Kansas City officials announced today that Bank of America will be giving the city 75 vacant properties. The bank may provide cash as well — up to $20,000 for rehabs of the properties or up to $7,500 for each demolition.
City leaders are touting the transfer of these vacant properties as a “gift.” The Kansas City Star’s headline today reads: “Bank of America gift of vacant houses will aid KC’s urban core.”
But this gift comes with many risks. Kansas City will have to pay to maintain the properties until they are sold. Presumably, Bank of America was paying property taxes on the properties that it owned — taxes that will not be paid if the city takes ownership. The transfer could be a gift, but if Kansas City fails to sell the properties quickly, that gift will soon turn into a liability.
Though I may disagree with their proposed solution, city leaders and area legislators have openly stated that it is difficult to sell vacant property in the city. It is a real possibility that some of the so-called donations will remain vacant, and in city ownership for a very long period of time. That is the risk of owning vacant property, regardless of whether you are a city, or a private investor: There is the chance that no one else will want to buy your property.
For the sake of Kansas City residents and taxpayers, I hope the city finds private buyers who can put the property to productive use as quickly as possible. But I think, given the foreclosure crisis and associated risks, a better headline would have been: “Kansas City’s acceptance of low value properties will aid Bank of America’s bottom line.”