Suffocating Neighborhoods, Parcel by Parcel

October 21, 2010

Suffocating Neighborhoods, Parcel by Parcel

We hear it all the time, that the growth of government stifles innovation and crowds out individual agency. One rarely sees this concept writ so large and discernibly upon the landscape, however, as when encountering abandoned, publicly owned properties.

Consider 4634 Cottage Ave., pictured below in August 2010. Until 1999, it was in private ownership following its construction in 1906. A sign reading “Private Property NO TRESPASSING” hangs ironically on one of the building’s boarded door openings, a vestige of the structure’s past life as an income-producing property.

Today, the multi-family dwelling is in a perpetual state of decay because of its status a property owned by the Land Reutilization Authority (LRA).

Private owners in a free market have vastly different incentives than do government agencies to ensure the health and vibrancy of assets under their control.

This month’s meeting of the LRA Commission will be held on Wednesday, Oct. 27, at 8:30 a.m. in the board room of St. Louis Development Corporation, on the 12th floor of 1015 Locust St. in downtown St. Louis.

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Yeah, Cottage Avenue was St. Louis’ own Champs Elysses all the way up until 1999 . . . .

Keep clicking on that page you linked to and you’ll find that the building was first recorded as vacant in 1989 – and every year since – at least one full year before the LRA took it. You’re right, that private owner was totally acting on different motivations.

That neighborhood had problems way before the LRA came in. Many of these were the government’s doing too, in the form of housing subsidies that preferred new construction in the suburbs, institutionalized racism in government-sponsored lending, publicly-funded highways, subsidized gasoline, etc etc

It would be nice if it was so easy that we could just say it was all the LRA though wouldn’t it?

Comment by Rob — October 21, 2010 @ 6:26 p.m.
Thanks for the comment, Rob.

Would a private owner have a greater incentive to preserve the value of an asset than a government?

Or, does a private owner allow a front porch to disintegrate, broken windows to remain unboarded, and weeds to overtake the lot?

I think it’s a matter for debate.

The blame I assign to LRA relates to its outright refusal in many cases to sell, even when willing buyers present the funds to purchase. Hence, my use of the word “suffocat[ion].”

Comment by Thomas Duda — October 21, 2010 @ 7:38 p.m.
I blame the LRA for that, too. But I don’t blame them for causing widespread vacancy like you did in the original post. Get on Geo St. Louis and click parcels around that one and you will find no shortage of privately-owned vacant properties.

The LRA is a problem, but not THE problem.

Comment by Rob — October 21, 2010 @ 8:16 p.m.
You’re overstating my initial assertion.

Let’s be careful to make a distinction between vacancy and decay. I’m comfortable accusing government of driving decay.

I really appreciate the comments; I hope that we can organize a discussion in the coming months about the LRA and the future of St. Louis.

Comment by Thomas Duda — October 21, 2010 @ 8:24 p.m.
If anything I was giving you the benefit of the doubt and understating it by talking about vacancy only — show me a well cared for vacant in that part of the city, privately- or publicly-owned. I doubt you could. You would have no problem finding a privately-owned decaying building that is occupied by tenants, though. Vacant buildings are definitely not the only ones decaying, but they are are the only ones owned by the LRA. My point is the same– those buildings were decaying (and vacant) before the LRA owned them.

The problem of decay is complicated and has deep roots. You’re right that the government’s answer is not working but that doesn’t mean they are “driving” it. Your question of who has a better incentive to maintain a property is a good model but it needs to be adjusted if you’re going to apply it to the real world. The fact is that speculative land holding by private owners involves few incentives to improve property since it would only serve to increase their taxes (if they are even paying them). The lower they keep their costs while sitting on it, the bigger the payoff when they are able to sell it. Ironically I think I’d explain the LRA in the same way, but add the familiar aspects of a bloated bureaucracy too inefficient and directionless to accomplish anything. My point is that there is no reason to expect private owners to care for properties like this any more than the LRA in this part of the city because there is plenty of evidence that they don’t.

LRA is definitely a part of the future of St. Louis but we need to be realistic about what their role really has been and could be.

Comment by Rob — October 22, 2010 @ 6:14 a.m.
Hey, Rob:

I was doing some reading just now, and I ran across the following text from a resolution approved by the LRA Commissioners in March 2009:

From the “Background” description accompanying Resolution No. 09-LRA-046:

“By donating property, the owner could potentially avoid the cost of improving the property to meet City code; avoid the expense of securing a vacant building; eliminate the need for insurance, fire and liability; eliminate real estate taxes; avoid the problem of trespassing; and avoid the cost of spraying for weeds and cutting grass.”

I guess this really just reiterates the initial point of this post.

I definitely do not seek to oversimplify an issue or to assign blame where it does not belong. Vacancy, decay, abandonment, whatever we call it, is terrible. Individuals are best equipped to solve the problem, however. Government is a disease, not a cure.

Comment by Thomas Duda — October 22, 2010 @ 6:49 p.m.
Vacancy and abandonment doesn’t have to be terrible if it came about naturally or for a good reason and no one is hurt. My point is that government played a role in the abandonment of central cities and they have a responsibility to fix it. The decline of central cities is, I think, a perfect example of government failure. The LRA is how the city and state are addressing it, as is their responsibility. Not sure its the best way but here we are.

Your assumption that individuals would have taken better care of property doesn’t hold because clearly they didn’t — the quote you provided shows that these buildings have negative value in the short-term to the people who currently own them. But that doesn’t mean they wouldn’t have value to NEW owners. The properties are such a burden on current owners (people who inherited them, moved out and couldn’t re-sell, etc) that it isn’t even worth their time to try to sell them. The LRA is supposed to be the middleman that takes them and then arranges sale to someone who does value them and would improve them. They have a responsibility to not let the properties fall back into the hands of speculators and I think we agree that they might over-reach with this. But you also seem to assume that there would be an endless line of willing and capable buyers. Especially in the case of the property above, I just don’t think that’s true. But I think changes could be made that might increase the pool.

So maybe we’re talking past each other a bit — you say that private owners, generally, would take better care of these properties. I am saying that most private owners did not (and had no incentive to) take care of these properties, but that there likely are now and will in the future be private parties who would. The LRA, for all its faults, is supposed to facilitate this transfer. So I guess you can criticize the LRA for decay, but first you have to prove that there are willing buyers who will not impose greater costs on the city as the owner than the LRA. Most LRA properties are scattered and separated by privately-owned property in such a way that restricts the parcels use to residential, which really limits their attractiveness to capable buyers. But I think we’d agree that the LRA, under the direction of the SLDC, sits on these properties and holds out for something big to happen on them. Unfortunately, private owners have and continue to do the same (McKee, “Urban Assets”). That’s why I have to say that the problem is bigger than the LRA.

Comment by Rob — October 23, 2010 @ 9:28 a.m.
Rob,

Because of government involvement, the market cannot self correct. Maybe population loss means that we’ll have larger yards in some neighborhoods or more off-street parking in others. Right now, though, we have what fits my definition of a nightmare: stasis.

The examples of Northside Regeneration LLC and (perhaps) Urban Assets are not the best, as both companies appear to be chasing a perverse government incentive that encourages decay. DALATC is another driving force behind you see in these cases.

I agree, the LRA is not our City’s only problem. I don’t think that I ever said that it was.

Comment by Thomas Duda — October 23, 2010 @ 10:56 a.m.
Any idea how many of the decaying privately owned occupied properties are owned/occupied by people under the age of 70 and if not owner occupied have tenants paying the rent themselves (ie not Section 8)?

Comment by S/A — October 25, 2010 @ 12:21 a.m.

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Yeah, Cottage Avenue was St. Louis’ own Champs Elysses all the way up until 1999 . . . .

Keep clicking on that page you linked to and you’ll find that the building was first recorded as vacant in 1989 – and every year since – at least one full year before the LRA took it. You’re right, that private owner was totally acting on different motivations.

That neighborhood had problems way before the LRA came in. Many of these were the government’s doing too, in the form of housing subsidies that preferred new construction in the suburbs, institutionalized racism in government-sponsored lending, publicly-funded highways, subsidized gasoline, etc etc

It would be nice if it was so easy that we could just say it was all the LRA though wouldn’t it?

Comment by Rob — October 21, 2010 @ 6:26 p.m.

Thanks for the comment, Rob.

Would a private owner have a greater incentive to preserve the value of an asset than a government?

Or, does a private owner allow a front porch to disintegrate, broken windows to remain unboarded, and weeds to overtake the lot?

I think it’s a matter for debate.

The blame I assign to LRA relates to its outright refusal in many cases to sell, even when willing buyers present the funds to purchase. Hence, my use of the word “suffocat[ion].”

Comment by Thomas Duda — October 21, 2010 @ 7:38 p.m.

I blame the LRA for that, too. But I don’t blame them for causing widespread vacancy like you did in the original post. Get on Geo St. Louis and click parcels around that one and you will find no shortage of privately-owned vacant properties.

The LRA is a problem, but not THE problem.

Comment by Rob — October 21, 2010 @ 8:16 p.m.

You’re overstating my initial assertion.

Let’s be careful to make a distinction between vacancy and decay. I’m comfortable accusing government of driving decay.

I really appreciate the comments; I hope that we can organize a discussion in the coming months about the LRA and the future of St. Louis.

Comment by Thomas Duda — October 21, 2010 @ 8:24 p.m.

If anything I was giving you the benefit of the doubt and understating it by talking about vacancy only — show me a well cared for vacant in that part of the city, privately- or publicly-owned. I doubt you could. You would have no problem finding a privately-owned decaying building that is occupied by tenants, though. Vacant buildings are definitely not the only ones decaying, but they are are the only ones owned by the LRA. My point is the same– those buildings were decaying (and vacant) before the LRA owned them.

The problem of decay is complicated and has deep roots. You’re right that the government’s answer is not working but that doesn’t mean they are “driving” it. Your question of who has a better incentive to maintain a property is a good model but it needs to be adjusted if you’re going to apply it to the real world. The fact is that speculative land holding by private owners involves few incentives to improve property since it would only serve to increase their taxes (if they are even paying them). The lower they keep their costs while sitting on it, the bigger the payoff when they are able to sell it. Ironically I think I’d explain the LRA in the same way, but add the familiar aspects of a bloated bureaucracy too inefficient and directionless to accomplish anything. My point is that there is no reason to expect private owners to care for properties like this any more than the LRA in this part of the city because there is plenty of evidence that they don’t.

LRA is definitely a part of the future of St. Louis but we need to be realistic about what their role really has been and could be.

Comment by Rob — October 22, 2010 @ 6:14 a.m.

Hey, Rob:

I was doing some reading just now, and I ran across the following text from a resolution approved by the LRA Commissioners in March 2009:

From the “Background” description accompanying Resolution No. 09-LRA-046:

“By donating property, the owner could potentially avoid the cost of improving the property to meet City code; avoid the expense of securing a vacant building; eliminate the need for insurance, fire and liability; eliminate real estate taxes; avoid the problem of trespassing; and avoid the cost of spraying for weeds and cutting grass.”

I guess this really just reiterates the initial point of this post.

I definitely do not seek to oversimplify an issue or to assign blame where it does not belong. Vacancy, decay, abandonment, whatever we call it, is terrible. Individuals are best equipped to solve the problem, however. Government is a disease, not a cure.

Comment by Thomas Duda — October 22, 2010 @ 6:49 p.m.

Vacancy and abandonment doesn’t have to be terrible if it came about naturally or for a good reason and no one is hurt. My point is that government played a role in the abandonment of central cities and they have a responsibility to fix it. The decline of central cities is, I think, a perfect example of government failure. The LRA is how the city and state are addressing it, as is their responsibility. Not sure its the best way but here we are.

Your assumption that individuals would have taken better care of property doesn’t hold because clearly they didn’t — the quote you provided shows that these buildings have negative value in the short-term to the people who currently own them. But that doesn’t mean they wouldn’t have value to NEW owners. The properties are such a burden on current owners (people who inherited them, moved out and couldn’t re-sell, etc) that it isn’t even worth their time to try to sell them. The LRA is supposed to be the middleman that takes them and then arranges sale to someone who does value them and would improve them. They have a responsibility to not let the properties fall back into the hands of speculators and I think we agree that they might over-reach with this. But you also seem to assume that there would be an endless line of willing and capable buyers. Especially in the case of the property above, I just don’t think that’s true. But I think changes could be made that might increase the pool.

So maybe we’re talking past each other a bit — you say that private owners, generally, would take better care of these properties. I am saying that most private owners did not (and had no incentive to) take care of these properties, but that there likely are now and will in the future be private parties who would. The LRA, for all its faults, is supposed to facilitate this transfer. So I guess you can criticize the LRA for decay, but first you have to prove that there are willing buyers who will not impose greater costs on the city as the owner than the LRA. Most LRA properties are scattered and separated by privately-owned property in such a way that restricts the parcels use to residential, which really limits their attractiveness to capable buyers. But I think we’d agree that the LRA, under the direction of the SLDC, sits on these properties and holds out for something big to happen on them. Unfortunately, private owners have and continue to do the same (McKee, “Urban Assets”). That’s why I have to say that the problem is bigger than the LRA.

Comment by Rob — October 23, 2010 @ 9:28 a.m.

Rob,

Because of government involvement, the market cannot self correct. Maybe population loss means that we’ll have larger yards in some neighborhoods or more off-street parking in others. Right now, though, we have what fits my definition of a nightmare: stasis.

The examples of Northside Regeneration LLC and (perhaps) Urban Assets are not the best, as both companies appear to be chasing a perverse government incentive that encourages decay. DALATC is another driving force behind you see in these cases.

I agree, the LRA is not our City’s only problem. I don’t think that I ever said that it was.

Comment by Thomas Duda — October 23, 2010 @ 10:56 a.m.

Any idea how many of the decaying privately owned occupied properties are owned/occupied by people under the age of 70 and if not owner occupied have tenants paying the rent themselves (ie not Section 8)?

Comment by S/A — October 25, 2010 @ 12:21 a.m.

October 21, 2010