Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck

7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck

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TheCost

of

Vacant

and

Blighted

Properties

in

Atlanta:

AConservativeAnalysisofServiceandSpilloverCosts

FinalReport

DanImmergluck,PhD1

September1,2015

Acknowledgements:IwanttothankSaraToering,GeneralCounseloftheCenterfor

CommunityProgressforinvaluableassistance,withoutwhichthisreportwouldnothavebeen

possible.IalsowanttothankJordanWilliamsattheCityofAtlantaOfficeofHousingwhotook

theleadattheCityinhelpinggatherthedatafromdifferentagenciesthatareusedinthis

report.Finally,IwanttothankDerrickJordanfromtheOfficeofHousingandTerriLeeinthe

DepartmentofPlanningandCommunityDevelopment,andthemanyindividualsinvarious

agenciesthat

assisted

by

providing

data

and

feedback.

1ThisreportwaspreparedfortheCityofAtlantaaspartofacontractbetweentheCityofAtlantaandCommunity

Progress,datedMay13,2015,forservicesincludingthecompletionofaCostofBlightStudy.Contacttheauthorat

[email protected].


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TableofContents

Page

Introduction

Section1.ServiceCosts:CodeEnforcement,Police,andFire

1.1

CostEstimatesforCodeEnforcementandtheDepartmentof

CorrectionsCleanandCloseProject

1.2

Cost

Estimates

for

Police

Department

Dispatches

Associated

withVacantProperties

1.3CostEstimatesforFireDepartmentServicesAssociatedwith

VacantProperties

Section2.SpilloverCostEstimatesonPropertyValuesandPropertyTax

Revenues

Conclusion:AggregatingtheServiceandSpilloverCostsDuetoVacant

PropertiesinAtlanta

Citedand

Relevant

Literature

Appendix: SuggestionsforFutureDataCollection

1

3

3

6

11

14

23

25

27


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1

Introduction

Theproblemofdistressedvacantpropertiesandtheblightthataccompaniesthemhasbeena

continualconcernincommunitydevelopmentandneighborhoodplanningintheU.S.

(AccordinoandJohnson,2000;Mallach,2006;SternliebandIndik,1969).Therootsofvacancy

andabandonment

at

the

neighborhood

level

have

ranged

from

declining

employment

and

population,tometropolitansprawl,toespeciallyrecentlysubprimelendingandits

accompanyingforeclosures.

Vacantpropertiesespeciallythoseinpoorconditionhavenegativeimpactson

neighborhoodsandcities.2 Forexample,avarietyofstudieshavefoundnegativespillover

impactsofvacantand/orabandonedhomesonneighboringpropertyvalues.Inastudyof

Columbus,Ohio,Mikelbank(2008)foundthatvacantpropertiesreducedthepriceofnearby

homesbymorethan$4,000.InasimilarstudyofFlint,Michigan,GriswoldandNorris(2007)

determined

that

each

vacant

structure

within

500

feet

a

home

reduced

the

home

value

by

over

2percent.InastudyofBaltimore,Han(2014)alsofoundthatvacanthomeshadanegative

effectonnearbypropertyvalues.Vacantpropertiesarealsoassociatedwithhighercrimerates.

Cui(2010)analyzedcrimeandforeclosuredatainPittsburghandfoundthatviolentcrimes

within250feetofaforeclosedhomeincreasedbymorethan15percentoncetheforeclosed

homebecamevacant,withsimilareffectsonpropertycrime.Branas,Rubin,andGuo(2012)

foundthatvacantpropertyisamongthestrongestpredictorsofassaultamongadozen

demographicandsocioeconomicvariables.

Thenegativeeffectsofvacantpropertiestendtotaketwogeneralforms.First,vacant

properties,especially

those

in

poor

condition,

impose

direct

service

costs

on

code

enforcement

units,policedepartments,firedepartments,courtsystems,andothergovernmentalagencies.

Second,vacantpropertiesespeciallypoorlymaintainedonescanimposenegative

spillovercostsonnearbyneighborhoods,includinglowerpropertyvaluesandhighercrime

rates.

Inthisanalysis,Iformulateconservativemeasuresofsomeofthechiefcostsimposedbyvacant

propertiesintheCityofAtlanta. Theanalysisisorganizedintotwomainsections.Section1

addressesdirectservicecostsintermsofcodeenforcement,police,andfirecosts.ThenSection

2estimates

the

spillover

costs

of

distressed

vacant

properties

on

residential

property

values,

andassociatedpropertytaxrevenues.

2Vacantpropertiesincludevacantbuildingsorstructures,andvacantlots.Thefocusofmostofthisstudyisonvacant

buildings,withparticularattentiontotheeffectsofvacantresidentialbuildings,includingsingle andmultifamilybuildings.In

somecases,costsareconservativelyestimatedonlyforasubsetofvacantproperties.Forexample,duetoalackofresearchon

theeffectsofcommercialpropertiesonpropertyvalues,onlythespillovercostsofvacant,residentialbuildingsareincludedin

costestimates.


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2

Theanalysisinthisreportyieldsaconservativerangeofbetween$1.67to$2.96millionin

annualCodeEnforcement,Fire,andPolicedirectservicecosts,incurredbytheCityofAtlanta,

thatarerelatedtovacantproperties.3 Inaddition,theanalysisyieldsabest,reasonable

estimateoflossesinsinglefamilypropertyvaluesintheCityduetodistressed,vacant

propertiesof$153million,withaconservative,lowerboundof$55million.Suchadeclinein

propertyvaluestranslatesintoabest,reasonableestimateofpropertytaxrevenuedeclineof

$2.7millionperyear,withalowerboundof$985,000peryear.

Thisanalysisisnotcomprehensiveandoffersaconservativeestimateofthecostsofblightin

thecity.Forsomecosts,datacouldnotbeobtained.Amongthesearethoserelatedtounpaid

propertytaxes.UnfortunatelytheFultonCountyTaxCommissionerwasunabletoprovide

adequatedataformeasuringtheseeffects.Dataoncourtsystemcostswerealsonotavailable.

Thespillovercostsofvacantpropertiesonmultifamilyrentalandcommercialpropertieswere

notabletobeestimatedbecausetherearenoreliablestudiesavailableoftheeffectsofnearby

vacantproperties

on

the

value

of

these

sorts

of

buildings.

Only

the

effects

on

the

values

of

singlefamilypropertiesareconsideredinthisanalysis.

Thisstudyisalsoconservativebecause,ineachstepoftheanalysis,estimateswerecalculated

inaconservativefashion.Forexample,inthespilloverestimatesinSection2,onlyspillover

effectsoutto500feetfromadistressedvacantpropertywereconsidered,eventhoughsome

researchfindssmalleffectsoutto1,000feetormore.Moreover,onlytheeffectsduetovacant

propertiesinpoorordeterioratedconditionwereincludedinthecostestimatesinSection2,

despitethefactthatevenvacantpropertiesinfairorgoodconditionareexpectedtohave

some

(albeit

smaller)

negative

impact

on

property

values.

ANoteonTimingoftheData

Theanalysesinthisstudywerenotallabletobeconductedforthemostrecentyear(2014).

DirectservicecostsforCodeEnforcementandtheFireDepartmentwereexaminedforcalendar

year2014,becausethesedataincludedsomeinformationonthevacancystatusofaffected

properties.ThiswasnotthecasefortheanalysisofPoliceservicecostanalysis,becausethe

PoliceDepartmentsadministrativedatadoesnottrackthevacancystatusofproperties

associatedwithdispatches. Inordertodeterminedispatchlocationsassociatedwithvacant

properties,data

from

2012

were

matched

via

geographic

information

system

(GIS)

software

to

thecityswindshieldsurveydatafromtheStrategicCommunityInvestment(SCI)study(APD

Solutions,2013),whichwascollectedin2012.Moreover,thespillovercostanalysisrequired

vacancyandconditiondataonlyavailableintheSCIdataset,andsoitwasconductedfor2012.

3Datawerenotavailableatthetimeofthisstudytoestimateadditionaldirectcostsincluding,forexample,courtcosts

(solicitorsoffice,publicdefendersoffice,andmunicipalcourt),andcostsassociatedwithtaxdelinquencyandenforcementon

vacant/abandonedproperties.


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3

Section1.ServiceCosts:CodeEnforcement,Police,andFire

1.1CostEstimatesforCodeEnforcementandtheDepartmentofCorrectionsCleanandClose

Project

UsingdataprovidedbytheCodeEnforcementunit,therewereover23,000codeenforcement

inspectionsin2014.Ofthese,almostall,22,862,werefromcasesinitiatedafter2010,forwhich

thedetailsofthecodeenforcementcasewereavailable.

Unfortunately,theCodeEnforcementdatadonotexplicitlyidentifyallvacantproperties,but

thecasedescriptionsdoindicateincidentswherethestructurewasclearlyvacant(cases

classifiedasopenandvacant). Thedataalsoindicateburntstructuresandvacantlots.

AnycaseincludedinanyofthesethreecategoriesisconsideredaKnownVacantproperty.

Additionally,many

inspections

were

classified

as

junk,

trash

and

debris,

overgrowth,

and/or

exteriorstructural. InspectionsclassifiedbyCodeEnforcementintwoorthreeofthese

categories,butnotclassifiedinthisanalysisasKnownVacant,werecategorizedhereas

LikelyVacant. AllotherpropertieswereclassifiedasLikelyOccupied,howeversome

portionofthesepropertiesisalmostcertainlyvacant.

The2014codeenforcementinspectionsbreakoutasinTable1.1.1. Justover23percentof

inspectionsareclassifiedhereasKnownVacant,withanother14.4percentclassifiedasLikely

Vacant.Thisleaves62.4percentcategorizedasLikelyOccupied.

Table1.1.1.CodeEnforcementInspectionsin2014byEstimatedVacancyStatusofProperty

(1)

EstimatedVacancyStatus NumberofInspections PercentofInspections

KnownVacant(2) 5,307 23.2%

LikelyVacant(3) 3,287 14.4%

LikelyOccupied 14,268 62.4%

TOTALINSPECTIONSIN2014(1) 22,862 100.0%

(1) Forcasesinitiatedafter2010;over95percentofall2014cases.

(2) Thisincludes3,992inspectionsindicatedasopenandvacant,1,037indicatedasvacantlot,and493asburntstructure.

Numbersdonotaddto5,307becausesomeinspectionsfallintomorethanoneofthesecategories.

(3) ThisincludespropertiesthatarenotKnownVacantbuthaveatleasttwoofthefollowingthreefeaturesindicated:a)junk,

trash,anddebris;b)overgrowth,andc)externalstructuralissues.


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4

ToprovideacomplementarycheckonthenumberofCodeEnforcementcasesthatinvolve

vacantproperties,CodeEnforcementwasaskedtoprovidearoughestimateofthepercentage

ofunitsthatinvolvedvacantproperties,andestimatedarangebetween40and50percent.

Themoreconservativeestimateofthisrange(40percent)isjustslightlyhigherthanthe

portionofcasesthatfallintotheKnownVacantandLikelyVacantcategories.Therefore,8,594,

or37.6percentofthe2014inspections,providesareasonablyconservativeestimateofvacant

propertyrelatedinspections.

Table1.1.2providesarangeofestimatesforCodeEnforcementcostsbasedontheresultsin

Table1.1.1. CodeEnforcementpersonnelindicatedthatthetypicalinspectiontookonehalf

hourtoexecute.Thus,directcostsofinspectionsareequaltothenumberofinspectionstimes

onehalfhourtimestheaveragehourlyrateforcodeenforcementofficers,whichequals

$28.33,includingsalaryplusfringebenefits.4Inordertodetermineanestimatedindirectcost

chargeforcodeenforcementactivities,itisnecessarytoidentifytheassociatedcostsofnon

fieldinspector

personnel

associated

with

code

enforcement

activity.

To

do

this,

the

budget

for

theCodeEnforcementUnitwasobtained.Aloadingfactorwasdevelopedtoreflecttheindirect

costsofnonfieldpersonnelaswellasequipment,suppliesandothermiscellaneousexpenses.

Thetotalpersonnelbudget(salariesandfringebenefits)fortheunit,excludingovertime,extra

helpandretentionbonuseswas$3,056,212.Ofthis,$1,296,506wasforthe22code

enforcementofficersinthefield.Thus,aloadingfactorof135.7%forsupervisory,

administrative,andsupportpersonnelcostswasestimated.Then,$110,380inequipment,

suppliesandothermiscellaneousexpensesweredividedbythetotalsalaryandfringeofthe

unitto

get

an

indirect

charge

rate

of

3.6

percent.

Together,

these

sum

to

aloading

factor,

or

indirectchargerate,of139.3percent.

AsshowninTable1.1.2,thisanalysisyieldsarangeofannualcostsbetween$449,726and

$1,587,813peryearforvacantpropertyinspections,withareasonable,conservativeestimate

of$728,274annually.Thisfigureincludesonlythecostsforinspectingpropertiesanddoesnot

includeanycostsofamelioratingtheproblemsassociatedwiththevacantparcels.

4The28.33perhourcostsisbasedonanannualbudgetfortotalsalaryplusfringebenefitsfor22codeenforcement

officersof$1,296,506.ThisfigurewasprovidedbytheCodeEnforcementUnit.


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5

Table1.1.2.AnnualCodeEnforcementCostsforThreeScenariosofVacantProperty

InspectionCounts

ScenariosofVacantPropertyCases Inspections Hours DirectCosts

FullyLoaded

Costs

Known

Vacant

5,307

6,634

$187,934

$449,726Known+LikelyVacant 8,594 10,743 $304,335 $728,274

Known+Likely+PossibleVacant 18,737 23,421 $663,524 $1,587,813

TheDepartmentofCorrectionsCleanandCloseProject

Inadditiontothesecosts,outsidetheCodeEnforcementunit,theCorrectionsDepartment

managesaprogramcalledInmateCleanandClose,whichisaprojectthatworkstosecure

vacantand

open

buildings.

The

Department

provided

costs

for

the

program

through

May

of

2015ofjustover$107,000forpersonnelandsupplies.Adjustingthisupwardforatotalfiscal

yearresultsinanestimateof$128,400inannualcosts.

NotcountedinanyofthesecostsarethoseaffiliatedwiththeDepartmentofPublicWorks,

whichisfrequentlyaskedtocleanandcutpropertieswhoseyardsarepoorlymaintained.

Estimatesforeffectivecoststothecitywereestimatedtoexceed$200,000overaoneyear

periodfromJuly2013toJuly2014;howeverlienswerefiledfortherecoveryofthelarger

amountsand

recovery

may

reduce

the

effective

costs

to

the

city.


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6

1.2CostEstimatesforPoliceDepartmentDispatchesAssociatedwithVacantProperties

DataonpoliceincidentswereobtainedfromtheAtlantaPoliceDepartment.Tobeconservative

andeliminatethosecallsthatmightbeviewedaslessthansubstantive,allincidentswherethe

durationfromcallreceivedtoendwaslessthan10minutesweredropped.Thiseliminated

approximately35

percent

of

all

incidents

from

further

analysis.

Unfortunately,APDrecordsdonotindicatewhetheralocationaffiliatedwithanincident

involvedavacantproperty.Thus,inthiscase,GISsoftwarewasusedtomatchthelatitudeand

longitudecoordinatesintheAPDdatawithrealestateparcelsonthecityofAtlantaparcelmap.

Todothis,theAPDincidentrecordswereimportedintoArcGISandplottedusingthelatitudes

andlongitudesprovidedbythePoliceDepartment.(Averysmallshareabout2percent of

theoriginalrecordsprovidedbytheDepartmentdidnothavelatitudeorlongitudecoordinates;

theseincidentswerealsodroppedfromtheanalysis.) ThemapwasthenprojectedinArcGISin

the

same

coordinate

system

used

in

the

parcel

shape

file

for

the

City

of

Atlanta.

(Figure

1.2.1

belowshowstheincidentsplottedontopoftheparcelmapforthecity.)Oncethesetwofiles

werelinedup,itwaspossibletojointhemspatially,sothatforeachincident,anynearby

parcels(within40feet)wereidentified.Formost(79%)oftheseincidents,theincidentlocation

overlappedwith(wascontainedwithin)apropertyparcel.However,toaccountforsome

expectederrorinrecordingthelocationoftheincident,additionalparcelswithin40feetofthe

reportedincidentlocationthelocationwerealsoconsideredaspossiblybeingincidentsites.

Aspatialjoinidentifiedtheparcelsthatwerelocatedatthesamelocationasthepolice

incident.Forincidentswheretherewasnopreciselycolocatedparcel,thepresenceofavery

closeparcel

was

checked

in

case

the

reported

police

incident

location

was

immediately

adjacenttotheparcel(e.g.,onthestreetinfrontoftheproperty).Ofthe2012incidentslasting

atleast10minutes,154,235wereidentifiedaslocatedpreciselyonaparcel. Another9,965

incidentswereidentifiedaslocatedwithin20feetofthenearestparcel.Finally,another31,072

wereidentifiedaslocatedbetween20and40feetofthenearestparcel.

Table1.2.1providesdataontheincidentsassociatedwithpropertyparcelsin2012.Itprovides

threelevelsofsensitivityformeasuringthenumberofincidentsandincidenthoursassociated

withpropertiesinthecity.Itbreaksthesenumbersoutbythevacancystatusofthebuilding,

whichwas

obtained

from

the

2011

2012

citywide

windshield

survey

completed

for

the

Citys

StrategicCommunityInvestmentstudy(CityofAtlanta,2013).ThePoliceincidentdatawere

obtainedfor2012tomatchthetimingoftheSCIwindshieldsurvey.


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7

Figure1.2.1.PoliceIncidentsPlottedonParcelMapfortheCityofAtlanta

ThetwolefthandsidecolumnsinTable1.2.1indicatetheincidentandhourcountsbyvacancy

statusas

reported

in

the

SCI

data.

However,

for

many

parcels,

there

was

no

vacancy

status

availablefromtheSCIsurvey.Theseaccountforapproximately28percentoftheincidents

linkedtoproperties.Sincethereisnovacancyinformationavailablefortheseincidents,the

associatedincidentsandincidenthourswereassignedavacancystatusinthesameproportion

asthoseincidentswithknownstatus.Theseadjustedestimatesareshowninthetworight

handcolumnsinTable1.2.1.Thesecolumnsshouldprovideamoreaccuratecountofincidents

andincidenthoursassociatedwithvacantproperties.Theadjustedvacancyestimatesare

boldedinthetable.

Table1.2.1providesthreedifferentestimatesofincidentsandincidenthoursassociatedwith

vacantproperties.Thefirstestimate(inthetopsegmentofthetable)isthemostconservative

andincludesonlyincidentsthatarepreciselyidentifiedascollocatedwithparticularparcels.

Themiddlesegmentofthetableincludestheseincidentsbutalsothoseidentifiedaslocated

within20feetofpropertyparcels.Similarly,thebottomsegmentofthetableidentifies

additionalincidentslocatedwithin20to40feetofpropertyparcels.Thus,Table1.2.1identifies

arangeofincidentcountsandincidenthoursassociatedwithvacantbuildings.Thenumberof


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8

incidentsfor2012rangesfrom12,919to16,756,andthenumberofincidenthoursrangesfrom

14,824to17,392.Theseincidents,then,averagejustoveronehoureachfromcallreceiptto

thecleartimefortheincident.

Table1.2.1.IncidentCountsandHoursAssociatedwithPropertiesbyVacancyStatus,2012

Incident Hours and Counts

Incident Hours and Counts AssumingProportionate Reallocation of Incidents

w/ Unknown Vacancy Status

Vacancy Status Incidents Incident Hours Incidents Incident Hours

Including only property locations identical to incident

Occupied 95,913 95,907 131,874 143,696

Vacant 9,396 9,894 12,919 14,824

No Structure 5,886 8,066 8,093 12,085

Not Visible 981 884 1,349 1,325

Unknown/blank 42,059 57,179

TOTAL 154,235 171,930 154,235 171,930

Including identical property locations and those within 20 feet

Occupied 99,765 103,023 139,205 154,764

Vacant 9,684 10,121 13,512 15,204

No Structure 7,035 8,984 9,816 13,497

Not Visible 1,194 1,090 1,666 1,637

Unknown/blank 46,522 61,884

TOTAL 164,200 185,102 164,200 185,102

Including identical property locations and those within 40 feet

Occupied 116,151 113,433 162,657 170,271

Vacant 11,965 11,587 16,756 17,392

No Structure 10,001 11,010 14,005 16,527

Not Visible 1,324 1,183 1,854 1,776Unknown/blank 55,831 68,754

TOTAL 195,272 205,966 195,272 205,966LeastC

onservative

MostConservative


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9

EstimatingDollarCostsAssociatedwithPoliceCallsRelatedtoVacantProperties

Inordertoestimatethecostsassociatedwiththeincidenthoursassociatedwithvacant

propertiestwofiguresareneeded.Firstistheaveragehourlycostofanincidenthourinterms

ofdirectstaffingcosts.Assumingthatatypicalincidentrequiresoneofficer5,andwithan

averagehourly

rate

for

officers,

including

fringe

benefits,

of

$27.21,

we

can

calculate

the

direct

staffcostsbymultiplyingthenumberofincidenthoursbythishourlycost.

Then,fullyloadedperstaffhourcostswerecalculatedusingthePoliceDepartmentsFY2015

budgetanddetailedinformationonpersonnelcostsfromtheDepartment. TheDepartment

providedsalaryandfringebenefitsbyorganizationalunitforallswornofficers.Afterexcluding

supportandadministrativeunits,thetotalsalaryandfringeforallswornofficersinthe

Departmentlikelytoworkinthefieldwasestimatedat$131,199,746forthefiscalyear.6 Then,

thetotalsalaryandfringefigurefromtheDepartmentsFY2015budget($212,822,369)was

divided

by

this

figure,

to

yield

an

indirect

loading

factor

for

non

field

(administrative

and

support)personnelof62.2%.Inaddition,theFY2015budgetshowedsupplies,contracted

services,andothercostsforthedepartmenttotaling$18,327,332.Dividingthisfigurebythe

totalpersonnelbudgetgivesasuppliesandmiscellaneousloadingfactorof8.6%.Addingthese

twoloadingfactorstogethergivesatotalloadingfactorof70.8%,whichwillbeappliedto

directsalaryandfringecosts.

Table1.2.2takestheincidenthourestimatesfromTable1.2.1andtranslatestheminto

estimatedcoststothecity.Itmultipliesincidenthoursbytheassociatedhourlypersonnelcosts

(salaryplusfringebenefits)forofficersinthefield.Thelastcolumnthenmultipliesthesecosts

by1.708

to

reflect

the

70.8%

loading

factor

estimate

for

APD.

The

result

is

that

fully

loaded

costsforvacantpropertyrelatedpoliceincidentsin2012rangedfrom$688,941to$808,288.

AsinthecaseoftheFireDepartmentanalysis,thereisnoattemptheretoaccountforany

injuriesorfatalitiesresultingfromanyincidentsincludedinthisanalysis,includingany

associatedhealthcare,lostproductivity,oremotionalcosts.Thereisalsonoattemptmadeto

includeanycostsassociatedwithactionssubsequenttothedispatchperiod,includingany

courtorincarcerationcosts.

5TheAPDincidentdataindicatethatover98.7%ofdispatchesinvolvejustoneofficer.Thus,oneofficerperdispatchis

assumed.6Officersinthefollowingorganizationalunitswereassumedtobeprimarilyadministrative,supervisoryorsupport: Chiefof

Police,AssistantChiefofPolice,PoliceAdministration,PoliceBackgroundandRecruitment,PoliceTraining,andCode

EnforcementChief.


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10

Table1.2.2.ServiceCostEstimatesforPoliceforVacantPropertyRelatedCalls,2012

Estimate of VacantProperty Incidents Incidents Incident-Hours Direct Staff Costs (1)

Fully LoadedStaff Costs (2)

Most Conservative 12,919 14,824 $403,361 $688,941

Mid-Range Estimate 13,512 15,204 $413,701 $706,601

Least Conservative 16,756 17,392 $473,236 $808,288

(1) Basedonaveragesalaryandfringeperhourof$27.21.

(2) BasedonindirectcostsforotherFireDepartmentpersonnel,supplies,etc.of70.8%ofdirectstaffcosts(salaryplus

fringe).


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11

1.3 CostEstimatesforFireDepartmentServicesAssociatedwithVacantProperties

ThecostsimposedontheCityofAtlantaintermsofFireDepartmentcostswereanalyzed

throughcloseexaminationoftheFireDepartmentsincidentreportdata,whichtrackawide

varietyofcharacteristicsnotonlybyincident,butalsobyunitrespondingtotheincident.The

FireDepartments

data

had

the

advantage

of

including

afield

describing

the

type

of

property

andwhetherthepropertywasoccupiedorvacant,althoughthisfieldwasleftblankina

sizeablenumberofcases.Asubstantialproportionoffireincidentresponsesoccuratparking

garages/facilities,andthesewereexcludedfromtheanalysis,aswerefiresatsiteswherethere

wasnobuildingorstructure.Datawereanalyzedfortheyear2014.TheFireDepartmentdata

showedthat,in2014,therewere584incidentsatresidentialorcommercialbuildings

(excludingparkingstructures)resultingin5,000dispatchesfromdifferentunits. Table1.3.1

providesinformationontheseincidents.

Table1.3.1SummaryStatisticsonFireIncidentsConcerningResidentialandCommercial

Buildings2014*

Occupancy Number of IncidentsNumber of Unit

DispatchesNumber of Staff

Responding Number of Staff Hours

Occupied 276 47.3% 2,683 53.7% 9,135 53.8% 10,101 61.5%

Reported Vacant 83 14.2% 833 16.7% 2,907 17.1% 4,138 25.2%

Unreported 225 38.5% 1,484 29.7% 4,951 29.1% 2,175 13.3%

Total 584 5,000 16,993 16,414

*excludes parking structures, vacant lots, and other locations without identified residential or commercial structure

Table1.3.1showsthatwhilereportedvacantpropertiescomprise14.2percentoffiresat

residentialandcommercialbuildings,almost40percentofpropertieshadunreportedvacancy

status.Whatmaybemoreimportant,however,isthateventhisconservativeestimateof

vacantbuildingfireincidentsaccountedforadisproportionatepercentageofstafftimeand

costscomparedtooccupiedbuildingfires.Overall,justover25percentoffirefightingstaff

hoursdevotedtobuildingfireswereassociatedwiththesereportedvacantstructurefires.

ThefiguresinTable1.3.1werederivedfromFireDepartmentrecordswhichindicatevarious

characteristicsforeachdispatch,includingincidentnumber,unitnumber,location,thenumber

ofstaffinvolvedinthedispatch,thelengthoftimeofthedispatchuntiltheincidentwas

resolved,andsomeadditionalfeatures.Inmorethan15percentofincidents,thenumberof

staffonthedispatchwasnotreported.Inthesecases,theaveragestaffnumberfordispatches

fromthesameunitduringtheyearwasassignedtothatdispatch.


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12

AccountingfortheLargeNumberofBuildingFireswithUnreportedOccupancyStatus

AsseeninTable1.3.1,almost40percent(38.5%)oftheincidentsatresidentialorcommercial

buildingswereatbuildingswherethevacancystatuswasnotreported.Ifweassumethatthe

shareofthesepropertiesthatwerevacantisthesameastheshareofreportedoccupancy

statusproperties,

then

that

share

is

simply

equal

to

(14.2%/(14.2%+47.3%)),

which

equals

23.1%. Table1.3.2showsthechangeinthevacantbuildingtotalsunderthisassumption.While

thenumberofincidentsincreasessignificantlyto135,andthenumberofdispatchesandstaff

increase,thelengthofthesecallsareshorter,sotheydonothaveaslargeasaneffectonstaff

hours,ortherefore,ondirectcosts.

Table1.3.2.AdjustingVacantBuildingFigurestoAccountforUnreportedOccupancyStatus,

2014

Incidents Dispatches Staff Staff-Hours

Reported Vacant Buildings 83 833 2,907 4,138

+ 23.1% X Unrepor ted 52 343 1,144 503

Likely Vacant 135 1,176 4,051 4,641

EstimatingtheServiceCostsofVacantBuildingFires

Directcosts

of

dispatches

were

based

on

staff

and

equipment

costs

for

atypical

dispatch

of

24

firefightersofdifferentranksandatotalofsevenvehiclesofdifferentsize.Thisscenariowas

basedoninformationfromFireDepartmentpersonnel.Directstaffcostsperhour(salaryplus

fringebenefits)werecalculatedat$920.87perhourforatypicalmixof24staff,foraperstaff

hourdirectcostof$38.37perhour. Equipmentcostswereestimatedat$681perhourfor

these24staff(on7vehicles).Thusequipmentcostsperstaffhourwereestimatedat$28.38.

Then,fullyloadedperstaffhourcostswerecalculatedusingtheFireDepartmentsFY2015

budgetandinformationonfieldpersonnelcostsfromtheDepartment. TheDepartment

providedaverage

salary

and

fringe

benefits

by

category

of

firefighter

for

all

field

personnel.

The

totalsalaryandfringeforsuchpersonnelwasestimatedat$57,528,064.Thenthetotalsalary

andfringefigurefromtheDepartmentsFY2015budget($91,919,992)wasdividedbythis

figure,toyieldanindirectloadingfactorfornonfieldpersonnelof59.8%.Inaddition,theFY

2015budgetshowedsupplies,contractedservices,andothercostsforthedepartmenttotaling

$10,366,807.Dividingthisfigurebythetotalpersonnelbudget($91,919,992)givesasupplies


15/30

13

andmiscellaneousloadingfactorof11.3%.Addingthesetwoloadingfactorstogethergivesa

totalloadingfactorof71.1%,whichwillbeappliedtodirectsalaryandfringecosts.

Table1.3.3usesthesefigures,togetherwiththedatafromTable1.3.2,tocalculatethe

estimatedcostsforReportedVacantandLikelyVacantBuildingFires.TheresultsinTable3

indicatethat

Fire

service

costs

for

vacant

buildings

in

the

city

ranged

from

$388,000

to

$436,000in2014.

Itisimportanttopointoutthatthesecostsdonotincludeanycostsorharmassociatedwith

fatalitiesor injuries(andassociatedemotionalcosts,lostproductivity,orhealthcarecosts)and

donotincludeanydamagetotheproperties.Noattemptismadeheretocalculatewhatcould

besizeablemonetaryandnonmonetarycostsfromsuchoutcomes.

Table1.3.3.EstimatedServiceCostsofFiresatVacantBuildings,2014

Staff-HoursDire ct

Staff Costs(1)Fully Loaded

Staff Costs(2)Equipment

Costs(3) Total Costs

Reported Vacant Buildings 4,138 $158,775 $271,505 $117,436 $388,942

Likely Vacant 4,641 $178,075 $304,509 $131,712 $436,220

(1) Basedonaveragesalaryandfringeperhourof$38.37.

(2) BasedonindirectcostsforotherFireDepartmentpersonnel,supplies,etc.of71.1%ofdirectstaffcosts(salaryplus

fringe).

(3) Basedonestimatedequipmentcostsof$28.38perstaffhour.


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14

Section2. EstimatingtheSpilloverCostsofDistressedVacantPropertiesonSingleFamily

HomeValuesandPropertyTaxRevenueinAtlanta

InSection1ofthisstudy,thedirectservicecostsofvacantpropertieswereestimatedfor

variouscityservices,includingpolice,fire,andcodeenforcement.Inthissecondpartofthe

study,the

costs

that

are

imposed

upon

neighborhoods

and

taxpayers

in

the

form

of

reduced

propertyvaluesandtheassociateddeclineinpropertytaxrevenueareestimated.Thesecosts

aretypicallyreferredtoasspillovercostsintheresearchliterature.

Theapproachhereistoutilizethesignificantamountofrecentstudiesfromothercities,

combinedwithlocaldataonvacantpropertiesindifferentconditions,todevelopestimatesof

thesespillovercosts.Thedataandtimerequiredtodirectlymeasurethepercentageeffectof

vacantpropertiesonnearbypropertyvaluesusingprimaryrealestatedataisquitesubstantial,

andanyparticularmeasurementofsucheffectsissubjecttothelimitsoftheavailabledata.

The

approach

used

here

takes

advantage

of

a

now

substantial

literature

on

the

effect

of

vacant

anddistressedpropertiesonpropertyvalues.Thisstudyconductsametaanalysisofthehigh

qualitystudiesthathavebeendoneacrossdifferentcitiesanddifferentyears,andestimates

thespillovercostsonnearbypropertyvaluesduetodistressedvacantproperties,usingthe

centraltendenciesofthesefindings.

Then,actualdataonvacantproperties,brokenoutbytheirphysicalcondition,werecombined

withthesespillovereffectpercentagestoestimatethecumulativeeffectsofvacantproperties

inAtlantaonpropertyvalues.These,inturn,wereusedtoestimatepropertytaxrevenue

effects.Sensitivityanalysiswasperformedusingparticularlyconservativeestimatesfromthe

literaturein

order

to

develop

alower

bound

on

the

likely

property

value

impacts.

WhatDoExistingStudiesSayabouttheEffectofVacantPropertiesonNearbyHomeValues?

Agooddealofresearchhasexaminedthespillovercostsofvarioustypesofdistressedhousing

onnearbyhomevalues,includingtheeffectsofforeclosedproperties,theeffectsofvacant

properties,andtheeffectsoftaxdelinquentproperties.Theprecisedefinitionsofvacancy,

foreclosure,andtaxdelinquencyvaryacrossstudiesduetothenatureofthedataavailableand

differencesin

local

definitions

of

these

terms.

7

In

recent

years,

the

greatest

volume

of

such

workhasconcernedtheimpactofforeclosuresonnearbyhomevalues.However,while

foreclosuresmaycatalyzeanincreaseinvacantorphysicallyneglectedhomes,mostofthese

studiesdonotdirectlymeasuretheimpactofthevacancyorphysicalconditionofnearby

7Essentiallynorecentliteraturehasexaminedtheeffectofvacantnonresidentialpropertyonhomevalues,ortheeffectof

vacantpropertiesonnonresidentialormultifamilypropertyvalues.Thus,anysucheffectsarenotaccountedforinthisstudy.


17/30

15

values. (Afewofthesestudiesdoseparatelymeasuretheimpactofvacant,mortgage

distressedproperties,andtheyareconsideredhere.)

Thefocushereisonstudiesthatmeasuretheeffectofdifferentsortsofvacant,residential

propertiesonnearbyhomevalues. Whilemanycostofblightstudiesclaimtoincludethe

spillovereffects

of

vacancy

or

blighted

properties

on

nearby

home

values,

aset

of

8studies

conductedoverthelast10yearswereidentifiedthatwereviewedassufficientlystrongto

includeinthismetaanalysisofspilloverimpacts.Someotherstudiesexaminedtheeffectsof

onlyvacantlotsonnearbyproperties,ordidnotdistinguishbetweenvacantstructuresand

vacantlots.Othersexaminedtheeffectsofparticularinterventions,suchastargetedcode

enforcementorthegreeningoflots,thatdidnotdirectlyidentifythespillovercostsofvacancy

orblight.(Someofthesestudiesmaybereferencedinotherpartsofthisreportwheretheir

implicationsarerelevant.)

Not

surprisingly,

some

of

the

studies

examined

here

occurred

in

the

same

cities.

This

is

partly

becausesomecitieshavedevelopedbettersetsofdataondistressedproperties,homevalues,

andotherrelevantinformationthatareneededtoconductstrongstudies.Whiletheprecise

magnitudesofthespillovereffectsareexpectedtovarysomewhatbasedonthelocationofthe

study,thegenerallyconsistentfindingsamongthestudiesandthestudiesinothercities

suggestthattheseeffectsaresimilaracrossdifferenttypesofcities.Moreover,oneofthe

studiesiscarriedoutacrossfifteenmetropolitanareas.8

Forthepurposeshere,thekeyfindingofinterestinthesestudiesistheextenttowhichnearby

distressedvacantpropertiesaffecthomevalues. Thestudiesgenerallymeasurethedegreeto

whichadistressed

property

within

acertain

radius

of

ahome

reduces

the

value

of

the

home.

Theradiiatwhichtheseanalysesaredonetendtorangebetween250and1,000feet,withall

ofthestrongstudiesidentifiedhereincludingameasurementintherangeof500to660feet

(about1/10th

to1/8th

ofamile).Whilesomestudiesfindnegativeeffectsasfaroutas1,000

feetormore,theeffectstendtogetquitesmallbeyondthe500660footdistanceandare

ignoredhere.Thus,anyspillovercostsestimatedinthisanalysiswillbeconservatively

measuredbyignoringeffectsbeyondthisrange.Forsimplicity,wewillconsiderallestimatesin

the500660footrangeas500footestimates,anotherconservativeassumption.

Table2.1

summarizes

the

spillover

estimates

from

the

eight

strong

studies

identified.

These

studiesusedstrongeconometricmethodstoidentifythemagnitudesofspillovereffects.Most

ofthemusedwhatarecalledspatialhedonicmethods,usingadvancedeconometricmethods

8Mostofthesestudiesoccurwithinonecityoronecountybecausethesortofdatarequiredonvacantpropertiesisoften

highlylocalizedandnotgenerallyavailableacrosscountiesormetropolitanareasinaconsistentfashion.


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16

Table2.1.FindingsonNegativeSpilloverPriceEffectswithin500FeetofDistressed

ResidentialStructuresinUrbanMarkets,20072015(1)

Effectsoutto500feet

City

TaxForeclosed

orDelinquent

Vacant

Whitaker&Fitzpatrick,2014 Cleveland 5.20%

Almetal.,2014 Chicago 3.40%

GriswoldandNorris,2007 Cleveland 2.26%

Whitaker&Fitzpatrick,2013 Cleveland 1.80% 1.80%

Griswoldetal.2014 Cleveland 3.07% (2) 0.83% (2)

Mikelbank,2008 Columbus 1.35% (3)

Han,2014 Baltimore 0.32% (3)

Gerardietal.,2012 15Metros 1.30% (4)

Mean

3.15%

1.12%

Range 1.8%to5.2% 0.32%to1.8%

Notes:

(1) A few of these findings are actually measured out to distances of 660 feet, so that the effects here are conservative estimates at 500 feet.

(2) These factors are averages of the effects found in 3 of the 4 submarkets used in this study: extremely weak, weak, and moderately functioning;these are the sorts of neighborhoods where most tax delinquent properties exist in Atlanta. The effect in highly functioning markets is substantiallylarger in magnitude (more negative) and is excluded here for the sake of being conservative in estimating spillover costs.

(3) This is a spatially weighted average of the magnitude of the effect found within 250 feet and that found from 251 to 500 feet. The 250-foot effect isgiven weight, and the 251-500-foot effect is given weight, reflecting the difference in spatial areas surrounding the distressed property.

(4) This is an average of the magnitude of the effect found for vacant homes with seriously delinquent mortgages and lender-owned homes in below-average condition.

Figure2.1.RangeofNegativeSpilloverEffects(as%ofPropertyValue)to1/8mile

-5.20%

-1.80%

-3.15%

-1.12%

-1.80%

-0.32%

-6.0%

-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

Spillover%

o

nProperties

within1/8mile

Tax Delinquent/Foreclosed Vacant


19/30

17

tocontrolfordifferencesamongpropertiesandpropertylocationsotherthanthenumberof

nearbydistressedproperties.Thesestudiescontrolfordifferencesinthesize,structure,

numberofbathroomsandbedrooms,andotherqualitycharacteristicsamongdifferenthouses.

Theyalsocontrolfordifferencesinneighborhoodandlocationcharacteristics. Someuseda

hybridhedonicmethodutilizingthechangeinsalepriceasthedependentvariable(repeat

sales).9Whilenostudyisperfect,thestudiesheregotosignificantlengthstoisolatethe

spillovereffectsofdistressedpropertiestothegreatestextentpossibleusinghighqualityand

detaileddata.

Table2.1distinguishesfindingsacrosstheeightstudiesbetweenthosepertainingtovacant

propertiesandthosepertainingtaxdelinquentortaxforeclosedproperties,withthislatter

categoryoftenrepresentingprimarilyvacantproperties.Taxdelinquentortaxforeclosed

vacantpropertiesareexpectedtobe,onaverage,moredistressedthantheaveragevacant,

nondelinquentproperty,becauseownersofvacantpropertieswhoarecurrentontheirtaxes

aremore

likely

to

maintain

the

properties.

Conversely,

tax

delinquent

owners

may

be

in

the

processofabandoningtheirproperties.Figure2.1illustratestherangeofthesespillovereffects

at500feet.Forvacant(nontaxdelinquent)propertiestheyrangefrom0.32percentinone

studyto1.8percent,withanaverageof1.12%.Fortaxdistressedproperties,thespillover

effectsrangefrom1.8percentto5.2percent,withameanof3.15percent.Thus,the

distressed,taxdelinquentpropertieshaveamarkedlylarger,negativeeffectonnearby

propertyvalues,whichisexpectedbecausetheseproperties,onaverage,aremorelikelytobe

physicallydistressed.

These

ranges

of

impact

are

conservative

in

at

least

two

ways.

First,

as

explained

above,

some

studiesfindnegativeeffectsofvacancyorneglectbeyondthe500footradius.Butthese

measuresarelesscommonandthemagnitudesarequitesmall,sowhiletheymaybematerial

innature(especiallybecausemorepropertiesliewithin1,000feetofavacantstructurethan

withinthe500footradius),theyarenotcountedforthesakeofreliabilityandbeing

conservativeinestimatesofspillovercosts.Second,someofthelargestestimatesofnegative

impact(intheGriswoldetal.2014study)werenotincludedinthemetaanalysisheredueto

theiroccurringonlyinhighlyfunctioning,(thatislowerpovertyandhigherpropertyvalue)

neighborhoods.BecausethegreatmajorityofdistressedpropertiesinAtlantaarelocatedin

lowerincomeandlowervalueneighborhoods,includingsuchlargemagnitudespillover

measuresherewouldnotbeappropriateandriskoverestimatingthespillovercostsofblight.

9ThestudiesutilizinghybridrepeatsalesapproachesincludeHan(2014)andGerardietal.(2012).Therepeatsalesapproach

suffersfrompotentialbiasduetoalackofinformationonimprovementstopropertiesbetweensubsequentsales(theHan

studyattemptstoomitpropertiesthatmayhavebeenflippedbutmaybelimitedinitsabilitytodoso).Thespatialhedonic

methodssufferfrompotentialomittedvariablebiasaswell,althoughofadifferentsort,althoughthesmallareaspatial

controlsminimizethisproblem.


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18

Usingthisanalysis,inordertoprovideforareasonablerangeofsensitivityanalysis,the

spillovercostsofdistressedvacantpropertiesonhomevalueswillbeestimatedusingtwo

differentmagnitudesofspillovercosteffects. GIStechniqueswillbeusedtoidentifythe

numberofdistressedvacantpropertiesthatliewithin500feetofeach14unithomeintheCity

ofAtlanta.Thenusingthespillovereffectestimatesandtheappraisedvaluesofthehomes

(fromcountypropertytaxassessors),thedecreaseinvaluesofallhomeswithin500feetofa

vacanthomewillbecalculatedandsummed.10

Thiswillyieldtheaggregatedecreasesinvalue

duetovacanthomes.Then,usingestimatesofassessedvalueandmileageratesfortheCity

fromFultonCounty,lossesinmarginaltaxrevenuewillbeestimated.

IdentifyingtheNumberofVacantPropertieswithin500feetofSingleFamilyHomes

Inordertoidentifythenumberofvacantpropertieswithin500feetofsinglefamily(14unit)

homes,data

from

acomprehensive

windshield

survey

of

residential

parcels

in

the

City

of

Atlanta,whichwasconductedbetweenDecember2011andAugust2012fortheCitys2013

StrategicCommunityInvestmentReport(APDSolutions,2013). TheSCIsurveynotonly

indicatedthevacancystatusofresidentialbuildings,italsoindicatedtheconditionof

residentialbuildings.Buildingswereclassifiedasbeingindeteriorated,poor,fair,or

goodcondition.Forthepurposeshere,vacantpropertiesclassifiedintheSCIsurveyas

deterioratedorpoorarecalleddistressed,vacanthomes.

Thefocusinthisanalysisisonthespillovereffectsofvacantbuildingsindistressedcondition.

The2012

SCI

windshield

survey

classified

2,411

vacant

residential

buildings

as

being

in

deterioratedorpoorcondition(labeleddistressedinthisanalysis),andanother5,606vacant

buildingsasbeinginfairorgoodcondition.Thelocationsofthedistressedvacantresidential

propertieswereplottedusingtheirparcelnumbersandaparcelmapshapefilefortheCityof

Atlanta. UsingArcGIS,500footbuffersaroundeachofthedistressedvacantpropertieswere

calculated.TheseareplottedagainstaparcelmapforthecityinFigure2.2. Whileallsortsof

vacanthomesaredisproportionatelyconcentratedacrossaswathofthecityrunningfromthe

northwestsidetothesouthside,thedistressedvacanthomesareevenmorespatially

concentratedintheseneighborhoods.

ByusingaspatialjoininArcGIS,the500footbufferswereintersectedwithallparcelsinthe

city.Inthisway,thenumberofbufferstouchingeachoftheapproximately80,000singlefamily

(14unit)homesinthecityofAtlantawerecalculated.Thiscalculationprovidedthenumberof

10Thetaxappraisedvaluesofhomesmaybehigherorlowerthanthehomestruemarketvaluesandaregeneratedonan

annualbasis.Thesevaluesaregenerallycreatedwiththeuseofacomputerizedautomatedmassappraisal(CAMA)systems

utilizedbycountytaxassessors.


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19

Figure2.2.500footBuffersaroundDistressed,VacantResidentialBuildings

Table2.2.SingleFamilyHomesbyNumberofDistressedVacantResidentialBuildingswithin

500Feet,2012

Rank of S-F Home by Number of Nearby DistressedVacant Properties

Number of Distressed Vacant Buildingswithin 500 feet

Lower Quartile (25%ile) 0

Median (50%ile) 0

Upper Quartile (75%ile) 2

90th percentile 5


22/30

20

distressedvacantpropertiesthatarelocatedwithin500feetofeachhome.Duetothespatial

clusteringoftheseproperties,thesenumbersvarysignificantly,asmightbeexpected.Table2.2

showsthathomesintheupperquartileintermsofthenumberofnearbydistressedvacant

propertieshaveatleast2suchpropertieswithin500feet,andthetopdecileofneighborhoods

has5ormoresuchpropertieswithin500feet.Thismeansthat10percentofsinglefamily

homesinthecityhave5ormoredistressedvacantresidentialbuildingswithina500foot

radius.Yetmanyhomesinthecityhavenodistressedvacanthomeswithina500footradius.

Morethanhalfofthehomesinthecityfallintothiscategory.AsindicatedbyFigure2.2,these

homestendtobelocatedinthemoreaffluentnorthernandnortheasternpartsofthecity.

Someoftheliteraturereviewedforthisstudysuggeststhatthespillovereffectsofadditional

nearbyvacantpropertiesonpropertyvaluesarenotentirelylinear.Inparticular,asmoreand

moredistressedvacantpropertiesexistnearahome,thenegativeeffectsonhomevaluewill

eventuallydeclineandreachalimit.Forexample,ifhavingonedistressedvacantproperty

within500

feet

has

a

3%effect

on

ahomes

value,

then

having

three

such

properties

nearby

mayaccumulatetoa9%cumulativeeffect.However,itislesslikelythatgoingfrom3nearby

distressedvacanthomesto9nearbydistressedvacanthomeswillincreasetheeffectby

anotherthreefold,from9%to27%. Whiletheresearchonsuchnonlineareffectsis

somewhatscarce,someworkintheforeclosureliteraturesuggeststhattheseeffectswilltend

tohitaplateauafterreachingsomewherearound10distressed,vacanthomes.Tobe

conservative,Ilimitthenegativeeffectsofdistressedvacantpropertiesto5. Forexample,if

theeffectofhavingonedistressedvacanthomewithin500feetis3%,thentheeffectof

having5isestimatedas 15%,buttheeffectofhaving6isalsoestimatedat15%,asisthe

effectof

having

10

vacant

homes

within

500

feet.11

SummingUptheSpilloverCostsonSingleFamilyHomeValuesinAtlantaduetoVacant

ResidentialProperties

Inordertoestimatethecumulativeimpactofdistressedvacantresidentialpropertiesonsingle

familypropertyvalues,themagnitudeofthespillovereffect(expressedasapercentofvalue

pervacanthomewithin500feet,uptoalimitof5vacanthomes)mustfirstbeidentified. To

dothis,

we

draw

on

the

results

of

the

meta

analysis

summarized

in

Table

2.1

and

Figure

2.1

above.ThefirstrowinTable2.3presentswhatisviewedfromareadingoftheliteratureasthe

best,reasonableestimateofcumulativespillovercostsonsinglefamilypropertyvaluesdueto

11Forsensitivitypurposes,theeffectsinTable3belowwerereestimatedassumingthatthelimitoftheeffectsisnotreached

untilthenumberofnearbyvacanciesreaches10,insteadof5.Thesizeofthecumulativespillovereffectswasnotsubstantially

largerbecause,asshowninTable2,90percentofhomesaresurroundedby5orfewerdistressedvacanthomes.Moreover,

thehomessurroundedbyhigherlevelsofvacantpropertiestendtohavelowervalues,sothedollaramountoftheeffectis

oftennotverylarge.


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21

Table2.3.EstimatesofCumulativeSpilloverEffectsonSingleFamilyPropertyValuesand

PropertyTaxesDuetoDistressedVacantResidentialBuildings,2012

Assumption s

Effect of Distressed Vacant

Properties with in 500 Feeton Single-Family Values (1)

Cumulative Effect ofDistressed Vacant

Properties on SFValues

Average Ef fectper Distressed

VacantProperty

Potential CumulativeImpact on

Annual PropertyTax Revenue (2)

Best Reasonable Estimate -3.15% per vacant bldg - $153,222,604 - $63,551 - $2,723,133

More Conservative -1.12% per vacant bldg - $55,420,545 - $22,987 - $984,956

(1) All estimates assume no further effect when count of properties within 500 feet exceed 5. (Sensitivity analysis with limit of 10 showed only marginally largertotal effects.)

(2) Estimated as 40% X decline in value X 44.431 mileage rate (2012); ignores exemption effects that may result in smaller or zero on taxes on some low-value

properties.

distressedvacant

properties.

This

effect

is

3.15%

for

each

distressed

vacant

property

within

500feet,whichistheaverageoftheresultsfromthestudiesestimatingtheeffectsoftax

delinquentproperties.

ThesecondrowinTable2.3presentsamoreconservativesetofassumptions,whichleadto

smallerspillovercostestimates.Thisrowassumesthatdistressedvacantpropertieshaveonlya

1.12%effectonhomevalueswithin500feet. Thismagnitudeistheaveragefromthestudies

inTable2.1thatestimatetheimpactofvacant(butnottaxdelinquent)propertiesonhome

values.

Thebest

reasonable

assumption

results

in

estimated

cumulative

spillover

costs

of

distressed,

vacantresidentialpropertiesonsinglefamilyhomevaluesintheCityofAtlantaof

$153,222,604.Suchalossinvalue,inturn,couldleadtoadeclineinannualpropertytax

revenuesbyasmuchas$2,723,133,althoughthiseffectmaybemitigatedinthosecaseswhere

someverylowvaluesmaynotexceedexemptionlevels. Onaperpropertybasis,thisestimate

meansthateachofthe2,411distressedvacantpropertiesreducestheaggregatevalueof

homeswithin500feetbyatotalof$63,000.

AmoreconservativeassumptionisusedinthesecondrowofTable3.Here,theaverageofthe

findingson

vacant

(as

opposed

to

tax

delinquent)

properties

is

used,

with

the

spillover

estimate

of1.12%perdistressedvacancy. Underthisassumption,thecumulativeeffectonsinglefamily

homevaluesis$55,420,545,withaneffectof$22,987perdistressed,vacantproperty,anda

cumulativeeffectonannualpropertytaxesofasmuchas$984,956.

Theresultsofthisanalysis,summarizedinTable2.3,indicatethatthetotalcostsofdistressed

vacantpropertiesintheCityofAtlantarangefrom$55millionto$153millioninlostproperty


24/30

22

values.Thistranslatesintolostpropertytaxrevenuesontheorderof$1millionto$2.7million

annually. Atanaveragepropertyvaluecostrangingfrom$23,000to$63,000pertroubled

property,abenefitcostperspectivesuggeststhatbasedonthesecostsalone,substantial

investmentinremediationordemolitionofsuchpropertiesmaybewarranted.Combining

thesecostswiththesubstantialcostsavingsthatmightbeobtainedbyreducingtheservice

costsdetailedinSection1,theargumentforpublicinvestmentinremediatingordemolishing

distressedvacanthomesbecomesevenstronger.

AMajorCaveat:MitigatingAnyNegativeEffectsofPoorlyMaintainedVacantLotsFollowing

Demolition

While

a

number

of

recent

studies

(Griswold

and

Norris,

2005;

Griswold

et

al,

2014;

Whitaker

andFitzpatrick,2014)havefoundthatthatdemolitionprogramsinFlint,Michiganand

Cleveland,Ohiohaveresultedinsignificantreductionsinspillovercostsonlocalproperty

values,theexperienceofsomecitiessuggeststhatifthevacantlotsresultingfromdemolition

arenotaddressedadequatelytheycancreatetheirownsetofspillovercosts.TheCityof

Philadelphia,inparticular,afterengaginginmajordemolitioncampaignsinearlieryears,has

foundthatlargenumbersofpoorlymaintainedvacantlotscreatetheirownsetsofproblems

forcommunities(EconsultandUniversityofPennsylvania,2010).Moreover,recentresearchon

greeningprogramsaimedatgreeningandmaintainingtheselotsshowlargepositiveimpactson

neighboring

property

values

(Buchianeri,

G.,

K.

Gillen,

and

S.

Wachter,

2012).

These

effects

are

duebothtotheeliminationofthenegativeimpactsontheneighborhoodofaneglectedvacant

lot,butalsoduetothepositiveamenitiesprovidedbywellmaintainedgreenspace.

Therefore,iftheCityofAtlantaincreasesitseffortstowardsdemolishingdistressed,vacant

homes,especiallythoseposingthegreatestnegativeimpactsonlocalcommunities,itshould

planforgreeningandmaintenanceactivitiesandcostsgoingforward.Otherwisethe

investmentindemolitionmaynotresultinasubstantialrateofreturnintermsofincreased

propertyvaluesandtaxrevenues.


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23

Conclusion:AggregatingtheServiceandSpilloverCostsDuetoVacantPropertiesinAtlanta

Thepurposeofthisstudywastoestimatethecostsimposedbyvacantpropertiesinthecityof

AtlantaonthepublicandontheCityofAtlanta.Section1gatheredandanalyzeddataoncosts

tothecityintermsofservicecostsindealingwithvacantpropertiesthroughcode

enforcement,public

safety,

and

fire

protection

services.

Section

2identified

the

spillover

costs

ofdistressedvacantpropertiesonsinglefamilyhomevaluesinthecity,andonassociated

propertytaxrevenues.

Itisimportanttopointoutthatcostsidentifiedinthisstudyarebynomeanscomprehensive.

Manylikelycostsarenotincludedinthestudy.Forexample,becausethereislittletono

researchoftheeffectsofvacantpropertiesonthevaluesofmultifamilyorcommercial

properties,theseeffectsarenotcapturedhere,andthesecostsarelikelytobesignificant.

Moreover,wheneveruncertaintyofcostswasencountered,effortsweremadetobe

conservative.

Therefore,

the

findings

here

should

be

viewed

as

a

lower

bound

on

the

costs

imposedbyvacantpropertiesonthecity,andonlocalgovernment.

Notwithstandingthiscaution,thislowerboundoncostsofvacantpropertiesacrossSection1

and2ofthisstudyaredescribedinTableC.1.Therangeofquantifiable,knownannualcosts

associatedwithvacantpropertiesinthecityisveryconservativelyestimatedatbetween$2.6

and$5.7milliondollars.Thesefiguresdonotincludemanyunmeasuredcosts.Examples

includecourtcosts,unrecoveredboardingordemolitioncosts,costsofinjuryfromfires,and

thespillovercostsonmultifamilyrentalorcommercialbuildings. Beyondannualcosts,the

best,reasonableestimateofonetimecoststosinglefamilypropertyvaluesthatareestimated

at$153

million.

This

estimate

is

based

on

using

the

studies

that

appear

most

appropriate

for

estimatingtheimpactofphysicallydistressedanddisinvestedpropertiesonnearbyhome

values.Forthepurposesofprovidingaminimumestimateofthemagnitudeoftheseimpacts,

TableC.1alsoprovidesamuchmoreconservativeestimate,basedonstudiesthatexaminein

theimpactofvacantandnotjustdistressedortaxdelinquentpropertiesonnearby

propertyvalues.Whilethesecostsaccruemostlytopropertyowners(includinghomeowners)

andnotdirectlytolocalgovernment(otherthanthepropertytaxportion),theyshouldbe

consideredaspartoftheoverallcostsofvacancyandblight.


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24

TableC.1.EstimatedCostsDuetoDistressed,VacantPropertiesintheCityofAtlanta12

Annual Cos ts One-Time Property Value LossMore

ConservativeLess

ConservativeBest

ReasonableVery

Conservative

Service Costs

Code Enforcement $449,726 $1,587,813

Department of Corrections' Clean and Close Project $128,400 $128,400

Police Dispatch Costs $688,941 $808,288

Fire Department Dispatch Costs $388,942 $436,220

Spillover Costs

One-Time Loss in Single-Family Property Values $153,222,604 $55,420,545

Annual Decline in Property Tax Revenues $984,956 $2,723,133

TOTAL ESTIMATED COSTS $2,640,965 $5,683,854 $153,222,604 $55,420,545

12Asmentionedearlierinthisanalysis,thesecostsarenotcomprehensive.TheydonotincludessomeservicecoststotheCity

ofAtlanta,includingcleaningandcuttingcostsincurredbytheDepartmentofPublicWorksforyardmaintenanceorcourt

costs(solicitorsoffice,publicdefendersoffice,andmunicipalcourt).Costsassociatedwithtaxdelinquencyandenforcement

onvacant/abandonedpropertiesarealsonotincluded.


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25

CitedandRelevantLiterature

Accordino,J.andJohnson,G.2000.AddressingtheVacantandAbandonedPropertyProblem.

JournalofUrbanAffairs22:301315.

Ahrens,M.2009.VacantBuildingFires.NationalFireProtectionAssociation.

Alm,J.,Z.Hawley,J.Lee,andJ.Miller.PropertyTaxDelinquencyanditsSpilloverBenefitson

NearbyPropertyValues(October7,2014).AvailableatSSRN:

http://ssrn.com/abstract=2507049.

APDSolutions.2013.TheStrategicCommunityInvestmentReport:AReportPresentedtothe

CityofAtlantaDepartmentofPlanningandCommunityDevelopmentOfficeofHousing.

November.

Branas,C.,D.Rubin,andW.Guo.VacantPropertiesandViolenceInNeighborhoods.

InternationalScholarlyResearchNetwork:PublicHealth2012:5.

Buchianeri,G.,K.Gillen,andS.Wachter.2012.ValuingtheConversionofUrbanGreenspace.

PennsylvaniaHorticulturalSociety.

CommunityResearchPartnersandRebuildOhio.$60MillionandCounting:TheCostofVacant

andAbandonedPropertiestoEightOhioCities.RebuildOhio.

Cui,L.2010.Foreclosure,VacancyandCrime.November1.AvailableatSSRN:

http://ssrn.com/abstract=1773706.

DeltaDevelopmentGroup.2013.FinancialImpactofBlightontheTriCOGCommunities.

September.Availableathttp://svcog.org/wpcontent/uploads/2014/08/BlightImpact

FullReport.pdf.

EconsultandUniversityofPennsylvania.2010.VacantLandManagementinPhiladelphia.

Gerardi,K.,E.Rosenblatt,P.Willen,andV.Yao,2012.ForeclosureExternalities:SomeNew

Evidence.PublicPolicyDiscussionPapersNp.125.FederalReserveBankofBoston.July25.

Griswold,N., B.Calnin,M.Schramm,L.Anselin,andP.Boehnlein.2014.CaseWestern

University.February.


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26

Griswold,N.andP.Norris.2007.EconomicImpactsofResidentialPropertyAbandonmentand

theGeneseeCountyLandBankinFlint,Michigan.Report#200705.TheMSULandPolicy

Institute.

Han,H.2014.TheImpactofAbandonedPropertiesonNearbyPropertyValues.HousingPolicy

Debate24:311334.

Heckert,M.andJ.Mennis.2012.TheEconomicImpactofGreeningUrbanVacantLand.A

SpatialDifferenceindifferenceanalysis.EnvironmentandPlanningA44:30103027.

Mallach,Alan.2006.BringingBuildingsBack:FromAbandonedPropertiestoCommunityAssets.

Montclair,NJ:NationalHousingInstitute.

Mikelbank,B.2008.SpatialAnalysisoftheImpactofVacant,AbandonedandForeclosed

Properties.FederalReserveBankofCleveland.

Sternlieb,G.andIndik,B.1969.HousingVacancyAnalysis.LandEconomics:45:117121.

TheReinvestmentFund.2014.StrategicPropertyCodeEnforcementandItsImpactson

SurroundingMarkets.August.

Whitaker,S.andT.Fitzpatrick.2014.LandBank2.0:AnEmpiricalEvaluation.WorkingPaper12

30R.FederalReserveBankofCleveland.

Whitaker,S.andT.Fitzpatrick.2013.DeconstructingDistressedPropertySpillovers:TheEffects

ofVacant,TaxDelinquent,andForeclosedPropertiesinHousingSubmarkets.Journalof

HousingEconomics22:7991.

Winthrop,B.andR.Herr.2009.DeterminingtheCostofVacanciesinBaltimore.Government

Finance

Review.June.


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27

Appendix:SuggestionsforFutureDataCollection

Inordertobeabletobetteridentifythemunicipalservicecostsassociatedwithdifferenttypesof

properties,whichcouldalsobeusedtotargetthemostburdensomepropertiesforremediationor

demolition,anumberofstepsshouldbeconsideredbyvariousmunicipalagencies.

1) Police,Fire,CodeEnforcement,andMunicipalCourtSystemsshouldidentifytheparcel

identificationnumberforeachpropertyinvolvedinanincident.Noneoftheseagencies

currentlyincludeparcelIDnumbers(orPIN)numbersintheirdatasystems.Whilestreet

addressescanbeuseful,therecordingofstreetaddressescanbepronetofrequenterrorsand

estimationswhichmakethepreciselocationofapropertydifficult.Misspellingsandother

problemscausefrequentproblems. Forpoliceandfire,identificationofaparcelnumberwill

needtobedonebasedonGPScoordinatesorbasedonastreetaddress,orboth,butmatching

toaparcelnumberisgenerallyfeasibleifthecoordinatesoraddressesarerecordedaccurately.

Ofcourse,manylocationsarenotassociatedwithaparticularproperty,andthoselocationswill

notbeassociatedwithaparcelnumber. TheuseofPINnumberswillallowintegratingor

matchingincidentsassociatedwithpropertiesacrossdifferentagencies,aswellaswithmany

othersortsofdatasuchastaxassessordata,taxdelinquencydata,etc.

2) Similarly,alloftheseadministrativedatasystemsshouldincludealocationtypefieldto

identifyeasilywhetherthelocationisarealestateparcelornot.Otherlocationtypesmight

includeexpressway,arterialstreet,sidestreet,etc.Togetherwithdataonthetypeof

property(commercial,industrial,multifamilyresidential,singlefamilyresidential,etc.)thisfield

willbehelpfulinidentifyingthenatureofthelocation.

3)

All

of

these

agencies

should

include

complete

and

accurate

information

on

the

condition

of

the

propertywhereanincidentoccurs.Ataminimum,theoccupancystatusofeachpropertyshould

berecorded.TheFireDepartmentistheonlyagencythatcurrentlytracks(atleastpartially)

whetherapropertywhereanincidentoccursisvacantornot,andthereisincompletedatafor

manyincidents.Beyondvacancy,usefuldatawouldincludeanestimateoftheconditionofthe

building,similartothetypologyusedintheStrategicCommunityIndicatorssurvey(good,fair,

poor,deteriorated).

4) TheCodeEnforcementUnitshouldtrackhoursspentinspectinganddealingwithpropertiesby

casenumber,togetherwiththeassociatedparcelnumber.Alsoincludedshouldbecostsdueto

boardingor

demolition.

Recovery

of

such

costs

should

also

be

tracked.

5) MunicipalCourtshouldutilizeexistingCodeEnforcementcasenumberstotrackthetimeand

costsofcases.Parcelnumbersshouldbeincludedinsuchdatasystems,again,toeasilylinkto

otherdatasetsbyproperty. Thecostsofmunicipalcourtinspectionsshouldbetracked,

includingtimeandanyexpenses,includingpublicdefendercosts,filingfees,etc.Allpersonnel

costsshouldincludefullyloadedcosts.


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6)

TheFultonCountyTaxCommissionershouldprovideparcelleveldetaileddataonalltaxactivity,

includingdelinquencies,taxliensales,taxforeclosures,etc.,onaregularbasis.Thisdatashould

indicatethestreetaddressandparcelnumberofeachproperty,theannualtaxbill,any

outstandingtaxbill,anypurchasedtaxliens(amount,whenpurchased,interest,etc.),anytax

foreclosureaction,

and

other

relevant

information.

Such

data

should

be

updated

on

an

annual

basis.Relianceonvendorsthatmakeretrievalofsuchdatacostlyshouldbereconsideredto

enablereasonableresponsetimestodatarequestsandtheprovisionofgranulardatainreadily

understoodformats.

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Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck

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