Land Contract Companies Settle Lawsuits in Cincinnati Without Celebrations

New Orleans     In the more than a year that the ACORN Home Savers Campaign has built committees of owner-occupants in cities in Michigan, Ohio, Pennsylvania, Arkansas, Georgia, and Tennessee to try to force companies to convert land contracts to ownership for the occupants, to renegotiate the terms, and bring homes up to standards, others have argued that the best tactic in dealing with land contracts was through the courts.  Lead lawsuits filed in Cincinnati a year ago have now been settled and provide a template for understanding what relief is possible and what is not, so let’s see what an examination of the settlements provides for the future organizing.

The City of Cincinnati sued both Harbour Portfolio, based in Dallas, and Vision Property Management, based in Columbia, South Carolina.  The suits were based on the condition of certain properties owned by the prospective companies.  The settlements in both cases resolved various fines and assessments involving these properties.  Harbour will have to pay $125,000 to settle and Vision will be required to pay about $88,000.

Going forward the companies are required to record all properties in the future.  They are also barred from entering into any future land contracts until the city has inspected the property to determine that meet minimum code standards.  There was an attachment with a list of properties that Harbour needs to resolve.  In the Vision settlement there were four properties at issue, two of which the City agreed had already been brought up to code and were deemed approved and two that were in process.

Pretty much that’s the bottom line on the settlements.  Pay up, fix ‘em up, and go on about your business.

The one area in which the settlements are completely silent is on the issue of the land contracts themselves and their provisions.   Harbour has been a classic contract-for-deed company in most of its transactions.  After investigations and subpoenas from the Consumer Financial Protection Bureau about their business practices since contracts-for-deed are under Dodd-Frank, the company seems to largely be exiting the market, even though the CFPB has been rendered toothless at this point.  Vision is a lease-purchase-option company where owner-occupants sign an agreement with a term of seven years normally and at the end of that term have credits set aside and the option to then buy the property and refinance.

In the settlement the City and Harbour agreed that a separate disclosure would be given to Harbour occupants explaining that they were in a land contract.  In the Vision settlement the company agreed, regardless of the nature of their contracts, to comply with any Cincinnati regulations that govern the conduct of landlords with tenants.

All of this is for the good, but leaves both companies whole and intact though chastened, and leaves the nature of their contracts affirmed as legal and appropriate business models under state law in Ohio, either because land contracts are covered in the case of Harbour or the law is silent in the Vision situation using lease-purchase-options.  Efforts to amend the Ohio law in the legislature proposed by some seem to not be making much progress and lack Republican support in the bodies they control.  The Cincinnati settlement will be the benchmark by default and gives relief where there are nuisance properties, but leaves the structure of land contracts in various forms untouched, leaving the ACORN Home Savers Campaign with plenty of work to do in our efforts to push companies towards mortgage conversions and different contract and business models.

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Soccer Team Trying to Score on Cincinnati

Cincinnati        There must be something about being a billionaire that to really know you’ve made it in the big time you must have to own some kind of major league sports team so you can hang with your brothers, yes, mainly brothers, and say you’re a big leaguer too.  And, if you own a big-league team whether football, basketball, or baseball, and want to really “Jerry Jones” it, you have to build a huge, strapping stadium.  And to really get the respect of your buddy billionaires, you have to be able to sit around the clubhouse with a scotch and brag about how you soaked the suckers and got the taxpayers to carry the weight so you could collect all of the paydays.  Who knew that now applied to major league soccer in the United States as well?

Not many people, but they are finding that out now in Cincinnati thanks to the Futbol Club of Cincinnati, known as FCC locally, and its ownership group led by American Financial Group Inc. co-CEO Carl Lindner III and including Cintas Corp. CEO Scott Farmer, are the big bucks behind the ball.  The Major League of Soccer it turns out is considering expanding their league.  Yes, some of us forget that there is a major league of soccer, but that’s another story for another day.  To get a franchise you have to build or have a stadium that can hold 25 to 30,000 fans.  You also get to pay the league $150 million if you win the franchise and that seems to give the already rich a way to get even richer because it seems they get a share in the royalty of every soccer game televised in the States, including the English Premier League, the real major league of world soccer.

So now that we have the background clearer, the big news is the old story of how cities, meaning the taxpayers, get taken for a ride in building a stadium.  The controversy in Cincinnati, as I heard over and over in one meeting after another while talking to people about the ACORN Home Savers Campaign, is where to put the stadium and the cost of the shakedown.  The owners tout the fact in big letters that they would finance the $200 to $250 million to build the stadium but downplay the fact that they are trying to get tax-increment-financing which would knock off millions and millions year after year.  They had one deal in the Cincinnati suburb of Oakley where the city and county promised them $52 million in infrastructure.  They have another possible site in Kentucky, but I didn’t catch the giveaway there.  Then there is the west side location that they seem to want now that it would require tearing down a public high school stadium, relocating it, and building there.  FCC is playing divide-and-conquer on a community benefits agreement.  The school district wants taxes, and FCC is trying to nickel and dime them, as far as anyone knows.

That’s part of the problem.  No one really knows the real deal.  They have tried to roll the public authorities.  There is no transparency, and they are trying to fast track everything by the end of March, claiming that the MLS is going to decide whether Cincinnati or some other city wins an expansion team.

Unless something changes, this is not a game Cincinnati is going to win, unless they get on the field and protect the real goal of the city and citizens more aggressively.

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