One policy change can help end blight of abandoned property in Michigan

For decades, many U.S. communities have suffered from population loss and economic decline, resulting in widespread abandonment of industrial and commercial buildings. In Michigan, according to the Center for Automotive Research, about 105 of the 170 automotive plants built here since 1979 have closed – and that doesn’t include the many abandoned non-automotive industrial and commercial facilities that plague our communities.

This pattern of abandonment, we contend, is due in large part to current land-ownership policies that allow owners to literally “walk away” from their privately held parcels and burden the public sector with the cost of blight removal.

This flood of abandonment and subsequent blight has left communities with a large number of vacant properties and limited public resources to rehabilitate or commission deconstruction.

Through the current “throw away” society, private industry is not responsible for repurposing, reuse or potential resale of developed properties. The policy may actually encourage irresponsible private industry behavior by incentivizing the abandonment of properties by placing these costs on taxpayers rather than the consumers of that product or service

Our research at the Michigan State University Center for Community and Economic Development examined the feasibility of adopting sound public policy that would require private entities to secure financial instruments (i.e., insurance and guarantee bonds) on newly built commercial and industrial structures. This would ensure that at the end of a structure’s useful life financial resources to fund deconstruction would be available, thus ending the practice of private property abandonment and alleviate the hardships placed on a community to finance removal. This policy would place the cost of deconstruction on the owners/customers of a specific product or service.

We contend the abandoned and blighted industrial properties scattered across the nation’s cities pose a serious threat to public health and welfare. Abandonment and the blight that follows has been estimated to reduce property values in adjoining properties within a 1.5 mile radius by 10 percent.

Alternatively, the cleanup of blighted brownfields has been estimated to increase property values in adjoining properties within a 1.5 mile radius by 10 percent. Blight sets in motion a downward spiral in a community’s quality of life with negative social and economic consequences for surrounding residential, commercial and industrial properties and people.

Our research identifies a variety of precedent-setting policies and practices that seek to mitigate the cost of rehabilitation/abandonment of private structures and activities. These industries, such as mining, oil rigs, cell towers and wind turbines, currently require financial assurance for dismantling, removal and restoration of their sites. They use a variety of methods ranging from “tipping fees” to secured bonds.

These methods of paying for the true cost of a product or service are a strong free-market tool to measure real consumer demand of a product rather than the hidden subsidization of private property cleanup. We believe this method of true-cost accounting is a more equitable and socially responsible way for doing business and assessing the cost of goods and services and provides for a more market-driven approach to ending abandonment than the current publically subsidized model.

Ultimately, we propose a new method to preventing the perpetual cycle of private property abandonment by requiring at the national level all new commercial and industrial projects to secure a private insurance policy to provide for the deconstruction of a property at the end of its useful life.

Such a policy could change the methods of construction, encourage the use of recyclable materials, create an entirely new insurance sector and end the cycle of abandonment and blight in communities. Future generations deserve a place not littered with the structural remnants of the past. Ending the cycle of private property abandonment is achievable with visionary leadership balanced with informed policy.

Bridge welcomes guest columns from a diverse range of people on issues relating to Michigan and its future. The views and assertions of these writers do not necessarily reflect those of Bridge or The Center for Michigan.

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Comments

Mike R
Thu, 07/11/2013 - 3:23pm
A very thoughtful and innovative approach based on creative adaptation of current practice in another sector. I commend the authors and encourage community/legislative discussion of their proposals.
Duane
Sun, 07/14/2013 - 4:29pm
Mike, Since it is so good do you think it should apply to private residences?
Todd J. Anson
Sun, 07/14/2013 - 5:53am
A unique, but flawed notion. Michigan is already uncompetitive and now suffers from decades of failing to read the “tea leaves.” It is substantially behind the economic progress curve and desperately needs a “new game plan.” Front loading even higher costs on economic growth is not the answer. It will only push the state further behind. A monumental mistake. Properties are supposed to be worth more today than they were 20-30-40 years ago. That is the norm in most places. Not true in Michigan because of many years of failed policies. Repositioning the state economically. That’s the answer that has avoided Michigan.
Duane
Sun, 07/14/2013 - 4:28pm
It is always interesting how the authors of such ideas never seem to concern themselves with such things as unintended consequeunces. Their ideas are always right and will solve all the stated ills their 'good intentions' are direct toward. I have yet to find one that identifies potential problems and then describe how they will address them. It is as if every building ever built has a single purpose, a very short life that will end up as blight. The facts that the construction of the buildings will contribute to employement, that the reasons for the buildings to be built has anything to do with jobs. I wonder where all those highly desirable 'loft' spaces come from, where entrepreneurs find those low cost building to start up new businesses. I wonder where these hundred year old building would be if this approach had been used when they were first being considered. It seems the authors can only see 'blight' and only see it caused by private enterprise. I wonder if they have any boarded up schools in thier area, any detriorating city buildings in their area, or government owned houses/appartments become blight. NO, it is only private business that creates blight in the eyes of these authors. I wonder what would be said by the residential home owners, etc, if the authors suggested for private home? If their concept was extended to public onwn facilities. If the ideas of thes authors are so good then why are they recommending them to all bligthed buildings? I wonder How Michigan State University would react if they were held to the standards and practice these authors are recommending to control private businesses.