How vacant and foreclosed properties are costing taxpayers:
This is the heart of the issue for local government. Vacant land and buildings not only drain value and reduce revenue, they require government action, and thereby increase expense. Derelict buildings and abandoned property exert a significant drag on local economic and fiscal health. They heighten the need for fire safety and police services, code enforcement, property maintenance, and demolition while damaging the quality of life and the value of surrounding properties. A recent Philadelphia study found that vacant properties can reduce neighboring property values by as much as 20 percent. The study calculated that such properties have resulted in a loss of $3.6 billion in housing wealth in Philadelphia, costing millions in lost property tax revenues. And the city is spending over $20 million each year to maintain vacant properties, a huge sum at a time of intense fiscal stress for local government.
That’s from a new Brookings paper on how cities can manage vacant land and foreclosed properties. The owners of vacant land and blighted properties impose significant costs on their neighbors and taxpayers. They should have to pay for it.
Philadelphia is looking at land banking to deal with this. Candidates for local government should be very interested in this issue. Cracking down on blight will produce more property tax revenue, meaning fewer teacher layoffs.
So let's see if I have this right – someone owns a vacant lot. In today's climate, they make the right decision and not build. Bank financing is impossible to get, amazingly difficult to get good tenants, etc.
And you want to punish them.
Just because a lot is vacant doesn't mean it's blighted, or not being taken care of.
Oh, and you also want the government to dictate development.
Nice thought there comrade.
It's not about punishing people – it's about making them internalize the costs that are currently being paid by their neighbors in reduced property values.
Blighted properties reduce values around them, true. Vacant lots that are cared for do not.
And using the tax code to punish someone for making the correct economic decision is just stupid. Once you start using tax policy to force bad decisions, you end up with problems. Just look at Washington (Clinton, Dodd and Frank) using the CRA to force home ownership – didn't work out too well there either.