LOUISVILLE, Ky. (WDRB) --  In 2004, the house at 3511 Hale Avenue in the Chickasaw neighborhood became so run-down that Louisville Metro demolished it at taxpayers’ expense.

Long abandoned by its owners, the Hale Avenue property continued to languish for more than a decade as a vacant, overgrown lot. City crews visited it more than 30 times in 10 years to cut the weeds and remove trash. Thousands of dollars in liens were filed against the property, likely more than its market value.

Today it looks much different. The paint is drying on a modest, 3-bedroom shotgun house that Habitat for Humanity of Metro Louisville just built on the lot this spring.

Tony Butler, a 30-year-old stock worker at a local Save-a-lot grocery, stands in the kitchen and imagines looking out on his kids playing in the backyard from the window above the sink.

Butler will soon move into the home with one of his sons – and he hopes to take good care of the property for decades.

“It was a great opportunity for me and my family, to own my own home,” he said.

The once-abandoned lot on Hale Avenue almost certainly would have remained an overgrown nuisance – like thousands of others in west Louisville – were it not for a four-year-old city effort to return the worst abandoned eyesores to productive use.

In 2012, Metro government began filing foreclosure cases on long-vacant houses and lots like the one on Hale Avenue, and now the effort is beginning to show at least a handful of results.

Taking absentee owners to court costs taxpayers at least $1,400 and takes a year or two – sometimes longer.  But for neglected homes with far more liens filed against them than their market value, it’s the only way to get the property into different hands.

“The boarded houses that you see in the neighborhoods, Louisville Metro does not have direct control over,” Jeana Dunlap, the city’s vacant property administrator, told a Metro Council panel last month. “We are cutting the grass, we are boarding the entry ways, we are removing junk, we are dealing with animals and squatters -- but we do not have site control to make those homes available to people that want them.”

Since the initiative started in 2012, Louisville Metro has filed 355 foreclosures against absentee property owners, according to the Jefferson County Attorney’s Office, which handles the cases.

According to Dunlap’s office, 112 properties have been sold at foreclosure auctions in the last two and a half years. About half of those sales were to private bidders like rental property investors and nonprofit builders like Habitat; the other half went into the city’s land bank, a holding place for properties awaiting a developer.

The city-led foreclosures have been predominantly in west Louisville, which has the highest concentration of blighted houses and lots. More than half of the cases have been in Portland, Shawnee, Russell, Park Hill, Chickasaw and Parkland.

INTERACTIVE MAP -- Current Louisville Metro foreclosure cases (Expand map in new window).

Despite results like the Habitat house, it’s unclear whether the foreclosures have put a dent in the city’s overall problem with blight. Louisville has about 8,200 vacant and abandoned properties, a figure that hasn’t changed much since Mayor Greg Fischer launched a number of efforts to combat the program upon taking office in 2011.

Cathy Hinko, director of the Metropolitan Housing Coalition, said the foreclosure initiative is an example of the city being “clever about doing what they can.”

“But because they have to do it that way, the number of properties they can do anything with is small,” she said.

The 355 foreclosures filed at this point is also far short of the 800 cases that Fischer said the city would bring at a press conference in July 2012 – when the mayor and former Attorney General Jack Conway committed $750,000 of Kentucky’s share of the National Mortgage Settlement to the program. Fischer also put $125,000 of city money to the effort in the 2012-13 budget.

Despite the lower volume of cases, the city exhausted the mortgage settlement money late last year, said Dunlap, who heads Louisville Metro’s Office of Vacant and Public Property Administration.

Dunlap said the mortgage settlement funds were also used for demolitions on blighted homes and that it turned out to be more costly than originally estimated to follow through with foreclosure cases.

For example, the city sometimes has to pay off tax lien investors at foreclosure auctions to acquire a blighted home and get it into the land bank.

“Really at the beginning of the process we didn’t know what it would take to close out a foreclosure case,” she said in an interview last week.

Dunlap said it will take Metro government funding to continue the program, though she could not say how much is needed or how many more foreclosures cases the city plans to bring.

“Rather than set a large arbitrary goal or number, what we are trying to do is look at a neighborhood, block to block (and) find all the vacant/abandoned properties that are in that block, in that neighborhood and have a prescription for every one of them,” she said. “We’re hoping we get visual, tangible results on a block by block basis.”

The foreclosure program got off to a rocky start, as WDRB reported in March 2014, as the Jefferson County Attorney’s Office was not prepared to prosecute the cases and many sat dormant in the court system.

Today, “We feel like we’ve gotten better. We have made significant inroads to speed that time up,” said Matt Golden, chief of the County Attorney’s civil division, which has even hired outside lawyers to handle some of the foreclosure cases.

Capital investment still needed

Just because the city forecloses on a vacant home does not always mean there is an investor chomping at the bit to spend tens of thousands of dollars fixing it up or building a new house.   

In 54 of the 112 foreclosure sales, Metro government ended up taking title the property, typically because there was no third-party bidder at the court auction. The city then maintains the lot or house in hopes of finding a private investor to take it over.

City-owned house at 1910 Baird Street in PortlandFor example, aboarded up house at 1910 Baird Street in Portland (right) has been sitting in the city land bank, with a clean title for redevelopment, since Metro government acquired it at a foreclosure auction last June.

A city crew came by Thursday morning to cut the grass, neighbors said.

“It needs to be either fixed up or torn down,” said Harold Ervin, a 49-year-old self-described military veteran who lives two doors down. “It’s been settin’ there like that.”

But a quarter-mile away on Bank Street, it’s a different story.

The shotgun house at 1837 Bank Street was one of the city’s first foreclosure cases, filed in October 2012.

For more than a year, the house sat in the city’s land bank. Then, Artist Row Portland – the investment group led by Louisville developer and businessman Gill Holland – bought it for $2,500 in March 2015.

“1837 was one of the two worst properties on that street,” Holland said in an interview. “When a building like that is falling down, it’s driving down property values for everybody else, not to mention dis-incentivizing future investment.”

After a renovation Holland estimated at $75,000 to $80,000, the one-bedroom house is now rented out for $650 month.

“It’s a good thing; you’re taking out the bad and bringing in the new,” said William Riggle Jr., who is remodeling a house once owned by his grandfather just across Bank Street with intention of living there. “That’s how it should be.”

Holland, who is also running for Metro Council in northeast Louisville’s District 17, argues it’s worth a few thousand dollars for the city to take action on dilapidated homes.

Returning them to use raises property values, which raises taxes, and provides paying customers for public utilities like the Louisville Water Co. and Metropolitan Sewer District, he noted.

“Some of these properties – there’s like 13 owners. They might not even know they own the property because somebody died. They certainly don’t care about it,” Holland said. “At some point, you’ve got to take it over.”

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