What is the solution to so many vacants?

[Pav]

Just recently my municipality has amended it's vancant property registry requirements and instituted regorous penalties and fines for those who do not comply:

•vacant property owners must submit a vacant building registry application for each vacant property they own and they must provide the contact information for the party in charge of the building
•owners must describe the premises and how they have secured the structure from public access
•owners must maintain at least $300,000 in liability insurance for 1 & 2 unit buildings and $1,000,000 for other buildings
•registration must be renewed annually. This fee can be waived if the owner decided to restore the property, of which, they must submit plans
•any owner who fails to comply faces civil penalties between $500 and $1,000 per day the violation continues

There are over 700 abandoned or vacant properties in the city, which only 4.8 sq miles. Many of these vacants are confined to a few city blocks. These news rules are a direct result of owners of vacant properties doing nothing (either banks or private owners). These owners have no plan to rehab or demolish these buildings, because it is probably cost prohibitive (esp due to lead paint and asbestos abatement/removal). They’re just passively waiting/hoping for values to increase (not currently listed for sale or viable to rent). They say it is too expensive to rehab, too expensive to demolish, and, now, too expensive to pay insurance/vacant registry fees. Or if it is habitable, taxes and utilities make it too expensive to maintain.

 If the city, owners, and banks don’t have the resources to solve the issue, who does? How do you solve the issue of a property (or properties) that’s after-improved-value is still less than the resale value? Any mustachian proposals?

[ShoulderThingThatGoesUp]

Sometimes there are simply more buildings than demand, especially in a high-cost, low-growth area like northern New York.

That said, it drives me nuts to see stories like this one where zoning stops a vacant, useless property from something somebody actually wants to do with it. Parcel-by-parcel zoning is unnecessary and damaging.

[waltworks]

Either prices/demand will recover, or eventually nature will take them back.

-W

[Another Reader]

Although the reasons are different, these cities are becoming mini-Detroits.  The lenders won't foreclose, because they don't want the liability, and the owners won't or can't pay the fines.  You want to revive these cities?  Reduce your property tax to zero in the target areas and provide revitalization incentives.  Or go through the public purpose condemnation process, pay the "fair market value" of approximately nothing and bulldoze the buildings.

[arebelspy]

Although the reasons are different, these cities are becoming mini-Detroits.  The lenders won't foreclose, because they don't want the liability, and the owners won't or can't pay the fines.

Agreed.

Or go through the public purpose condemnation process, pay the "fair market value" of approximately nothing and bulldoze the buildings.

Why do that when the cities can just pass laws as described in the OP, have the properties rack up enough in fines for the people to just turn them over to the cities, where they get them for free?

[ShoulderThingThatGoesUp]

Cities getting the land is not always a good solution. Look at this map of government-owned parcels in Philadelphia, many of which are vacant and/or derelict. All the tiny green and red parcels are owned by the city. Philadelphia has 40,000 vacant properties.

[arebelspy]

Cities getting the land is not always a good solution. Look at this map of government-owned parcels in Philadelphia, many of which are vacant and/or derelict. All the tiny green and red parcels are owned by the city. Philadelphia has 40,000 vacant properties.

Who said it was?  That is often what is happening though, as evidenced by the rest of your post.  :)

[Pav]

The original city in question already has a list of 200 city owned properties/parcels. They have a 50 page pdf with pictures of each available property on their website.

It seems counter intuitive for a city to try to acquire valueless vacant properties, as it does not have the resources (or authority?) to rehab them. And it's expensive for a city to demolish entire neighborhoods. Although this city tried that form of "urban renewal" in the 1960s. It did little to increase homes values or tax base.

They're best hope is to get them back on the tax rolls with occupancy. Again, we run into the after-improved value < rehab costs + purchase price (even if purchase price = $0).

I would guess that the city is acquiring the properties for free/fee/tax liens in the hopes of selling them for profit to rehabers or developers, right? Anyone ever see this tactic work successfully?

[ShoulderThingThatGoesUp]

Cities getting the land is not always a good solution. Look at this map of government-owned parcels in Philadelphia, many of which are vacant and/or derelict. All the tiny green and red parcels are owned by the city. Philadelphia has 40,000 vacant properties.

Who said it was?  That is often what is happening though, as evidenced by the rest of your post.  :)

I guess nobody did.

[arebelspy]

Cities getting the land is not always a good solution. Look at this map of government-owned parcels in Philadelphia, many of which are vacant and/or derelict. All the tiny green and red parcels are owned by the city. Philadelphia has 40,000 vacant properties.

Who said it was?  That is often what is happening though, as evidenced by the rest of your post.  :)

I guess nobody did.

Probably the city officials. 

[theoverlook]

These owners have no plan to rehab or demolish these buildings, because it is probably cost prohibitive (esp due to lead paint and asbestos abatement/removal). They’re just passively waiting/hoping for values to increase (not currently listed for sale or viable to rent).

And the values won't increase why? Because there are so many vacant and run down properties. Oh, the irony!

[Pav]

Yeah, it's very obvious of the cyclical problem. It seems like there are generally a few schools of thought here:

1)

Reduce your property tax to zero in the target areas and provide revitalization incentives

Let the city (or state or federal) government subsidize the rehabilitation via grants and tax breaks. This is a tough sell to a municipality that has budget issues. (Also downcast as the progressive, tax-burden shifting approach)

2)

Or go through the public purpose condemnation process, pay the "fair market value" of approximately nothing and bulldoze the buildings.

Let the city (or someone) demolish the largely vacant, low income neighborhoods. (Downcast as the fascist approach : urban renewal)

I often also hear #1 combined with:

3) Jobs! If the residents only had a place to work, they'd be able to pay decent rent or become responsible proud home owners of flourishing revitalized neighborhoods. We should incentivize small businesses, light manufacturing, etc to move to town with government subsidized tax breaks.

All three of these options seem to have some flaws. At the very least, they involve some form of investment by the city. What options truly have the best vision and sustainability? I'd be very interested in a City's case study being brought to the mustachian table.

[ShoulderThingThatGoesUp]

Allentown, PA is trying an interesting approach. The state of Pennsylvania set up a tax finance zone in center city Allentown, where all taxes except city and school district ones go to the developer instead of the government for a period of time. It's working in the sense that substantial construction is taking place and the area certainly looks nicer, but the government certainly hasn't broken even on the zone yet. More construction is planned, so it will be interesting how this progresses over the next decade.