Last month WYSO reported that an Illinois-based hedge fund had purchased about one in eleven homes in the town of Huber Heights. The company made national news by asking Montgomery County to reduce its property taxes by over a million dollars. Now the results are in—and they weren’t as hard on the local budget as expected.
Like any city or town, a lot of Huber Heights’ revenue, especially for the schools, comes from property taxes, which depend on values assessed by Montgomery County. Property owners can contest those values, and that’s what Vinebrook Properties, a rental company backed by the hedge fund Magnetar, attempted this year.
What’s unusual with these reassessments is that the company contested the value of hundreds of homes at once. In January Vinebrook, with Magnetar’s investment money, purchased 1500 homes in Huber Heights (and about 400 more in other places) from the Huber family, long-time landlords in the area.
According to the county auditor’s office, the board of review has considered reassessments on 818 homes since the company made the request in April. Vinebrook withdrew 257 requests after completing its own appraisals, and the auditor’s office found no changes were needed on the majority of the remaining homes. In the final tally, values were assessed down on 239 homes, at a cost this year of $183,736 to the city, much of that coming out of the school budget.
“We’ve already made reductions of around 14 and a half million dollars,” said Sue Sue Gunnell, Huber Heights school superintendent. She was concerned about the reassessments because failed levy attempts and state budget cuts have already put the district in dire straits. “It was just one more piece that was impacting our ability to efficiently provide services to our students.”
The final number, Gunnell says, is a relief, a drop in the bucket compared to what it could’ve been.
Dan Bathon, the head of Vinebrook, says tax reassessments are just a part of the business.
“I intend to put that money and much more back into the houses and into the community, he said. “So that as time goes on you’ve got a better home, which hopefully attracts great tenants who have wonderful children that want to go to the schools.”
In theory, the higher values will benefit the schools and the community as a whole in the long run. But as prices rise, Bathon also concedes some people could eventually be priced out of the Huber Homes, currently a decent low-income rental option in the Dayton suburb.
Property values in Montgomery County have declined since the recession, making purchases like the Huber Homes cheaper for investors. At the same time, Magnetar, the investor behind this giant home purchase, is known around the country for its role in packaging mortgage deals that led to the financial meltdown, while also betting against their success in the markets. Now the fund is joining a national trend of investors capitalizing on the booming rental market.