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C H A P T E R 1 0 Tactical Options for Stable Properties Frank S. Alexander All cities face a constant challenge of confronting deterioration of vacant, abandoned, and substandard properties. The costs of neglect—promulgated by these vacant, abandoned, substandard, or tax-delinquent properties—are real; while these burdens have long been apparent, in recent years the costs of neglect have been empirically demonstrated and verified, and they are large. To stabilize a city’s real property, these external costs must be internalized . This problem is complex, and no single approach will solve it. Each city needs a range of options tailored to its specific inventory of neglected real property. In addressing the costs of abandoned properties and the possibilities of rebuilding communities, state and local governments have begun to use five tactical options. Each takes a slightly different approach, and each is based upon differing assessments of the local government capacity, the market dynamics, and the structural barriers. The five options are (1) property tax foreclosure reform, (2) housing and building code enforcement, (3) vacant property registration ordinances, (4) vacant property receiverships, and (5) mortgage foreclosure reforms. Land banks and land banking programs are additional structural options that, when used, can and should be closely tied to one or more of these five tactical options (Alexander and Powell 2011). This chapter discusses these options. 190 Frank S. Alexander The Problem Properties To design an effective solution, the problem must be clearly understood. Vacant, abandoned, and foreclosed properties are “problem properties” for most neighborhoods and local governments—but those neighborhoods and governments may find the properties problematic for different reasons. Years before the Great Recession took hold, Paul Brophy and Jennifer Vey identified the ten key steps to urban land reform; at the top of this list is the importance of knowing the inventory (Brophy and Vey 2002). If an inventory of property is imposing external costs on a local government, what are those costs, and why are they tolerated? Properties that are significantly delinquent in the payment of property taxes impose the most obvious and direct public cost in the form of lost tax revenues. This may well be due to the complexity of a nineteenth-century tax foreclosure system that makes little legal or economic sense in the twenty-first century (Alexander 2000b). However , not all vacant properties impose external costs, as not all vacant propertiesaretaxdelinquent .Butwhen“vacancy”referstodeterioratedorsubstandard structures, then external costs become evident in the form of negative effects on adjacent property values (GAO 2011). The demolition of substandard structures may well represent the single greatest return on the investment of public dollars (Norris and Griswold 2007). Properties that are vacant, abandoned, and foreclosed result in a decline of almost 10 percent in the market value of all properties within 500 feet (Whitaker and Fitzpatrick 2011). To know the inventory is to know more than that problem properties impose significant costs and liabilities: it is to know why they exist (Brophy and Vey 2002). It requires an evaluation of the legal impediments (such as the inadequacies of the tax foreclosure system or the code enforcement system ) and the economic and social trends that contribute to the abandonment (declines in employment and population) (Accordino and Johnson 2000). In an otherwise strong real estate market, all that may be necessary is a highly focused tactical approach addressing one specific intervention or one subset of the properties. In a weak market that has been declining for years, no single tactical option will suffice, and long-term land banking of excess inventory may be critical. The relative geographical and spatial concentration of such properties may indicate the abandonment of a particular neighborhood, but it could also be an indicator of conflicts between the jurisdiction of overlapping political subdivisions, such as conflicts between cities and counties. 3.139.72.78] Project MUSE (2024-04-23 15:17 GMT) Tactical Options for Stable Properties 191 The Overall Strategy Identifying the appropriate tactical options for any given community presupposes an overarching strategy. For present purposes, both chronically weak market communities and stronger communities facing temporary or geographically concentrated abandonment share the same essential strategy : adopt policies and programs that compel the owners of problem properties to internalize the costs imposed by their properties on neighbors and neighborhoods, communities and governments (Alexander 2000a). The strategic goal is to let every owner of real property know that neglect and abandonment are not options since the rest of the community pays the price (Community...

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