. Buried in Little Rock’s debits and credits is a potential pool of cash that isn’t what it seems.

On paper, the city is carrying $3 million-plus in accounts receivable from caring for private property when the owner falls down on the job.

Mowing lawns gone to pasture and removing debris from yards gone feral are two of the most common chores undertaken through municipal intervention.

How much of that debt, amassed over years, is collectible? Unknown for now. Among City Hall denizens the consensus is that most of that money will never find its way back to civic coffers. But a sizable chunk should.

City officials are trying to get their arms around how best to manage the roster of liens filed against property and convert more of those demands for payment into cash. Meanwhile, the chore of dealing with nuisance properties goes on.

“It’s a public safety, health and welfare issue,” said Shawn Overton, Little Rock deputy city attorney. “A lot of people think it’s a revenue issue, but it’s not.”

During the month of May alone, Little Rock filed statutory liens totaling more than $123,000 for work done on 95 properties around the city.

In addition to the more common cut and clean jobs on vacant lots, code enforcement efforts entailed boarding and securing “dangerous, dilapidated, substandard or unsafe structures.”

The cost to remedy climbs from the hundreds of dollars into the thousands when nuisance properties reach the point of no return and uninhabitable houses are consigned to demolition.

Two Little Rock administrators tasked with overseeing nuisance properties and city funds couldn’t be reached for comment: Victor Turner, director of Housing & Neighborhood Programs, and Sara Lenehan, director of finance for the city of Little Rock.

Amy Fields

Over in North Little Rock, City Attorney Amy Fields walks through the fair warning process in dealing with problem properties and their owners.

“What we do generally is we will send out the required statutory notices to the property owners before we do any cleanup on the property,” Fields said. “If they don’t abate whatever the problem is, we will abate the nuisance.

“After that, they’re given another notice. If they don’t pay then, we get a list from our code enforcement to certify the amount of the lien through a board resolution. Under the statute, we can foreclose or send it to the county collector, and it gets added to their tax bill.”

Using Liens as Leverage

Tom Wadley, director of code enforcement in North Little Rock, said attaching the debt via statutory lien to a property tax bill provides leverage for the city to recoup its costs through the county collector.

“They are a part of the puzzle, or we would never get any money back,” Wadley said of the Pulaski county collector.

Of the certified liens filed by North Little Rock with the county since 2009, the city annually recouped between 12% in 2011 ($11,209) and 22% in 2014 ($44,708).

Little Rock didn’t begin using the county collector route until 2012.

If the property owner doesn’t pay his property tax bill plus the lien, the clock starts ticking on forfeiture.

“If they want the lot, they pay it,” North Little Rock’s Wadley said. “If not, the property goes to the state land commissioner.”

If a property tax bill is delinquent for two years, the county moves it to the state. After two years of delinquency with the land commissioner, the property is put up for public auction.

Tom Wadley

If the property fails to attract a bid sufficient to cover the full outstanding tax bill and lien, the land commissioner can sell it in a negotiated transaction after two years.

“The land commissioner may sell a lot for $500 in a negotiated sale even though we may have a $7,000 lien on it for demolishing a house,” Wadley said. “Who’s going to pay $7,000 for a weed lot?”

Poorly maintained vacant residential lots are the most prevalent properties that draw neighborhood complaints to City Hall. Known as “weed lots” to code enforcement staff, these properties keep city mowers busy when unresponsive owners don’t step up.

Wadley estimates North Little Rock oversaw about 1,000 mowings during 2018 with crews sometimes cutting grass on a single property as often as four or five times in a year. The bar for maintaining lawns in North Little Rock is set at 8 inches or shorter. In Little Rock, the maximum is 10 inches.

Poorly maintained property is often a sign of deeper financial woes and not simple negligence.

The state land commissioner is carrying 665 properties in Pulaski County bearing more than $2 million in delinquent taxes. On this roster, the city of Little Rock has a financial claim with statutory liens on 233 properties.

The city often isn’t the only creditor looking to collect. Mortgage companies could be seeking repayment on loans, the Department of Finance & Administration might be in search of unpaid state income taxes, and the Internal Revenue Service could be looking for unpaid federal taxes.

The list of other creditors staking claims can include the Office of Child Support Enforcement, law firms, individuals, the Department of Justice and more. These sorts of additional financial encumbrances can make trying to collect on a city’s statutory lien a losing proposition.

Mixed in with the significantly troubled properties are a grab bag of collection possibilities.

Collection Efforts Criticized

Lance Levi, a Little Rock real estate investor, has expressed his frustration with the city’s lackadaisical collection efforts over the years.

“It comes down to city policy,” Levi said. “If you can get the money easily, then the city should go after it. That should be the policy. They should do a better job of trying to collect our tax money.”

For what it’s worth, Little Rock has filed nearly $575,000 worth of certified lien claims with the county collector for the 2018 tax year. That’s more than five times as much compared with any of the past seven years.

For tax years 2012-17, Little Rock’s collection rates on certified liens filed with the county collector ranged as high as 36% in 2014 ($9,890) to as low as 18% in 2013 ($15,767).

Billy Roehrenbeck, owner of Pulaski County Title Co., was invited to brainstorm with city officials and citizens to figure out a better way to deal with the mountain of receivables.

“The real challenge is organizational and training,” Rohrenbeck said. “The city has to figure out how to triage and categorize the liens and use public records to better determine what’s collectible and what’s uncollectible.”

The foreclosure option hasn’t been a politically favored route to collect on nuisance properties. Overton, Little Rock deputy city attorney, estimates foreclosure costs at $4,000-$5,000, which could present a throwing-good-money-after-bad scenario if the city’s lien is behind a line of creditors.

“Since I’ve been here, we have not foreclosed on anybody,” said North Little Rock’s Wadley, now in his 19th year with the department. “A lot of these are vacant properties with absentee owners.

“For the people who are paying their property taxes, we collect from them with liens filed with the county collector. As a steward of the people’s money, you have to try to collect what you can.”

Liens for City Work Attached to Annual Property Tax Bills

Little Rock

Tax Year Properties Amount Owed Paid Unpaid Properties Owed & Outstanding
2018* 151 $574,741.64 $25,748.28 * *
2017 355 $101,912.92 $24,053.82 263 $77,859.10
2016 348 $102,936.37 $22,629.09 256 $80,307.28
2015 356 $106,355.36 $28,147.30 259 $78,208.06
2014 106 $26,802.90 $9,890.82 66 $16,912.08
2013 190 $87,860.90 $15,767.00 132 $72,093.90
2012 149 $32,855.90 $7,712.97 111 $25,142.93

North Little Rock

Tax Year Properties Amount Owed Paid Unpaid Properties Owed & Outstanding
2018* 373 $308,417.15 $25,849.10 * *
2017 402 $227,847.74 $38,698.39 287 $189,149.35
2016 366 $191,160.09 $26,176.50 268 $164,983.59
2015 353 $176,338.64 $27,972.05 261 $148,366.59
2014 298 $196,590.37 $44,708.52 200 $151,881.85
2013 25 $164,420.22 $28,449.49 178 $135,970.73
2012 223 $181,809.12 $27,823.01 148 $153,986.11
2011 182 $92,801.96 $11,209.55 9 $81,592.41
2010 169 $67,474.90 $9,160.75 116 $58,314.15
2009 133 $91,616.31 $15,819.95 96 $75,796.36
2008 78 $14,854.26 $5,739.51 44 $9,114.75
*Property taxes aren’t due until Oct. 15.
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