Bill to restore value of sinkhole homes has pros and cons [3-20-15]

Article Courtesy of The Tampa Bay Times

By Dan DeWitt

Published March 20, 2015

The winners of the Great Sinkhole Lottery could be in line to win again. And this round of payouts would be, at least in part, on you.

Some of your tax money could also go to those bottom-feeding investors who picked up sinkhole homes for pennies on the dollar. And the repair companies, the ones that earned millions fixing holes that may not have really needed fixing? You might end up paying them, too.

It’s all in a bill, Senate Bill 404, sponsored by state Sen. Wilton Simpson, R-Trilby

Yes, sinkhole companies would benefit, Simpson acknowledged, and no doubt there is a “moral hazard” in rewarding homeowners who may have gamed the system.

But, in the long run, the payouts would help taxpayers more than it would hurt them, he said. His proposal is to make government grants and government-managed loans available to homeowners, allowing them to fix unrepaired sinkhole homes.

Restoring their value would stanch the loss of property tax revenue. It would also start to erase the taint of sinkholes on Hernando and Pasco counties and boost their appeal to home buyers and investors, bringing a bump in property values and generating badly needed revenue for law enforcement and schools.

Senate Bill 404, sponsored by state Sen. Wilton Simpson, R-Trilby, could benefit sinkhole companies as well as homeowners. The Hernando County Commission recently voted to support it.

The Hernando County Commission voted without discussion Tuesday to send a letter of support for this bill, so they apparently buy this argument.

Should they?

Maybe. There could be a genuine benefit to the bill. You might be tempted to think of it as the Sinkhole Repair Industry Relief Act. But don’t think of it as just that.

The first of the bill’s two main parts would add filling sinkholes to the list of projects that can be funded by an existing loan program that finances jobs such a replacing roofs or installing solar panels.

The money comes from private investors, but county tax collectors send out the bills and can use liens to make sure they are paid. It’s a level of government involvement that helps draw those private backers and keep rates low.

And here we’re talking about loans, the property owner ultimately footing the bill. I can’t see that anybody would have a problem with that.

But I also can’t see a whole lot of homeowners jumping at the opportunity to spend, say, $150,000 to fix a few ceiling and driveway cracks and, in the process, lose the generous tax breaks that come with owning a devalued, unrepaired sinkhole home.

So, to sweeten the pot, there’s the second part of the bill. Areas with heavy sinkhole damage — think of the map of Pristine Place that practically glows when all the sinkhole homes are rendered in bright red — can be declared blighted areas.

These neighborhoods might qualify property owners for grants from local redevelopment agencies or the Federal Emergency Management Agency. Or, in other words, from taxpayers.

If the bill passes, it would be up to the Hernando and Pasco county commissions to decide how to set up these programs, and, in fact, whether to set them up at all.

They would have to consider whether this is a self-correcting problem. (According to the Hernando County Property Appraiser’s Office, revenue losses from sinkholes are dropping steadily.)

They would have to figure out to what degree sinkholes were a real problem rather than a gravy train that was way too easy to board.

They should try to figure out how many candidates for this program really wanted to fix their homes but couldn’t because, as was sometimes the case, the cost of repairs was higher than their insurance payments.

They need to ask how many homeowners, on the other hand, were like the Pristine Place resident who proudly grabbed a $186,000 insurance settlement for repairs he never intended to make.

“Actually,” he told me in 2011, “I have a very solid house.”