Virginia’s vacant buildings: what’s stopping the free market? Part 1

This is a guest post by Lane Pearson. Lane works as an attorney and urban planner for the Better Housing Coalition’s Center for Neighborhood Revitalization. He lives in Richmond Virginia.

Lane Pearson

Vacant, blighted buildings are more than just eyesores. On a fundamental level, blight is a signal of disinvestment in a neighborhood, and can quickly create a domino effect. The presence of blight in a community erodes tax revenues, decreases property values, and threatens the health, safety and welfare of neighbors.  The hazards they create pose a myriad of problems, which result in a disproportionate cost to local fire, police, building, and health departments.

Here in Richmond there are roughly 2300 vacant buildings.  Although not all of these have building code issues, a survey of city neighborhoods illustrates the pervasiveness of the problem of blight.  A few years ago the City of Richmond conducted an analysis of citywide crime data, and of all of the economic and demographic variables studied, vacant properties had the highest correlation with the incidence of crime.

This problem is not unique to Richmond.  A study from Philadelphia found that houses within 150 feet of a vacant property experienced a net loss of $7,627 in value.  A study from Austin, Texas found that blocks with unsecured vacant buildings had 3.2 times as many drug calls to police, 1.8 times as many theft calls, and 2 times the number of violent calls as blocks without vacant buildings.

While demolition is a short-term, and in some cases necessary, solution, the long term effects on neighborhood stability and the tax-base of a locality make it an inferior alternative to rehabilitation.

Under Virginia law, localities have several tools that can be used to address blight.  Owners of vacant buildings can be cited for code violations and taken to court if the violations are not resolved.  Buildings with unsafe structural conditions can be boarded up, stabilized, or demolished in whole or in part by localities.  If the property owners are not paying their property taxes, the locality can foreclose on the tax lien and sell the property at tax auction.  In particular cases, the locality can, using eminent domain power, seize a building through the Spot Blight Abatement process.

The problem with these tools is that when a property owner is unwilling or unable to repair a vacant building, implementation of these tools in a manner that results in renovation and repair can be excruciatingly slow. The tax sale process, for example, is often backlogged due to the sheer number of tax-delinquent properties and the limited resources localities can devote to enforcing the tax liens.  Code violations have relatively minor penalties, and are particularly ineffective when the property has been abandoned and the owner cannot be located.  The Spot Blight Abatement process is a useful tool, but it is so demanding of the time and resources of a locality that it is only used for specific, high-profile blighted properties.  Moreover, the Spot Blight Abatement process takes years, and the blighted condition of the building is not addressed until after it the entire eminent domain process has played out.

Additionally, in Spot Blight Abatement proceedings, once eminent domain has been authorized, a property’s fate is sealed, and it is simply a matter of procedure before the property is seized and the owner compensated.  Since these properties are, by definition, very deteriorated, the just compensation due to the property owner is less than what the owner would receive if the property were repaired and sold in habitable condition. That is a significant reason why the free market isn’t able to solve our vacant property problem in Richmond. A process that gives property owners the ability to recoup more value from their property could make a big difference. I’ll discuss that in a future post.

(Part 2 to follow)

Advertisements

One thought on “Virginia’s vacant buildings: what’s stopping the free market? Part 1

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s