By Max Pulcini and Erin Purcell

Axis Philly: Vacant Properties Damage Real Estate Values

Axis Philly: Vacant Properties Damage Real Estate Values
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Would you rather live on a block that is speckled with ramshackle, rundown abandoned houses or one with inviting green community gardens?

This home on 21st and Montgomery is up for sale by the Housing Authority-- one of many city agencies currently controlling vacant parcels.

This home on 21st and Montgomery is up for sale by the Philadelphia Housing Authority– one of the many city agencies currently controlling vacant parcels.

There are about 40,000 vacant parcels, which are property units, in the city of Philadelphia. Out of those 40,000 properties, 12,000 are owned by various city agencies. These city agencies are responsible for maintaining and selling the properties. Each city agency has its own priorities and vacant property falls low on the list.

The city becomes responsible for the properties when they are either repossessed due to abandonment or tax delinquency. Multiple agencies are in charge of these properties because there is not one unified agency that is responsible for these vacant properties.

Kevin Gillen of the University of Pennsylvania’s Fels Institute of Government works with the Greater Philadelphia Association of Realtors and has helped to calculate the impact that these properties have on the city’s property values and tax collections.

“Right now the Development Authority of Philadelphia is the lead city agency in charge of the disposition of city owned land. One of the challenges with getting the land off the city’s balance sheet and into private hands is that many of the city owned parcels are owned by various city agencies, none of whom have any real incentive to talk to each other,” Gillen said.

Although most of the vacant property is privately owned, the city must take action against those who do not properly maintain their property. When these actions take place, it costs the city more money.

“The majority of vacant property in the city is privately owned and those owners are primarily responsible for caring for their properties. When they don’t, the city issues code violation notices through the Department of Licenses and Inspections, and uses its limited resources to care for the worst offenders through demolitions, clean and seal actions and lot cleanups, billing the owners for the work whenever possible,” Mark McDonald, Press Secretary of Philadelphia, said.

Another issue that the city faces with this surplus of vacant land is the lack of revenue generated from these properties. City owned property is tax-exempt. Philadelphia is suffering from lost revenue and is spending millions of dollars a year maintaining these properties.

“Not only do these properties owe the city a tax contribution, they cost the city money in terms of maintenance, security and upkeep. A study commissioned by the Council President found the city spends approximately $20 million maintaining tax-delinquent properties,” Jane Roh, City Council Director of Communications, said.

The Greater Philadelphia Association of Realtors has proposed the creation of a Land Bank to City Council. The Land Bank would be controlled by one agency that would be responsible for maintaining and selling the properties.

“The Council President supports the creation of a Land Bank as part of the city’s efforts to move vacant, abandoned and delinquent properties back online and contributing to the city’s quality of life and economy,” Roh said.

Kevin Gillen of the Fels Institute runs analysis of how vacant land effects property values.

Kevin Gillen of UPenn’s Fels Institute of Government runs analysis on how vacant land effects property values.

The Land Bank would make the selling of vacant properties easier and more organized. Most of the vacant properties are not ideal for redevelopment. However, these small parcels can be repurposed as additions to already existing properties.

“Only a minority of the parcels, about 10 or 15 percent, has a market value for redevelopment. Not many have the size or location to allow for building to happen,” Gillen said. “Neighbors can buy these properties for some nominal amount, like $100, and convert it to a side yard or maybe you want to park your car there or plant a garden.”

If the vacant property is sold and properly developed, Philadelphia can increase tax revenues and employment as well as see an overall improvement of the city as a whole. The Penn Institute for Urban Research has determined that the construction alone will create about 800 jobs, which would generate $30 million in wages. This increase in wages would result in almost two million dollars in taxes for the city.

“The city is actively trying to get rid of [these vacant properties] to get them redeveloped or turn it into something with some future value,” Gillen said. “The city recognizes that this is a problem. There is no incentive for the city to maintain the ownership of these vacant parcels so they love to seem them repurposed.”

Several different organizations have already begun to support these repurposing efforts. Neighborhood groups have taken ownership of some of the vacant properties and created community gardens.

Private organizations morph vacant lots in open community gardens.

Private organizations morph vacant lots in open community gardens.

“The City also supports a number of nonprofit and community based lot cleanup efforts through the Pennsylvania Horticultural Society.  These programs engage community groups to help clean and mow several thousand vacant lots throughout the City during the growing season, both private and publicly owned,” Roh said.

The connection between vacant property and neighborhood development is obvious. When there is an abundance of vacant land, there is less development in the area. Tax revenues are low and people are not likely to invest in the area.

“There’s a question as to whether delinquency and abandonment is the symptom or the disease,” Gillen said. “It’s true that the presence of delinquent properties and abandoned properties can cause neighborhoods to decline but if neighborhoods are in decline then people are incentivized to go delinquent on their taxes and abandon their properties to begin with. So it’s a chicken and egg sort of thing.”

To find out more information on vacant property in your neighborhood or to find out how to purchase vacant property, visit the Philadelphia Redevelopment Authority’s website.

Check out our related story on delinquent taxes.

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