Well, yes. Developers calculate “carrying costs” of property being held for future projects as part of the decision to invest in it. The calculus—which may give certain investors a tax shelter, or may result in a capital gain rather than ordinary taxable income—is generally not as simplistic as the decisions you or I make about buying real estate.
The Old Post Office (which I can see out my window, a few blocks away) is a rather special case. It was actually owned most of those 20 years by USPS/GSA, and when it finally was sold to Bill Davies, the state historic preservation office used that event to conduct an NHPA Section 106 review that resulted in requiring preservation of the building’s façades (earlier schemes had looked at removing part of the building or hanging residential balconies on it). I absolutely did not think there was a market for 2.5 million square feet of office space in that part of downtown, with such enormous floorplates and so few windows. But the folks at 601W apparently had a better crystal ball than me, and that’s why they get to reap the profits down the road.
In nearly all cities in the US the property tax system is set up to encourage speculation, land banking, depreciation, abandonment, and decline. This is because the overwhelming majority of the assessed value of property is in the improvements, which are almost always buildings. The value of the land itself is usually highly discounted by the assessor on top of being a small component of the land+building value in the first place. So even in a highly developed downtown location, a vacant dilapidated building, or just an empty lot, can pay next to nothing in taxes because the improvement value is zero or nearly so. Throw down some pavement and charge for parking, and the taxes may not go up at all, but then it becomes an income producing property whose tax liability can be covered in a matter of a few weeks. The carrying costs are too low.
This is insidious because it discourages building, maintenance, and improvement as that would incur a higher assessment and tax. At the same time, those speculators and their low taxes are being subsidized by everyone else. While a vacant lot may not send kids to school or use libraries, they still need police and fire protection, and just because there’s no buildings there anymore, it doesn’t also make the streets, sidewalks, lights, pipes, wires, conduits, and other infrastructure go away. They still need to be paid for, but it comes from everyone else’s taxes and utility rates.
I keep going back to Detroit because we have many examples of entire neighborhoods abandoned and so many news articles that its hard to do a search. But I do recall that there have been people forced to move when their home is the only one left standing for blocks due to the city taking out the utilities for the entire neighborhood. They’ve also converted some areas into urban farmland, but I don’t think that its a significant amount of land.
Can you give a google street view position to demonstrate this? I’m scrolling around downtown Berkeley (Shattuck Ave area) and it appears pretty happenin’. I cannot find anything resembling a wasteland. I could be looking in the wrong area of downtown though…
As an inducement, these relocations have usually involved property swaps, at least in recent years. In other words, the last lone hold-out on a block isn’t just forced out, their property is exchanged for a comparable property in a more viable/inhabited neighborhood. Which, to my mind, is much better than simply forcing people out.
It’s still interesting to see. I’ve seen community gardens in lots of places. Detroit is the only city where I’ve seen community orchards.
Also, some actual commercial farms are now operating within the city limits. Good for them.
I could be out-of-date. Last I visited Berkeley, IIRC, must have been 8 to 10 years ago. Lots of boarded up buildings and store fronts along downtown Shattuck (University Ave. area). Perhaps the area has rebounded since?
