SUMMARY

This article focuses on the issue of Phoenix’s vacant properties and their impact on communities. 

Vacant properties can attract crime and destabilize neighborhoods, leading to a cycle of disinvestment and decay. Vacant properties also harm city tax revenues, as they often have unpaid taxes and generate minimal taxes due to their low value. They can also lower property values in the surrounding area, reducing tax revenues. 

DAWGS Vacant Property Security is working with Phoenix real estate investors proactively to address this issue, supporting housing authorities, real estate investors, and property managers as they implement programs to restore stability and enhance neighborhoods. 

Revitalizing vacant properties can restore value and increase tax revenue. The problem of vacant properties is self-perpetuating, causing declining property values and discouraging maintenance. To address this, Phoenix has created task forces and implemented comprehensive programs with the collaboration of various stakeholders. This collaborative approach has been successful in tackling the vacant property problem. 

 

SOLVING THE VACANT PROPERTY PROBLEM TOGETHER

Vacant properties with overgrown lawns and accumulated trash can create numerous problems for the surrounding communities. 

Scavengers, squatters, and gangs often target abandoned buildings, increasing the likelihood of fires and crime and destabilizing the entire block.

If there are several troubled blocks in a given area, it can cause a ripple effect and destabilize an entire neighborhood. 

Communities with abandoned residential and vacant retail storefront/commercial properties can perpetuate a cycle of disinvestment and decay.

RISING TO THE CHALLENGE

Phoenix is taking an active approach to tackle the issue of vacant properties. They are implementing creative programs to minimize adverse effects, restore stability in communities, and enhance the liveliness of neighborhoods. 

Our experience protecting vacant investment properties and working with various cities inspired this article. We’re pleased to offer ideas and strategies we have collected by talking to investors, public housing managers, housing authorities, property managers, and more.

PROTECTING THE TAX BASE

Vacant properties can harm city tax revenues in multiple ways. 

1. These properties often have unpaid taxes, leading to revenue loss for local governments. 
2. Due to their low value, vacant properties generate minimal taxes. 
3. Vacant properties can lower property values of the entire neighborhood, reducing local governments’ tax revenues. 
4. The failure to collect property taxes on these properties can cause massive losses for local governments and school districts. 

Property taxes are the largest source of tax revenue that is under local control, so this loss can be significant. 

Vacant properties frequently become delinquent on taxes because the cost of paying taxes may exceed the property’s value. The municipality tries to recover lost taxes through property sales when these properties are forfeited. Unfortunately, this process is challenging, and only a fraction of the lost taxes are usually recovered. Moreover, the demolition of properties further adds to the financial burden for cities. Even if taxes are being paid, they do not amount too much for vacant properties compared to occupied or renovated properties. 

VACANT PROPERTY REDUCES THE VALUE OF THE SURROUNDING PROPERTY

Empty properties generate minimal tax revenue and diminish the value of nearby homes and businesses. A study conducted in Philadelphia in 2001 revealed that houses within a 150-foot radius of a vacant property experienced a decrease in value by $7,627. Properties within a 150 to 300-foot radius experienced a decrease of $6,819, while those within a 300 to 450-foot radius experienced a reduction of $3,542. Also, houses on blocks with abandoned properties sold for $6,715 less than those without abandoned. 

A separate study in St. Paul, Minnesota, highlighted the negative impact of vacant properties on neighborhood property values, reducing the city’s tax base. The study also found that demolishing a vacant building and leaving an empty lot in its place led to a loss of $26,397 in property tax revenue over twenty years. 

However, focusing efforts on revitalizing vacant properties can restore value and increase tax revenue for the city. 

THE VACANT PROPERTY SPIRAL AND THE CUMULATIVE IMPACT OF VACANT PROPERTY

A single vacant building can have far-reaching consequences if not addressed. 

It can trigger a cycle of blight, leading to more arson and garbage accumulation, which can force residents and businesses to leave. To prevent this, Phoenix must tackle the issue early. 

The problem of vacant and abandoned properties is self-perpetuating, as it causes declining property values and encourages unethical real estate practices. This, in turn, discourages maintenance and causes communities to deteriorate. Businesses are more likely to suffer and less likely to stay in such areas. Additionally, abandonment makes it more difficult for homeowners to sell their properties, resulting in lower appraisals and bank loan denials. 

PROTECTING VACANT PROPERTIES – A COLLABORATIVE APPROACH

In the last decade, many cities faced a problem with vacant properties. To tackle this issue, some created task forces and implemented comprehensive programs with incentives and disincentives. These programs included assisting property owners who renovated vacant buildings and implementing more assertive ordinances. However, what made these programs successful was the unique collaboration and cooperation among various stakeholders over the next decade.

Some cities hired vacant property coordinators who brought together individuals from diverse municipal agencies to discuss the challenge. These coordinators also engaged regularly with community groups, the real estate industry, and financial institutions to enlist their support in identifying and maintaining vacant properties, which allowed cities to tackle their problems with these assets by bringing all stakeholders to the table and coordinating their actions.

Addressing a vacant property problem is challenging, but the evidence from past experiences demonstrates its feasibility.

MULTI-PARTY COORDINATION ESSENTIAL

Vacant properties require regular maintenance, primarily overseen by code enforcement departments. However, practical solutions to vacant property issues need collaboration across various municipal departments. By bringing together departments such as police and fire, public works, and municipal attorneys, cities can create a network for sharing crucial information on problematic properties. 

Departments must collaborate in sharing data, ensuring that Phoenix prioritizes issues based on the best available information. This collaborative effort extends to performing tasks more efficiently, including joint inspections. Additionally, tackling issues like tax delinquency is most effective when municipal officials work closely with county counterparts.

When neighborhoods at risk straddle municipal boundaries, cross-jurisdictional collaboration becomes crucial. Different departments and stakeholders must work in tandem to address vacant property issues comprehensively.

At the minimum, departments can share information about problem properties and neighborhoods, establish priorities, conduct joint inspections, and create inter-departmental task forces to address specific issues. This collaborative approach is fundamental to successfully addressing the challenges posed by vacant properties.

PROTECTING VACANT PROPERTIES THROUGH RENOVATION AND INVESTMENT

Ensuring the housing market’s stability is crucial to prevent homes from becoming vacant and reoccupying those that have already been vacated quickly. Various strategies can be implemented to achieve this, such as foreclosure prevention programs, rehabilitating homes for sale, or offering scattered-site rental housing. Marketing the neighborhood and revitalizing commercial sectors can also stimulate demand and attract residents to these areas, reducing the number of vacant homes. 

Loan modification, refinancing programs, and foreclosure counseling can help homeowners stay in their houses. In the event of vacant properties, they may need to be renovated before they can be occupied again. In strong real estate markets, private investors may be motivated by economic incentives to buy, renovate, and sell these properties. However, public funding or intervention from nonprofit organizations may be necessary to turn a vacant home into one that a homeowner can occupy. While it is ideal for foreclosed and vacant properties to be occupied by homeowners, investor activity has led to the rental of single-family homes in neighborhoods with demand for rentals. 

Community Development Corporations (CDCs) may be interested in acquiring properties that have been foreclosed on for tax reasons and renting them out. This would help increase the availability of affordable housing and stabilize the neighborhoods where the CDCs have already invested. In some cases, lenders or mortgage servicers may also choose to rent foreclosed homes to their former owners, providing similar benefits to the community as foreclosure prevention. 

The success of strategies to reoccupy vacant homes, whether by owners or renters, depends on the ability of a neighborhood to attract and retain residents. One approach is to market the area to stabilize housing markets and decrease the number of vacant and abandoned homes. Revitalizing commercial sectors in areas with a solid market to support them can also help revitalize and stabilize residential areas. When residential neighborhoods thrive, they can better support local retail businesses. Similarly, a variety of retail options can help attract and retain residents. 

In some cases, it may be necessary to demolish severely dilapidated vacant properties, even in neighborhoods where the housing market is doing well. If the cost of fixing a vacant property is more than what it would be worth after renovation, market-based solutions may not be effective. However, when a structure is demolished, plans can be made for the vacant lot, such as turning it into a pathway, park, parking lot, or community garden. Research has shown that programs that clear and landscape vacant lots can improve residents’ sense of safety, reduce certain crimes, and increase property values. 

CONCLUSION

Vacant properties burden communities, causing problems such as crime, fires, and decreased property values. Local governments struggle to control abandonment, which is often overlooked unless it directly affects nearby residents. 

Vacant properties are a financial drain on local governments. They generate little to no property tax income but require significant resources to maintain and address issues. 

Fires in vacant structures result in millions of dollars in yearly property damage, primarily due to arson. 

Cities like St. Louis, Detroit, Chicago, New Jersey, and Philadelphia spend millions of dollars annually demolishing vacant buildings and cleaning up vacant lots. 

Additionally, living near a vacant or abandoned property can cause a loss in property value, decreased tax revenues, decreased property values, and a negative impact on homeowners. 

Some cities have successfully addressed this problem by recognizing the value of these properties. Communities are finding ways to revitalize vacant properties and bring life back to blighted neighborhoods. These successful practices are being replicated throughout the country. 

The DAWGS Vacant Property Security team is available to discuss strategies for preserving these properties’ value and sharing our knowledge and experiences to empower communities, leaders, and policymakers to take action. Contact us for more information.

Key Features of the Vacant Property Registry:

1. Efficient Contact Management:

The VPR acts as a centralized repository, maintaining up-to-date contact information for owners of vacant properties. This streamlined approach enables the City of Phoenix to promptly notify property owners of any code violations or property-related concerns.

2. Overcoming Notification Challenges:

Vacant properties often pose a challenge in locating responsible parties for code violations. The traditional process can be time-consuming, particularly when property owners reside out of state and lack a designated local contact. The VPR eliminates these barriers, offering a mechanism to locate property owners and establish effective communication channels swiftly.

3. Accessible Online Portal:

To ensure convenience and accessibility, the VPR provides a user-friendly, free online portal that is available 24/7. Property owners can easily register, update their contact information, and access educational resources, fostering proactive engagement in property management.

4. Proactive Education for Property Owners:

The VPR goes beyond mere registration by offering property owners access to educational resources. These resources cover owner responsibilities, available support, and other valuable information to empower property owners to maintain their properties effectively.

5. Community Well-being:

Recognizing the broader impact of vacant properties on community well-being, the VPR facilitates an efficient response to issues such as crime, blight, and other code violations. By requiring a local point of contact and reducing notice times, the VPR enhances the city’s ability to address challenges promptly.

6. Increased Penalties for Non-Compliance:

To reinforce compliance, the VPR introduces increased penalties for property owners who fail to register their vacant properties. This proactive approach encourages timely compliance and discourages neglect of property responsibilities.

The Vacant Property Registry stands as a testament to the City of Phoenix’s commitment to proactive community engagement, efficient code enforcement, and the preservation of neighborhood integrity. By leveraging technology and education, the VPR not only addresses immediate challenges but also empowers property owners to contribute to the overall well-being of Phoenix communities.

What parties should be subject to registration requirements?

All registration programs require property owners to participate. However, since the foreclosure crisis has made it increasingly difficult to locate and contact property owners, some communities, such as Boston, Massachusetts, and Chula Vista, California, have begun requiring financial institutions with an interest in the property to register and maintain vacant properties.

References

(1) Temple University Center for Public Policy & Eastern Pennsylvania Organizing Project. “Blight Free Philadelphia: A Public Private Strategy to Create and Enhance Neighborhood Value.” Philadelphia, 2001.

(2) Edward G. Goetz, Kristin Cooper, Bret Thiele, and Hin Kin Lam, “Pay Now or Pay More Later: St. Paul’s Experience in Rehabilitating Vacant Housing,” CURA Reporter (April 1998): 19