Wednesday, February 6, 2013

A case study of the Value of Restoration vs Demolition

Neighborhood turnaround can and does happen all across the country. Communities realize the value of restoration and the value of historic Preservation as an economic development tool.

This once blighted block shines thanks to people who recognized the architectural value of these properties

The Holy Cross Neighborhood in Indianapolis has made a remarkable turnaround in less than a decade. Once, a high crime-low income, mostly rental neighborhood it has been transformed into one of the most desired communities near downtown. In fact a developer recently announced the development of 17 new homes on a patch of old industrial land. This will be the crowning achievement of a community that once struggled. It achieved that turnaround based on solid principals that historic preservation and restoration works as an economic development tool and is key to turnaround

A case in point in this Block. In 2003 this block has serious issues, Vacant or converted to illegal apartments there was little stability here. Chain link defined property lines and the area was devoid of flowers or the perception that anyone cared about this block. Due to the transient nature of rentals , there was no neighborhood stability. The value of these 5 homes combined was less than 20,000.00 and as a result they generated minimal property taxes which did little to offset the services they generated via police runs or cleanups by the Health department.

Some felt the solution was demolition but other in the community saw the value in these 5 properties all built between 1895 and 1898 as part of a speculative project called Winona Park. In fact some of these homes till retained original columns and detailing in spite of the hard use by tenants.

In 2003 we were in the midst of other restorations in the neighborhood when one of these homes came up for sale. Nearby neighbors were urging us to buy it because otherwise it was destined to be turned into two family home. This house has had all the historic interior ripped out , replaced by plastic trim and carpet. If we didn't buy it, who would? The neighborhood would have suffered from lack of investment and most certainly would never look the way it does today. So we bought it and though busy with other restorations , began turning one house around.

We built custom built-ins and we terraced and landscaped the yard, a new carriage house was the first construction the block had seen since the 1950's In fact it was the ONLY garage on that block. As we worked and painted and landscaped a funny thing happened, people began to notice that things were happening. The slumlords could not conduct business as usual and one by one those properties became available, and others began restoration. Properties that were once hard to sell at 20K sold for over 200K.

A block once worth less than 20K now has an assessed value at well over 1 million dollars. Families who care now live on this block. It is safe, and come spring, people will be out in their yards and everyone will be looking forward to the neighborhood block party held in the fall.

Demolition was an option for some, but we held firm, kept the pressure up on the slumlords, get them to sell and eventually we will have a great block of historic homes that the community would be proud off.

So while Cincinnati is determined to demolish 600 homes this year as yourself who really benefits? Is it the community? or, is it the demo contractors and city employees who administer the demo program.

We need to learn from other cities and we need to understand that even the most 'blighted' property can be turned around and more importantly can be restored and contribute to community tax base.


josh said...

Paul, I agree with you that demolition is a last resort, but in certain situations it seems like there is nothing a city or municipality do besides demo. I have a vacant property on my block that is the perfect example of this. The owner is obviously not right mentally and lives outside of the city limits. They have owned the property for 20 years and have not touched it in 10 --zero landscaping or maintenance of any kind. They continue to pay the taxes, eventually, and the property is assessed at 250k when in reality it is probably worth 50k and that would be the value of just the lot. So the city and county are faced with a situation where they are being paid taxes, albeit in arrears, but they are still being paid eventually. And the neighbors are faced with a situation where there is a blighted overgrown property that has become an attractive nuisance to children. The only thing stopping it from being attractive to squatters is that it is one of the only vacant properties in the entire neighborhood and is surrounded by neighbors who care, so any activity like that would be promptly reported. Our neighborhood became so fed up that we had to petition the city to demo the property because we felt like we had no other choice. And lets face it, 100 year old homes do not stand up well when they are kept in a state of zero maintenance for years on end, so who is to know if it could even be salvaged? It really is frustrating but I would rather see this particular property demolished than have the owner hold onto it until they leave this world, which could be another 20+ years. It just seems like there is no other answer in situations like this, at least in this city. The worst part about all this is that sometime down the road this lot will be acquired by a developer who will throw up a 500k house with a 15yr tax abatement...but this rant has been long enough..don't even get me started on the misguided tax abatement policy of this city --nothing is worse to me than offering tax abatements for building in areas where there would be a home built anyway regardless of any type of abatement. Abatements should really be done on a neighborhood by neighborhood basis and not city wide.

Brian Finstad said...

Josh, in Minneapolis, we have a 6,000 per year vacant and boarded registry fee that if not paid gets applied to your taxes. Then if you don't pay it, you loose the property to tax forfeiture. Puts quite the incentive on a situation like this for someone to bring the property back into occupancy or sell it. The problem doesn't sound like it is the building. It sounds like the problem is your municipality has not developed the right tools to deal with this sort of problem. Demoing that house won't solve the problem either as this scenario will (and probably does) exist somewhere else. Too often buildings take the fall for behavior of people or inept government or organizations. In Minneapolis, this VBR fee is "waived" if someone purchased the property and enters into a "restoration agreement" with the city in which the property will be brought back to Code Compliance within a specified timeframe. Problem solved. You'd also be surprised - most old homes are salvageable, even after years of neglect.

Paul Wilham said...

Josh, Ohio has what is known as a receievership law. You or a neighborhood organization can go to court and seek receivership of a property that is distressed. The court will place the property under your control and you make the necessary repairs keeping an accounting of the cost. When stabilization is complete you go back to court. The owner has an opportunity to pay back the costs. If he doesn't the court orders it sold for the amount owed. Usually the neighborhood gets the home because no one bids. They finish restore and then sell it. Camp Washington uses this technique all the time.

josh said...

Paul - just to be clear I am talking about Cincinnati here. So despite the fact that this building has been vacant for ~14 years they only recently were required to get a VBML by the city. I did as much legwork as I could trying to find out the details and it looks like they paid for the VBML the first year and then stopped paying for the renewals (which shouldn't have been granted in the first place). So what is the city to do in this situation when you have an owner that is this malignant? As you well know dealing with the city building department is incredibly difficult. Our neighborhood would love to take ownership of and restore this property but it just seems like we are out of options. People in the neighborhood have been trying to effect some type of change with this property for years on end to no avail. It seems we just don't have the right expertise to get the job done and that it is going to end in demolition.

josh said...

and brian, i do agree with you..cincinnati has something that is supposed to work like the system set up in minni but it does not work very well here..there is no reason it shouldn't work but the ineptitude of government can be astounding at times