A few decades ago, abandoned urban property wasn’t much of an issue, since cities were in clear decline and it wasn’t obvious that anyone even wanted the land to begin with. But with the revival of downtowns (including Detroit’s!) and cities in general, the issue of derelict property is going to become a lot more embarrassing and inexcusable. Philadelphia alone has 40,000 abandoned or vacant properties, and despite Mayor Nutter’s supposed dedication to fixing Philadelphia’s blight, the Daily News doesn’t sound optimistic.
And while they acknowledge that one-quarter of these properties are government-owned, I think they downplay Philadelphia’s culpability with the half of all vacant private properties that own backtaxes. As emphasized in a Radio Times discussion on the topic of vacant properties in Philadelphia, it is the city’s job to deliver a credible threat to property owners that their land and buildings will be seized if they don’t pay their taxes. This is a basic function of government, and one with broad political support (who, besides drug dealers and the homeless, has an interest in empty buildings?) – the fact that the city is failing at it is a very troubling sign.
As usual, throwing money down the hole (the subject of my favorite Onion video) is the most popular insider solution. But despite spending almost $300 million during his eight-year term as mayor, John Street “fell far short of his goal to demolish 14,000 buildings.” The “mo’ money” approach even has intellectual backing, with a Philadelphia Fed, ironically enough, publishing a report by Alan Mallach explaining how the federal government should throw $3.92 billion (warning: PDF) at the problem. But Philadelphia’s problem is not like Detroit’s, where the property needs to essentially be rewilded – Philadelphia is not in decline, and these abandoned properties are common even in trendy neighborhoods with excellent transit coverage. I have difficulty accepting that the cost of the administrative staff necessary to seize and auction off delinquent properties should exceed the revenues from their sales, especially considering the strength of inner-city real estate markets recently. And if the bureaucratic apparatus is really so inefficient that it can’t manage such a lucrative operation profitably, or at least with the money it’s already given, then it sounds like what’s need is reform, not more money.
I couldn’t agree more with your evaluation of the city government regarding collection of back property taxes. Uncollected property taxes in Philadelphia sits around $300m. John Street’s bond-funded Neighborhood Transformation Initiative was more payback to construction/demolition contractors than an actual attempt to improve neighborhoods.
More important is the city’s inability to reassess property values. Most properties have not been reassessed since the mid 1970s so property taxes, even in trendy areas, are low enough that one can sit on abandoned properties for as long as one likes. (Under $500 per year for land in Old City). We now have two agencies squabbling and suing each other to decide who is in charge of property reassessment. The suit has already gone to the Pennsylvania supreme court but the issue is not yet settled.
The solution to dilapidated downtowns is to quit taxing buildings and instead tax the sites below the buildings. Works every time. Check out what Josh Vincent has to say on youtube http://www.youtube.com/watch?v=grJJds_G6uc
…or what the Lincoln Land Institute people say: https://www.lincolninst.edu/pubs/download-thankyou.asp?doc_id=856