On Detroit's east side, 539 Custer sits near a church and barbecue joint. One can imagine the former residents eating a plate of ribs after Sunday worship. But if they did, it would have been some time ago. It has been about a decade since the three-family flat was occupied, according to neighbors. They say that the house was abandoned and is sometimes occupied by squatters.
The roof and second floor of the vintage 1900 structure are in disrepair. It appears that vinyl siding has been ripped off the house. The front door is made of plywood. The original fake brick siding is unscathed by the elements.
-- Metro Times
Each Wednesday, the Metro Times
lists the "Abandoned Shelter of the Week," and 539 Custer was listed on Oct. 22. The home is valued at $10,600, but Detroit officials said they plan to have the Detroit Buildings and Safety Engineering Department tear it down, according to the Metro Times.
The properties wind up either being sold or demolished, depending on what city agencies decide is most feasible.
In some cities, vacant properties are rare, but in others the scale of abandonment is far greater, with entire streets and neighborhoods resembling urban ghost towns, the National Vacant Properties Campaign (NVPC) states on its Web site.
Besides posing the obvious risk of fire, abandoned properties hurt communities and consumers by decreasing property values, reducing tax revenues and attracting crime.
The NVPC is a project of Smart Growth America (SGA), the International City/County Management Association (ICMA) and the Local Initiatives Support Corp. (LISC). The NVPC's mission is to reclaim and redevelop vacant lots and abandoned buildings, and mobilize policy-makers, developers and others to prevent abandonment.
The ICMA uses two criteria to define abandoned property. First, no one resides at the site, and it would be difficult for anyone to occupy the site without substantial repairs. Second, the property is boarded and secured or the entire lot is completely fenced to deny entry. The common element is the condition of these vacant properties amounts to a public nuisance, according to the ICMA.
Whether anyone owns such properties seems like a simple question, said John Bailey, associate director for SGA, but it's not.
"The problem is, especially in properties that have been abandoned for a long time, several different heirs might own the property, several different people might have an interest in the property, so it's difficult to find the one person who owns a property," he said.
The legal process surrounding vacant property foreclosure is cumbersome and lengthy, Bailey said, and title insurance companies typically won't insure the title unless each person associated with the property has been contacted.
"Before the way you did it was put an ad in the paper saying, '39 Elm Street is going to be foreclosed, come in if you have any interest in the property,'" he said, adding that a Supreme Court ruling in the last decade has changed cities' responsibilities. "Now you actually have to go and contact each person individually. I think part of the reason is an attempt at good government."
Foreclosure is an extreme step, Bailey said, because property rights have strong protection in the U.S. Constitution. As a result, city governments trying to do the right thing by taking responsibility for public nuisance properties can spend five to seven years in legal wrangling over foreclosing on an abandoned property.
"It's kind of the law of unintended consequences," he said. "Like many laws, they were put on the books to prevent bad governance and fraud, but it ends up hurting a city government's ability to regain land."
Technology plays an important role in reclaiming vacant and abandoned properties, said Lisa Mueller, knowledge sharing manager for LISC. The NVPC posts a range of information resources on the Web site, Mueller said, including papers, articles and PowerPoint presentations from various conferences where executive committee members are panelists.
"At LISC's recent Urban Forum in Philadelphia, I moderated a panel on GIS on behalf of LISC and the campaign," Mueller said. "Two panelists, Patrick McGuigan of Providence, R.I., and M.L. Wernecke of Philadelphia, described how community groups are using PalmPilots and Pocket PCs to gather property information in their neighborhoods -- abandonment by address, etc. -- which can be entered into a GIS. We believe GIS can be an important tool for localities to tackle their vacant property problems."
Casper, Wyo., is a member of the ICMA's GIS Consortium, and used GIS to develop Casper's Urban Renewal Plan for an area targeted for redevelopment, said GIS Consortium Project Manager David Borak.
"Their GIS was used to access and organize county assessors' data to evaluate and categorize properties in the corridor by building age and condition, exterior material, use by portion of the building, value, etc.," he said.
With the various technologies NVPC uses, Mueller said many cities now have the capacity to better track their inventory of tax delinquent and lien encumbered properties, which makes it easier for municipalities and nonprofits to strategically acquire them. In addition, she said, many cities and universities have made more information about specific properties available via the Web, which provides much quicker access to property information to the general public and nonprofits working to reclaim specific properties.
There are, of course, public-policy implications that go along with making data available to citizens, Mueller said.
"Some cities are very reluctant to make parcel-level property information readily available to the public in the interest of protecting the privacy of property owners," she said. "We have seen that more transparency is typically helpful to vacant property reclamation, and that parcel-level data can be most helpful to nonprofits working to acquire such properties. Most needed data is publicly available, but it can be time-consuming to look through tax delinquency records, or lists of city-owned properties at municipal offices lacking electronic access to it."
Most localities the NVPC has worked with have attempted to strike a balance in making information available that both protects individuals' privacy and supports neighborhood revitalization efforts, she said.
Making Informed Decisions
What happens with abandoned properties differs from state to state, and sometimes varies depending on city. In Michigan, once a property comes up for tax foreclosure, the city is first in line for bidding. The city tries to "bank" all their properties, Bailey said, because one challenge of redevelopment projects in urban areas is 30 or 40 property owners might live on one block, which makes assembling that land for a project difficult.
Many cities also set up land bank authorities that work with community development corporations (CDC), so cities immediately get the lands and sell them to CDCs or give the corporations below-market rates on the insistence that they help produce affordable housing on those lands.
Cities will also hold public auctions where citizens are welcome to bid, but it depends on the city. Some may have auctions once each year, or sometimes three or four times per year.
"It's one of those things where there are urban legends involved, where somebody says, 'Oh, for $100 I got this amazing house, and I only had to do $1,000 worth of work to it, and it's a gorgeous brownstone in downtown D.C.,'" Bailey said. "But it's tricky sometimes. Sometimes you're not buying the house, but you're buying the tax lien."
Buying the tax lien does not mean the purchaser is buying the property, which is what most people bidding think they are paying for at auction's close. This is where the situation gets a bit sticky.
Often, as in the case of Washington, D.C., what's sold is the standing lien caused by overdue taxes. In other words, the original owners did not pay their taxes, so the government seized the property. Should the owners pay up, the property is returned to the original owner. Although tax-lien laws differ from state to state, most areas have the person who bought the tax lien ask the court to foreclose on a property, giving them ownership.
Also, foreclosure can only begin once the property's original owner has been contacted and is given full opportunity to pay their debt. In some states, there is a waiting period before the purchaser can file for foreclosure. So even after purchasing the lien, the original owner can come back, pay what is owed, and what the purchaser thought was his or her property belongs again to its original owner.
The good news is that when a property owner does this, the purchaser gets a refund. Also, most cities require the property owner pay interest on the overdue taxes to the lien buyer. Purchasers should be fully aware of the situation into which they are headed, Bailey said, which is not usually the case.
The auction is won by the highest bidder. If the top bidder pays $15,000 for a $4,000 tax lien, and the original owner repays their debt, the original $15,000 is returned to the bidder along with the interest on the $4,000 lien. But a 12 percent annual interest rate would return only $480 in the first year -- a 3.2 percent return on the original $15,000 investment. The small return on investment is sometimes not worth the time and money spent in the process, although the bidder could possibly be compensated for foreclosure fees.
On the Horizon
In the future, the NVPC will focus more on providing technical assistance to local governments and CDCs, Bailey said, which could include day-long seminars on prevention policies or week-long training on other topics.
Structural improvements are on the way as well, LISC's Mueller said, and the NVPC plans to add new content to its Web site over the next few months.
"We have also just created a listserv for people interested in sharing information about vacant properties, or keeping up with the activities of the campaign. We look forward to strengthening the network of interested stakeholders via the listserv."
As part of that, NVPC may create more specific e-mail lists for experts on various topics, such as legal issues regarding vacant properties, to share technical information and best practices the average practitioner might not need to know.
"We are also helping to share information with practitioners about ways technology can facilitate vacant/abandoned property reclamation," Mueller said. "GIS and other inventory tracking systems are critical components of effective city land use strategies."