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

CURE FOR BLIGHT: Financial commitments commonly used in the mining, petroleum and telecom industries could, if applied to residential and commercial development, help bring an end to the scourge of abandoned buildings in Michigan, argue MSU’s Rex LaMore and Michelle LeBlanc. (Bridge archive photo)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.

 

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.

Rex LaMore is Director of the Michigan State University's Center for Community Economic Development. Michelle LeBlanc is a research assistant at the Center for Community and Economic Development

 

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.