Demolition: Removing unsafe structures and preparing properties for reinvestment
Demolition removes unsafe structures and blight and prepares properties for reinvestment. Demolition liens placed on a property give municipalities the opportunity to recover costs when the property is transferred and has sufficient value to cover the demolition liens. Demolishing blighted structures can raise property values in a municipality by millions of dollars.(53(
What does it do?
Demolition eliminates structures that are dilapidated, unsafe, or too expensive to repair. Demolition often lowers the costs of maintaining vacant properties, because vacant lots are less extensive to maintain than blighted properties and can be used temporarily or permanently for small parks, community gardens, or stormwater management. When performed at a larger scale, demolition can remove an oversupply of unmarketable buildings.
How do we pay for it?
A demolition lien, payable when a property is transferred, is placed on the property. In Pennsylvania, a municipal lien generally takes priority over all mortgage claims.(54) Where Community Development Block Grant (CDBG) funds are used, the municipality typically places a lien on behalf of the county, and Davis-Bacon wage standards apply.(55)
When a property value is less than the cost of demolition, it will be difficult to obtain payment. As a result, it is important that municipalities assess the value of the property “as is” to determine whether they can recover costs. Cost savings can be substantial where demolitions are planned and contracts are negotiated for multiple buildings as part of a bidding process. Philadelphia lowered costs from $24,000 to $13,000 per attached row house by bidding jobs for multiple houses in a single area.(56)
To improve cost recovery, Buffalo, New York posts a city employee outside the courtroom on the single afternoon each month when demolition hearings are scheduled. The purpose is to intercept the owners and establish a payment plan as soon as the court issues a judgment. Buffalo reports that it could collect more money if legal obstacles to serving out-of-state owners and attaching the assets of those owners could be eliminated.(57) In Ohio, both Cleveland and Cincinnati have adopted ordinances to expand the definition of who is responsible for demolition expenses. The expansion extends responsibility to people who buy a property after it is condemned and before it is demolished.(58) In Pennsylvania, courts have held that demolition liens run with the property.(59)
What types of property are covered?
Properties that have significantly deteriorated or properties being prepared for redevelopment.
What challenges will it solve?
Demolition is a targeted blight-removal tool. By targeting blight, demolition can reduce the costs of maintaining vacant properties and can raise property values in a municipality.
Where does it apply?
Any county or municipality may demolish a property.
How does it work? What is needed to use this law effectively?
Municipalities need a property maintenance code, or a set of ordinances, that (1) clearly establishes the right to demolish a property that is unsafe or unhealthy and (2) authorizes the imposition of a lien to recover costs. Municipalities will also be well served by a written process for demolition that satisfies local, state, and federal requirements. When a public agency demolishes multiple one- to four-unit residential properties, the EPA has concluded that EPA regulations require an asbestos survey.(60) The contractor and the property owner will be fined if no asbestos survey is completed.
What policies and practices will increase our chances of successfully using this tool?
The first step is to collect and maintain accurate data on vacant and deteriorated buildings. The data can provide extensive information to the code official, court, or review board that decides whether demolition should be permitted, and it allows for the planned and simultaneous demolition of multiple buildings to reduce costs. The second step is to create a local demolition strategy that prioritizes the demolition of properties in areas where other investments can be leveraged, thereby pursuing goals for economic development and community stabilization. Finally, working with the county and the redevelopment authority can help ensure that high-priority structures for demolition are included in lists for demolition.
What legal documents will we need?
- Property maintenance code or ordinance that provides a clear process for demolishing unsafe structures and that includes the right to recover costs through a demolition lien
When signing contracts with demolition contractors, a municipality should require the contractors to obtain all needed permits, perform an asbestos survey, remove and dispose of asbestos, remove debris (including below-grade foundations), restore shared walls, and grade and seed the lot.(61)
Who is using the tool now?
The City of York, as part of its property maintenance code, has a detailed demolition process that incorporates portions of the ICC International Property Code. The process has been reviewed by the courts.(62) Westmoreland County funds its countywide demolition program using Community Development Block Grant (CDBG) dollars. Typically, the Redevelopment Authority of Westmoreland County completes 25 projects annually for approximately $250,000. To fund the demolition, Westmoreland requires a private match from the municipality, owner, or other stakeholder. Westmoreland ranks the applications by overall reinvestment impact, including the level of reinvestment and jobs the demolition will attract and whether it will comply with the county’s comprehensive plan. Westmoreland works with a nonprofit to salvage reusable items such as doors, windows, and bricks from properties before demolition and uses the money obtained to fund affordable-housing initiatives. The redevelopment authority cannot tear down a structure without the owner’s permission or court-ordered action.(63)
How can we combine this with other strategies?
Demolition should be one part of a larger revitalization strategy. A database of vacant properties is beneficial for rental registration, vacant-property registration, land banking, and demolition. A land bank can carry out demolitions. For more information on demolition strategies, go to http://www.brookings.edu/~/media/Research/Files/Papers/2012/9/24%20land%20use%20demolition%20mallach/24%20land%20use%20demolition%20mallach.pdf.
53. A recent study of Flint, Michigan found that $3.5 million of demolition activity produced $112 million in improved property values. Nigel Griswold and Patricia Norris, Economic Impacts of Residential Property Abandonment and the Genesee County Land Bank in Flint, Michigan, Land Policy Institute (April 2007), http://www.communityprogress.net/filebin/pdf/new_resrcs/LPI_Genesee.pdf.
54. Section 2 of the Act of May 16, 1923, P.L. 207, as amended, 53 P.S. § 7103.
55. In fiscal year 2011, a total of $74 million in Community Development Block Grant funds was spent nationally on demolition, with an additional $32 million going to the closely related activities of relocation and site remediation. Alan Mallach, Laying the Groundwork for Change: Demolition, Urban Strategy, and Policy Reform, Brookings Institution (September 2012). http://www.brookings.edu/~/media/Research/Files/Papers/2012/9/24%20land%20use%20demolition%20mallach/24%20land%20use%20demolition%20mallach.pdf
56. Joseph DiStefano, “How Philly L&I Says It Cut Home Demolition Costs in Half,” Philadelphia Inquirer (March 19, 2010). http://www.philly.com/philly/blogs/inq-phillydeals/How_Philly_LI_cut_home_demolition_costs_in_half.html.
57. Sarah Lyons, Buffalo’s Demolition Strategy, Partnership for Public Good (Fall 2009), http://www.ppgbuffalo.org/wp-content/uploads/2010/06/Buffalos-Demolition-Strategy-1.pdf.
58. Codified Ordinances of Cleveland, § 3103.09 (k)(2), adopted November 14, 2011. Cincinnati Municipal Code § 1101-57.7. The “person in control” addition was made in October, 2010.
59. City of Philadelphia v. Philadelphia Transload & Logistics, Commonwealth Court of Pennsylvania (opinion not reported), February 14, 2012. http://statecasefiles.justia.com/documents/pennsylvania/commonwealth-court/884-c-d-2011.pdf?ts=1331824444.
60. The National Emission Standards for Hazardous Air Pollutants (NESHAP) standards for asbestos exclude residential buildings having four or fewer dwelling units. However, USEPA considers the demolition of more than one residential property an urban renewal project and subjects it to the NESHAP standards. Mallach, p.19.
61. Alan Mallach, Laying the Groundwork for Change: Demolition, Urban Strategy, and Policy Reform, Brookings Institution (September 2012), http://www.brookings.edu/~/media/Research/Files/Papers/2012/9/24%20land%20use%20demolition%20mallach/24%20land%20use%20demolition%20mallach.pdf.
62. City of York v. Norma Stough, Commonwealth Court of PA, (opinion not reported), September 8, 2008. http://statecasefiles.justia.com/documents/pennsylvania/commonwealth-court/106cd08_10-23-08.pdf.
63. E-mail messages from April Kopas, executive director of the Redevelopment Authority of the County of Westmoreland, to Karen Black, dated May 30, 2013, May 31, 2013, and July 30, 2013.