Confronted with hundreds of vacant lots and abandoned buildings amid heavy demand for housing, the city of Boston in 1997 decided to deploy a time-tested weapon: humiliation. Under its “Houses of Shame” initiative, Boston prints and broadcasts photographs of run-down inner city properties next to snapshots of the landowners’ well-tended suburban homes. “After a while, they get the picture,” Boston Mayor Thomas Menino said of property owners last Monday during a visit to the Harvard Club on 44th Street. Some of those owners, Menino recalled, began fixing up their property within hours of being outed. “Embarrassment is an excellent motivator for individuals,” he added; for policymakers, “it’s a lot of fun.”
Menino, whose efforts to reduce vacancy and abandonment have reduced his city’s roster of unused properties by 67 percent in 10 years, was speaking at a Drum Major Institute conference about how to use New York City’s vacant land and abandoned buildings to mitigate the city’s housing crisis. Seated next to the four-term Beantown mayor was Manhattan Borough President Scott Stringer, whose office is pushing a menu of policy ideas including tax incentives to spur the development of vacant land—ideas that the Bloomberg administration is not embracing.
A survey of Manhattan conducted last year by Stringer’s office and the advocacy group Picture the Homeless found some 2,200 vacant lots or buildings on the island—apparent anachronisms in a borough where the real estate market seems stuck at a rolling boil. Abandoned buildings seem to belong more to the city’s 1970s storyline of arson and blight than to the gleaming resurgence of today. Indeed, when Mayor Bloomberg’s 10-year housing creation plan was announced, the city’s Department of Housing Preservation and Development declared “the end of the crisis of abandonment.”
Not so fast, say Stringer and others—though they acknowledge the landscape has certainly changed. Today’s vacant properties aren’t tax delinquent like the 100,000 parcels the city took possession of during the 1970s and 1980s. The owners of today’s empty spaces pay their taxes, but simply aren’t doing anything with the land. They may be waiting to sell when real estate prices get even higher, or biding time until they legally can convert rent-regulated buildings into market-rate residences. Other properties could be the subject of a deal that’s being negotiated for the land, an ownership dispute, or an estate sale. And in some neighborhoods around the boroughs, the real estate market is soft relative to Manhattan’s, meaning willing buyers and acceptable prices might be hard for a seller to find.
Whatever the reason, the city’s vacant land and abandoned buildings are empty of activity but full of potential. “Some view them as liabilities. I say they’re our best assets,” Stringer told City Limits. His survey estimated that Manhattan’s vacant units could house 24,000 people. Picture the Homeless points out that that’s enough to give most of the city’s homeless a place to live. More likely is that the property would be developed for market-rate housing that included affordable units under the Mayor Bloomberg’s 10-year housing plan, which could run into cost problems (see City Limits Weekly #613, Nov. 12, 2007) partly because of the growing scarcity and rising cost of buildable land.
A major obstacle to getting housing developed on these parcels, Stringer says, is that despite the pressing need to make use of vacant land, “We do not incentivize property owners and landowners to do anything about it.” The city’s property tax structure, he says, fails to leverage vacant land into productive uses.
The city has four property classes that pay different tax rates. Class 1 covers one-, two- and three-family homes, Class 2 applies to other residential property, Class 3 is for utility company land and Class 4 encompasses commercial and industrial properties. While tax rates are highest for Class 1 properties, the other three classes are taxed on a far higher proportion of their assessed value, so Class 1 properties end up paying the lowest effective rate. Stringer’s survey found evidence that a quirk in how the city taxes vacant properties might be contributing to the vacancy problem: Below 110th Street, vacant properties next to Class 1 buildings are taxed at the higher Class 4 rate. Above 110th Street, vacant properties next to Class 1 buildings are taxed at the lower Class 1 rate. That differential – along with the broader contours of the real estate market – might be one reason why most of the vacant buildings in Manhattan are located above 110th Street.
So Stringer and Picture the Homeless—which first came up with the idea of the vacant lot survey—are pushing to recalibrate the incentives. Both have pressed HPD to conduct a survey of vacant properties that encompasses the whole city, not just Manhattan. Stringer’s office is working on a new city law that, like ordinances in places like St. Louis and Burlington, Vt., would require vacant property owners to register their property and pay a fee. And State Senator Jose M. Serrano of the Bronx has introduced a bill in Albany that would tax vacant properties above 110th Street at the higher Class 4 rate.
Additionally, Stringer’s office is considering calling for a new tax class specifically for vacant properties or even a more fundamental shift to so-called “land value taxation,” under which more of a property’s tax load would be attributed to the land, rather than the structure built on it—a change that would make vacant land costlier to hold. Meanwhile, Picture the Homeless and City Councilman Tony Avella, a Queens Democrat, are working on a law to discourage landowners from warehousing properties.
HPD has told Picture the Homeless (which sponsored a panel discussion today at Columbia University on this very issue) that an annual survey of vacant properties wouldn’t be cost-effective. HPD told City Limits that it would not oppose a survey, but on that idea and Springer’s other proposals, the housing agency is lukewarm at best. “Obviously, HPD is always interested in working with owners and developers to build affordable housing,” says Seth Donlin, an agency spokesperson. “Likewise, we’re always willing to work with elected officials—City Council members and the various borough presidents—to encourage that [development] in the private sector.” HPD didn’t offer specific reaction to Springer’s bid to register vacant properties and change the tax structure. But under Bloomberg, the city’s approach to housing has always been more carrot than stick – preferring to offer the private sector incentives to act, instead of punishments for not acting.
Bloomberg’s PlaNYC blueprint for growth calls for innovative approaches to creating more land for housing between now and 2030 with sweeping rezonings, waterfront development and transforming old schools and hospitals into housing, but—perhaps out of a reluctance to tell private owners who pay their taxes what to do with their property—doesn’t specifically address how to get unused individual lots into the housing market.
A key question is whether, if Stringer’s proposals were put into action, private sector development on these vacant properties would include the kind of affordable housing that advocates want. HPD contends that existing programs like the 421-a tax break and the agency’s inclusionary zoning model would encourage developers to offer affordable units alongside the market-rate apartments they create. HPD is well ahead of most of its goals for directing housing to lower-income people, but some agency programs create housing for people making upwards of $85,000 a year, and advocates for the homeless have said the mayor’s plan doesn’t set aside enough units for people coming off the street and out of shelters.
Including low-income affordable housing on these vacant properties might require more money than the city has left in its budget for the mayor’s 10-year plan. But Stringer says a conversation about the budget is premature, because the city doesn’t know how much total vacant property it has to play with. His message to HPD, he says, is “Call us. Let’s sit down and talk about a vacant lot and building count. We need to do this. We’ve got to know what our inventory is.”