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Pretty vacant


OKC officials search for ways to keep owners of vacant properties from draining the city of $20 million annually.

Tim Farley July 17th, 2013

Oklahoma City officials have embarked on a mission to recoup an estimated $20 million that is lost annually because of long-term vacant homes and commercial buildings.

The Marion
BY: Mark Hancock

More than 12,000 of those structures are scattered throughout OKC, which prompted city officials last year to commission a study about the severity of the issue, coupled with potential solutions.

Vacant homes and commercial buildings create a revenue loss because money typically collected from sales and use taxes, franchise fees from cable TV and utilities, fines and licenses and permits is not available.

Oklahoma City loses about $13.8 million in those categories, along with an additional $6.5 million because of police, fire and animal welfare departments responding to calls at such vacant structures, according to the study conducted by GSBS Richman Consulting.

“This is a financial burden for the city and the neighborhoods,” said city Planning Director Russell Claus. “They (vacant structures) require a disproportionate amount of city resources, but pay very little in taxes.”

He cited several cases that show owners of vacant homes and buildings pay substantially less in property taxes. For example, the Walcourt building, once a high-end apartment building in the 1930s and ’40s, has been vacant for 37 years, and its owner pays less than $400 in property taxes annually. In contrast, the owner of a nearby home pays $1,591 in property taxes each year.

The study found that a primary reason for the growing problem is the disparity between the costs of owning a vacant structure versus the market-based benefit of investing in it.

If owners choose not to invest or maintain their properties, the only cost is property taxes, which can be as little as $112 a year for a long-term vacant property. Long-term vacancies are defined as six months or longer.

Safety risk
The study also found that vacant homes and buildings create a safety risk and neighborhood decline. Such structures reduce the value of neighboring homes by 12 to 29 percent, depending on proximity, resulting in an estimated $2.7 billion reduction in real estate value citywide.

In addition, police officers, firefighters and animal welfare workers make more calls to vacant structures than to owner-occupied counterparts, Claus said.

Currently, there is no method for the city to recoup the costs connected to the public safety calls.

As a result, city officials intend to develop a vacant-building registry. The study suggested a per-building fee structure should be implemented to cover the administrative costs of the program.

The registry, if approved by the council, could be set up sometime this summer, Claus said.

In addition, city leaders will work with state lawmakers to draft legislation allowing for the municipality to assess and collect fees that pay for police, fire and animal welfare.

At least two state legislators have expressed an interest in the issue, according to Claus. City officials want the legal authority to file liens against — and ultimately foreclose on — properties on which owners don’t pay the fees and fines.

The study also recommended implementing a land bank program that allows public entities to acquire land and invest in property that hasn’t redeveloped on its own.

A land bank typically acquires properties from tax foreclosure rolls and then sells or transfers the title to city agencies, community development corporations or private developers with the intent of improving neighborhoods.

Worst wards
The GSBS Richman study found a high number of vacant buildings located in Wards 6 and 7, which covers many of Oklahoma City’s low-income areas.

Ward 6 Councilwoman Meg Salyer, whose district includes an impoverished area west of downtown, said the proposed legislative measures would put “teeth” into remedying the problem.

“The worst properties are paying the smallest amount of tax while demanding the highest level of service,” she said. “We need to create a disincentive for property owners to do that.”

The two wards suffer the biggest impact from vacant and abandoned buildings and are at the highest risk for market destabilization and disinvestment.

In addition, Ward 6 has the lowest average price per home at $74,667 and the highest rate of housing units vacant six months or longer at 9.3 percent. Ward 7 has the second-highest rate of housing vacancies at 9.1 percent.

Ward 7 Councilman John Pettis Jr. did not return phone calls seeking comment.

 
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