A recent report from the US Government Accountability Office (GAO) details the increasing problems arising from vacant properties. Among the major elements of the study was the burdens facing local governments in managing the growth in such properties.
From the GAO’s abstract:
[L]ocal governments reported spending millions of dollars–including federal funds–on vacant properties that are not adequately maintained. For example, Detroit spent about $20 million since May 2009 to demolish almost 4,000 vacant properties. Unattended vacant properties produce public safety costs and lower communities’ tax revenues due to the decline in value of surrounding properties, with some studies finding that vacant foreclosed properties may have reduced prices of nearby homes by $8,600 to $17,000 per property in specific cities. Cities and states are implementing a variety of strategies to minimize the negative impacts of vacant properties but face various challenges.For example, some local governments are creating special entities called land banks that acquire and hold vacant properties for later development, sale, or demolition. However, difficulty obtaining adequate and sustained funding and finding buyers for the properties can hamper these local efforts. Some cities have passed ordinances that require servicers to notify the city when a property they are managing becomes vacant and attempt to hold them responsible for maintenance. However, localities often lack resources or staff to enforce these requirements fully. Some suggest fewer properties would become vacant if servicers had to account for communities’ costs–such as for policing and fires–when considering whether to modify loans or foreclose, but servicers and others questioned the feasibility and effectiveness of such an approach. Local officials and community groups said they need more funds and increased oversight by federal regulators to ensure that servicers comply with local property maintenance codes.
Click here to see the report abstract, or get the full report here.
