Blighted Cities Prefer Razing to Rebuilding

[Evergrey]

http://www.nytimes.com/2013/11/12/us...ebuilding.html

Blighted Cities Prefer Razing to Rebuilding

BALTIMORE — Shivihah Smith’s East Baltimore neighborhood, where he lives with his mother and grandmother, is disappearing. The block one over is gone. A dozen rowhouses on an adjacent block were removed one afternoon last year. And on the corner a few weeks ago, a pair of houses that were damaged by fire collapsed. The city bulldozed those and two others, leaving scavengers to pick through the debris for bits of metal and copper wire.

“The city doesn’t want these old houses,” lamented Mr. Smith, 36.

For the Smiths, the bulldozing of city blocks is a source of anguish. But for Baltimore, as for a number of American cities in the Northeast and Midwest that have lost big chunks of their population, it is increasingly regarded as a path to salvation. Because despite the well-publicized embrace by young professionals of once-struggling city centers in New York, Seattle and Los Angeles, for many cities urban planning has often become a form of creative destruction.

“It is not the house itself that has value, it is the land the house stands on,” said Sandra Pianalto, the president and chief executive of the Federal Reserve Bank of Cleveland. “This led us to the counterintuitive concept that the best policy to stabilize neighborhoods may not always be rehabilitation. It may be demolition.”

Large-scale destruction is well known in Detroit, but it is also underway in Baltimore, Philadelphia, Cleveland, Cincinnati, Buffalo and others at a total cost of more than $250 million. Officials are tearing down tens of thousands of vacant buildings, many habitable, as they seek to stimulate economic growth, reduce crime and blight, and increase environmental sustainability.

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[fflint]

“It is not the house itself that has value, it is the land the house stands on,” said Sandra Pianalto, the president and chief executive of the Federal Reserve Bank of Cleveland.

Yes and no. I understand the costs cities pay in association with abandoned homes are significant, but I still see a longer game here. At some point, a city that wants to grow again must offer something tangible to future generations--and old-school, human scaled, traditionally urban neighborhoods are a rare commodity even today. If a city rips all of that out and the land lays fallow (or is reclaimed by forest/prairie), it offers future potential residents pretty much what every non-descript place offers: a blank slate. Alas, something else will be on offer that isn't present in most blank slates: all the negatives associated with a municipality with a long history of trouble, dysfunction and decline. There's got to be a tangible, compelling reason for someone to move to Baltimore instead of to the empty fringes of some sunbelt sprawler--e.g. to fix up a neglected but elegant and well-built brick rowhouse in a traditionally urban, walkable, transit-friendly neighborhood.

[animatedmartian]

Where's the line between short-term savings and long-term preservation?

Many vacant properties in Detroit, more notably the larger ones like Packard, Fisher Body Plant, Book Tower, etc, have been vacant for multiple decades now and at most only get rumors of reuse (Packard being the most recent to gain attention). Smaller less known properties can stay under the radar longer, but often are more easily vandalized and even in a lot of cases don't have any sort of protection against demolition.

On the flip side, there's not enough actual demand in Detroit to justify pouring in massive amounts of renovation money unless you follow the "if you (re)build it, they will come" philosophy. Saving every historical apartment building or house or skyscraper doesn't exactly guarantee that it'll be used as soon as it's done or that it'll even be profitable. It's a very risk-oriented environment for developers and lenders and I don't blame them for not eagerly sticking their hands in and it's easy to see why all new developments seem constantly subsidized.

In Detroit, the chances of someone buying a property, demolishing it, and rebuilding something cheaper in it's place is a lot higher than someone buying property, renovating it, and reusing it. Honestly, the only options are either deal with the current reality of buildings going unused or keep trying to hope for an idealistic future where there's sudden demand for them. Which do you choose?

[Crawford]

Yeah, as others have indicated, no older city is going to revitalize as a crappier version of suburbia. You can't out-suburb the suburbs. You need to keep some semblance of the historic stock to have something to differentiate yourself from sprawling messes.

I get why these cities are knocking these buildings down; there's no demand, and they're removing blight and potential locations for crime and danger. But city fortunes can turn around quickly, and a Baltimore without its rowhouse neighborhoods doesn't seem like a particularly interesting place.

[goat314]

It's mind-boggling how St. Louis usually never gets mentioned in these type of reports. Is St. Louis not considered an old manufacturing city anymore? The population decline here has been worst than Detroit on paper, although decay seems last widespread than Detroit on the ground.

[animatedmartian]

Originally Posted by goat314

It's mind-boggling how St. Louis usually never gets mentioned in these type of reports. Is St. Louis not considered an old manufacturing city anymore? The population decline here has been worst than Detroit on paper, although decay seems last widespread than Detroit on the ground.

Uhh...

In all, more than half of the nation’s 20 largest cities in 1950 have lost at least one-third of their populations. And since 2000, a number of cities, including Baltimore, St. Louis, Pittsburgh, Cincinnati and Buffalo, have lost around 10 percent; Cleveland has lost more than 17 percent; and more than 25 percent of residents have left Detroit, whose bankruptcy declaration this summer has heightened anxiety in other postindustrial cities.

Two miles northwest of the Gateway Arch in St. Louis, which has at least 6,000 vacant buildings, is an uninhabited deciduous forest where a sprawling 74-acre housing development once stood before the city demolished it because so few people lived there.

[M II A II R II K]

Social Impact Bonds: A New Model to Reduce Blight


11/06/2013

By John Roman, Ph.D.

Read More: http://www.huffingtonpost.com/john-r...b_4214851.html

Cities are actively searching for ways to reduce blight. Abandoned properties and vacant lots abound in decaying Rust Belt neighborhoods struggling with manufacturing losses and entrenched segregation. The problem is no less serious in the Sun Belt, where overzealous developers left half-built neighborhoods and overconfident consumers now face waves of foreclosures. And in every city there are investment property owners playing the moral hazard game -- they will only clean up their property when enough others do so that they can profit.

- But there may be a new tool in the war on blight: a relatively new financial instrument known as the social impact bond (SIB). The idea behind SIBs is that private investors, not the government, bear the risk for large-scale, pricey endeavors designed to build and maintain America's social service infrastructure. --- Social impact bonds are being used to inject private funds into public-sector programs to provide prevention services to vulnerable individuals. Last year saw the first SIB transaction in the United States when the Bloomberg Foundation and Goldman Sachs invested nearly $10 million in a program aimed at reducing recidivism rates of young men held at the New York City jail at Rikers Island. --- If the program is successful -- that is, if the recidivism rate is less than would be the case without these services -- New York City will repay Goldman its investment plus a profit. If the program fails, Goldman will not be compensated.

- SIBs are currently being used to invest in people, not places. But, for cities looking to innovate, SIBs may provide a promising model for funding reclamation of blighted areas cities inherit or want to develop. --- Under this model, private capital would be used to support revitalization projects, and cities would provide investors a cut of the revenue if the developments prove profitable. Using SIBs this way has some advantages over people-focused prevention programs. Unlike the Rikers SIB, where "savings"from reduced recidivism are unlikely to flow back in the government's coffers, cities would clearly identify savings in development and maintenance costs, plus reap the reward of increased revenue from more successful uses of now dormant properties.

- This is exactly what happened in Nashville when the city joined with private investors to revitalize an industrial wasteland into a mixed use community known as The Gulch now one of the country's first LEED-certified "green" neighborhoods. According to a report by Smart Growth America and Strategic Economics, The Gulch's revenue substantially outweighed its development costs. --- The Gulch produced over $115,000 per acre in net revenue and generated $3,300 per unit in property taxes, sales taxes, and additional revenue each year, but cost the city only $1,400 per unit in annual maintenance fees for infrastructure upkeep and fire and police response services.

- So the calculus here is simple. The SIB funds the takeover of problem properties. Then, the city works with commercial developers to develop a vision for the space that does more than turn a quick profit, with the SIB investment covering the difference between a socially beneficial project and one focused solely on profit maximization. --- The government receives more than twice the revenue that it pays for maintenance, guaranteeing a long-term stream of revenue that is more than enough to pay back the SIB principal plus a profit, and to finance future investments. --- Development of blighted areas is both a top priority and a risky financial endeavor for cash-strapped cities. Cities would benefit immensely by incentivizing the development of these areas through social impact bonds.

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