Disinvesting in the City

Abstract

Tax foreclosure offers an opportunity to investigate processes of disinvestment in the city. Prior research has not considered how tax foreclosure administration protects or further damages neighborhoods where foreclosure occurs. Detroit's loss of households led to disinvestment in housing and demolition of structures. In addition, at each of the three stages of property foreclosure and disposition, implementers took actions that promised to encourage disinvestment in property by facilitating the spread of blight and encouraging negative externalities. This occurred because (1) foreclosures took many owner-occupied properties; (2) the sale of properties to government entities was small and did not promote reuse; and (3) the foreclosure auctions disadvantaged purchasers who would become owner-occupants, channeled properties in strong neighborhoods to investors at low prices, and sold properties disproportionately to destructive buyers.

Critiques of the Shrinking Cities Literature from an Urban Political Economy Framework

“…Gallagher (2013) has suggested that abandoned homes and properties might be places where artists and their work can reside, activating underutilized space. In contrast to rightsizing that ultimately concentrates residents into a smaller land area within the city, reinforcing existing patterns of informal land use through formalized means has been said to result in a new, less dense land use pattern, described as a "new suburbanization" (Dewar, Seymour, and Druţȃ 2015;Amborst, D'Oca, and Theodore 2008).…”

“…According to Mallach (2006), "A land bank authority or similar entity exists for the explicit purpose of gaining control over the city's problem property inventory in order to make possible its timely and productive reuse" (p. 128). By gaining control of these properties that often have complex ownership and tax delinquency issues, a significant opportunity is presented to city or county governments to determine the location and nature of vacant land through land banking policies (Dewar, Seymour, and Druţȃ 2015). Further, when a single public entity takes ownership over often fragmented and scattered vacant properties, it becomes easier to assemble land into larger areas, bringing the potential for long-term, larger scale planning visions to form (Krohe 2011).…”

“…However, the uses that land bankowned properties may be put to and their attitudes with regard to how readily they allow potentially speculative buyers to purchase vary widely. Often regarded as a best practice in land banking, the Gennessee County Land Bank (GCLB) that includes Flint, Michigan, in its jurisdiction plays a relatively heavy-handed role in protecting their properties from being purchased by speculators or absentee owners that may allow the property to fall into worse disrepair (Hackworth 2014;Dewar, Seymour, and Druţȃ 2015). Typically acquired through tax foreclosure, before reselling properties, the GCLB "strictly limit[s] who can take possession of reverted property.…”

“…By contrast, the Wayne County Land Bank (where Detroit is located) places very few limitations on who may purchase properties and even allows for online property auctions (Akers 2013). This practice has led to widespread speculation, and many would argue a worsening real estate climate in the city of Detroit (Dewar, Seymour, and Druţȃ 2015;Akers 2013). In the case of Baltimore's SCOPE program (Selling City Owned Properties Efficiently), the city has even worked with realtors to unload properties onto the market as quickly as possible (Krohe 2011).…”

“…In the case of Baltimore's SCOPE program (Selling City Owned Properties Efficiently), the city has even worked with realtors to unload properties onto the market as quickly as possible (Krohe 2011). As Hackworth (2015a) and Dewar, Seymour, and Druţȃ (2015) have demonstrated, depending on market conditions to fix a failing market is counterintuitive and often destructive. Additionally, Weaver et al (2016) have stated that a key goal of establishing land banking is to "return erstwhile vacant and abandoned structures to the municipal tax rolls by placing them in the hands of private investors .…”