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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
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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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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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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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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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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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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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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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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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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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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
7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck
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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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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.
7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck
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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.
7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck
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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
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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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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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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
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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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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
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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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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.
7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck
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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.
7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck
28/30
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.
7/25/2019 Cost of Vacant and Blighted Properties in Atlanta by Dan Immergluck
30/30
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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