Monday, November 26, 2007

Vacant lots, empty buildings = new opportunity for affordable housing

In the 1970s, New York City took over some 100,000 properties abandoned for nonpayment of taxes, and in subsequent decades helped community development groups fix them to create affordable housing. The numbers remaining are few, so the city now practices new tactics--tax incentives or increased development rights--to stimulate affordable housing.

But other solutions remain, notably the utilization of vacant or abandoned properties that are not in tax arrears. Unlike some other cities, notably Boston (as reported on the DMI blog), New York doesn't keep an inventory, nor has it changed any tax policies to incentivize owners.

(Regarding some seemingly stagnant properties in the Atlantic Yards footprint, the state got around the lack of incentives by declaring them blighted. A rezoning, however, might have done the trick.)

A lot of vacant properties

Manhattan Borough President Scott Stringer, in partnership with Picture the Homeless, decided to rectify that. They sponsored a study released in April, No Vacancy?, that concluded that 2228 properties in Manhattan appear to be vacant or have vacancies; 1723 contained built structures, while 505 are empty lots. Those lots could support, under current zoning, nearly 24,000 units.

Stringer recommends a citywide plan to identify vacant properties that are not in tax arrears. A registration and fee program could allow the city to learn the reasons for vacancy and suggest available financing options.

Also, the city could change tax policy that currently allows owners to sit on vacant land or buildings without penalty. The report notes, "Today, property taxes impose no burden on landowners who fail to develop empty lots or to rehabilitate deteriorating buildings. The result is a free pass on speculative timing of the real estate market."

(Here´s more on the issue from City Limits.)

Policy changes

Stringer, in his report on Manhattan, suggests several possible changes:
--ending the tax exemption for vacant land above 110th Street (and, by extension, in the outer boroughs); in Manhattan, that could raise more than $100 million a year
--levy a sales tax on vacant properties not improved during ownership.
--create a separate tax class for vacant properties.

Stringer also suggests changing the tax structure, in certain areas, to the value of the land, rather than the buildings. A number of cities around the world tax land at a higher rate, and this will begin in Philadelphia. The New York City Independent Budget Office, in its 2007 Budget Options for New York City, proposed this as a possible tactic.

IBO acknowledges a counter-argument: "Opponents might argue that the current tax treatment of this vacant land serves to preserve open space in residential areas in a city with far too little open space. Opponents also might have less faith in the power of existing zoning and land use policies to adequately restrict development in residential areas."

The Boston experience

Boston has been out ahead of most cities, compiling an annual survey since 1997 as part of its Abandoned Buildings Information. The number of abandoned residential properties went down 77% in the last decade.

Boston Mayor Thomas Menino spoke last Monday morning at a breakfast panel sponsored by the Drum Major Institute for Public Policy (DMI), titled Rehabilitating Vacant Buildings into Affordable Housing. (Here's a lengthy live blog from DMI, plus another piece. There´s a panel today at noon on the conjunction between housing policy, homelessness, and vacant property.)

He said that city officials first asked owners to clean up their buildings or sites. If not, such a property was labeled as a "house of shame," announced in press releases and news coverage in the home town--often upscale suburb--of the propety owner.

"I'm not in the embarrassment business," Menino said, "but when it's a piece of property in decay... and they live in suburban luxury, that's unacceptable."

(Left to right: Brad Lander, Carlton Collier, Scott Stringer, Thomas Menino, Andrea Batista Schlesinger. Photo from DMI Blog.)

The New York twists

Are there any other reasons for some properties to remain vacant or unimproved, beyond speculative warehousing? Brad Lander of the Pratt Center for Community Development suggested that in some neighborhoods, the market still isn't strong. Also, in some cases, there are ownership disputes.

Carlton Collier of the Parodneck Foundation--who joked that his address changed from Bedford-Stuyvesant to Clinton Hill without him moving--raised a larger question of planning for growth. "I would love to have the Nets, but when you build this stadium and office space," he asked, "what about the infrastructure?" (It would be mostly housing, not office space, but his point is a common one.)

Lapsed planning

"We've got to put planning back into the community boards," Stringer said. "So when the developer comes in with the 700-dollar-an-hour lawyer, the community is able to negotiate. We've got to beef the grass-roots up."

(Note today´s news that the City Council has established a new task force to assess new projects' impacts on city infrastructure. Worthy but late.)

Lander suggested "the system in New York City is broken for proactive planning." One way to keep track of vacant properties could be to use the system that keeps track of rent-regulated property.

Stringer said the city council should get the Department of Housing Preservation and Development to do a citywide count.

Lander said the city had moved too slowly to adapt to a changing market, as evidenced by the belated reform of the 421-a tax incentive for new construction and the failure to fix the J-51 incentive for rehabilitation--both generous programs devised during the days when no one wanted to build in the city.

Community planning

"You've got to get the community back in the process from the beginning," Menino said. Collier suggested there's a role for the 197-a plans produced by and for community boards.

"The ULURP process needs to be strengthened," Stringer said. "I know the skylines are changing, and that's not necessarily a bad thing. But development without community participation and input makes absolutely no sense."

"Whether it's Community Benefits Agreements or negotiations in the land use process, let's stop settling for crumbs," he said.

Lander noted that communities now only have input in a reactive way. "You're never going to get one developer to solve the collective" problems of education, transportation, traffic and more.

Stringer suggested that the 197-a provision could be a solution, if taken seriously. But it's neglected every time, Lander replied. "You might conclude another system is needed."

(Missing words added in below two paragraphs)

A developer in the audience, a white Harlem resident, got up to ask a provocative question. Harlem, he said, was once an upscale neighborhood. What's wrong with him developing market-rate condos there, if he's fulfilling his responsibilities to his shareholders. "The profit motive," he said, "is getting rid of blight."

Stringer gave him a partial answer, noting that, if developers ask for more than what they're allowed to do, that triggers a responsibility to provide affordable housing. But the question lingered, a reflection on whether the city's market-friendly politics do enough of the job.

Bloomberg's legacy

How will Mayor Mike Bloomberg be looked upon in the future, wondered moderator Andrea Batista Schlesinger, director of the DMI.

Bloomberg, suggested Lander, will get credit for PlaNYC 2030, "but if we don't come up with new policies to cope with affordability and sustainability," he won't come off well.

Collier noted that the city's not building housing for low-income people earning under $30,000. It's difficult, Stringer said, for politicians to do things that have implications beyond their terms.

Menino, however, more than once pointed to a larger culprit regarding urban policies: "Nobody down at 1600 Pennsylvania Avenue cares about public housing." (A commentator on the DMI blog makes the same point, citing the mayor and governor as well.)

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