By all accounts, Roanoke Rapids Planning and Development Director David Wise said, “Vacant properties are a curse.”
He told the council during its work session Tuesday, “Vacant properties are an expense that local governments simply cannot afford — and that expense grows every year a property remains vacant or abandoned. Such properties produce no to little income but they do require plenty of time, attention and money.”
His report on what he called red properties in the city came out of a request from Councilman Carl Ferebee for a survey of property in the historic district.
Besides going over a list of abandoned properties, he gave council a rundown of the problems they create.
“Vacant properties often become a breeding ground for crime,” he said, “tying up an inordinate amount of police resources.”
He said an analysis conducted in Richmond showed that vacant and abandoned properties had the highest correlation to crime.
Richmond’s Neighborhoods in Bloom program resulted in a dramatic drop in crime rates. “Seven of Richmond’s neighborhoods were identified to restore physical livability and improve neighborhood stability, tracking everything from code enforcement to increasing home ownership rates.”
In the first three years of the initiative, Wise said targeted neighborhoods experienced a 19 percent reduction in crime compared to a 6 percent reduction citywide.
“The city of Richmond invested the majority of their Community Development Block Grant and HOME Investments Partnerships Program funding,” he said. “Capital improvement funds and other resources were allocated to these neighborhoods until they achieved the critical mass of public investment needed to stimulate self-sustaining private market activity.”
Arson and “accidental fire”
The United States Fire Administration reported that more than 12,000 fires are in vacant structures and result in $73 million in property damage a year. “Fires are likely in vacant properties because of poor maintenance, faulty wiring and debris.”
In the winter months the homeless burn candles for light and heat. “But more importantly, vacant buildings are a primary target of arsonists.”
More than 70 percent of fires in vacant or abandoned buildings are arson or suspected arson, he told the council. “Such fires strain the resources of fire departments because vacant buildings often contain more open shafts, pits and holes that can be an invisible threat to firefighters.”
The cost of fighting those fires is more than financial, Wise said. “The National Fire Protection Association estimates more than 6,000 firefighters are injured every year in vacant or building fires.”
Public nuisance and health
Vacant and abandoned properties require a disproportionate amount of public maintenance, he told the panel. “In addition to securing buildings against criminal activity, local governments must clean and care for them to prevent a build-up of trash, illegal dumping, and rodent infestations.”
Demolition does not eliminate the costs associated with abandonment. “The resulting vacant lot still requires maintenance. Managing vacant properties ties up the time of municipal employees and the resources of municipal taxpayers. Additionally, these properties depress the value of other properties and generate little or no tax revenue themselves.”
Decreased property values and tax revenues
Vacant properties reduce city tax revenues in three ways:
They are often tax-delinquent
They generate little in taxes
They depress property values across an entire neighborhood
Frank Alexander, interim dean and associate professor at the Emory University School of Law reports that the “failure of cities to collect even 2 or 4 percent of property taxes because of delinquencies and abandonment translates into $3 to $6 billion in lost revenues to local governments and school districts annually. Property tax remains the single-largest source of tax revenue under local control so this loss is substantial.”
Lost tax revenues
Taxes are often lost on vacant properties because of delinquency. “Abandoned properties often become vacant because the cost of paying taxes on the property may well exceed the value of the property.”
Said Wise: “Tax forfeiture is a common fate for vacant and abandoned properties — ownership is transferred to municipalities which try to recover the lost taxes through the sale of the property.”
The sales can become problematic for several reasons.
Gaining a title is a long and difficult process. Once the title is obtained, cities often auction delinquent properties for the amount of the tax lien but reclamation of all the lost taxes is not guaranteed. “Where cities have tried to recover delinquent taxes on parcels where homes have been demolished, not only are they not able to recover the taxes, but typically the demolition itself was costly.”
While sales taxes can provide a source of income, they do not ensure that the abandoned property will be put into productive use. “Sometimes these properties are purchased by speculators without any intent to restore them and the process fails to assemble marketable parcels of land.”
Lower property values
In addition to generating little in taxes, Wise said, “they rob the surrounding homes and businesses of their value.”
He cited a study in Philadelphia that showed houses within 150 feet of a vacant property experienced a net loss of $7,627 in value.
Properties within 150 to 300 feet experienced a $6,819 loss and those within 300 to 400 feet experienced a loss of $3,542.
That study also showed that houses on blocks with abandonment sold for $6,715 less than houses on blocks with no abandonment. “These lower property values represent a hit in the pocketbook for both homeowners and the city. A city that develops a focused effort to bring vacant properties back can restore value and taxes for the city.”
Cost to homeowners
There are many costs to homeowners living in a neighborhood with abandoned properties. “When neighborhood populations decline and property becomes vacant, a smaller number of residents bear a greater proportion of the city’s tax burden.”
This fact is particularly relevant to lower income neighborhoods, Wise said, as well as among residents without the resources or desire to leave those neighborhoods. “Additionally, there are other less-measured costs of owning a home in an area with vacant properties — costs that are both fiscal and psychological.”
Higher insurance premiums
The proximity of vacant and abandoned properties makes obtaining homeowner insurance, mortgages, and loans for home improvement more difficult, Wise said in the report. “Insurance companies are informed about what is going on in neighborhoods. This can mean increased premiums or even policy cancellations for those owners living near vacant or abandoned properties.”
There are a number of variables involved in the setting of premiums and many insurance companies hold the underwriting manuals to be proprietary. “The presence of high hazard property, which also includes condemned properties within 40 feet of a solid masonry building and 100 feet of a non-masonry building would lead to cancellation or non-renewal.”
Poorer quality of life
“With abandoned buildings comes social fragmentation,” Wise said. “Individuals who live in communities with an increasing number of vacant buildings begin to feel isolated, weakening the community.”
He said vacant buildings in neighborhoods symbolize that no one cares, increasing the likelihood that property values will continue to decline and that further abandonment will occur. “Vacant properties are out in the open for all to see and the aesthetic impact of abandoned properties, while not easily quantified in dollars, is another cost.”