Step Two: Upping those Vacant Building Fees

Turns out that in July, Councilman Richard Conti (Ward 6) introduced an ordinance that would fulfill one of the recommendations made at the presentation on Wednesday: increase the annual fee to owners of vacant buildings over the course of the first five years they stand vacant, from $250 the first year to $2,000 in the fifth and thereafter. (I'd question why we let it go flat at that point, frankly. Wilmington, DE, often cited as a model, jumps the fee up again at 10 years and then ever year after that. It is, after, the really long term vacancies that are the worst problems.)

Still, it's a good idea, used to good effect in other cities, and Albany should definitely move in that direction. The ordinance (after the jump), which needs a little rewording to be fully clear, is with the Law Committee, and Conti seems optimistic about its passage.

However, it won't do much good until the data collection and enforcement sides catch up with it. The building department is a year behind on its quarterly reports, and no one really knows what buildings are in the registry, should be in the registry, etc. Everyone in this field agrees: good information is step one. But while we've got step two proposed, it won't hurt to get it passed.

Original documents after the jump.

Ordinance first, supporting info follows.

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Council Member Conti introduced the following:

Ordinance Number 65.72.07

AN ORDINANCE AMENDING ARTICLE XIA (VACANT BUILDING REGISTRY) OF CHAPTER 133 (BUILDING CONSTRUCTION) OF THE CODE OF THE CITY OF ALBANY IN RELATION TO REGISTRATION STANDARDS AND REPORTING REQUIREMENTS

The City of Albany, in Common Council convened, does hereby ordain and enact as follows:

Section 1.  Subsection A of section 133-78.3 (Vacant Building Registration) of Chapter 133 is amended to read as follows:

A. The owner shall register with the Department of Fire, Emergency and Building Services not later than 30 days after any building [located in an area zoned for, or abutting an area zoned for, residential or neighborhood commercial use] in the City becomes a vacant building[, as defined in § 133-78.2,] or not later than 30 days after being notified by the Department of Fire, Emergency and Building Services of the requirement to register. The Department may identify vacant buildings through its routine inspection process as well as through notification by residents, neighborhood associations and other community groups that a building may be eligible for inclusion on the registry.

Section 2.  Paragraph (2) of Subsection C of section 133-78.3 (Vacant Building Registration) of Chapter 133 is amended to read as follows:

(2) If the building is to remain vacant, a plan for the securing of the building in accordance with standards provided in [§§ 133-68.1 and 133-68.2] § 133-68, if applicable, along with the procedure that will be used to maintain the property in accordance with Article XI, and a statement of the reasons why the building will be left vacant.

Section 3. Paragraphs (1) and (2) of Subsection I of section 133-78.3 (Vacant Building Registration) of Chapter 133 are amended to read as follows:

(1)    The owner of a vacant building shall pay an annual fee of [$200] $250 for the period the building remains a vacant building. The fee shall be reasonably related to the administrative costs for registering and processing the vacant building owner registration form and for the costs of the City in monitoring and inspecting the vacant building site.

(2)    The first annual fee shall be paid no later than 30 days after the building becomes vacant. If the fee is not paid within 30 days of being due, the owner shall be subject to prosecution as prescribed in § 133-80. If a plan is extended beyond 365 days, subsequent annual fees shall be [due on the anniversary date.] paid as follows:

(a) for the second year that the building remains vacant: $500;
(b) for the third year that the building remains vacant: $1,000;
(c) for the fourth year that the building remains vacant: $1,500; and
(d) for the fifth, and each succeeding year, that the building remains vacant: $2,000.

Section 4.  Section 133-78.6 (Quarterly Reports) of Chapter 133 is amended to read as follows:
[Once every three months, the] The Department of Fire, Emergency and Building Services shall [send] submit a quarterly report not later than January 15, April 15, July 15 and October 15 of each year to the Mayor and [to the] Common Council [a list of] listing all buildings in the City declared vacant under the provisions of this article, the date upon which they were declared vacant and whether a vacant building registration and vacant building plan has been filed for the building. [as well as] The report shall additionally include a list of all previously declared vacant buildings, which are no longer subject to the provisions of this article.
    Section 5.  Except as herein amended, Chapter 133 (Building Construction) of the Code of the City of Albany is hereby ratified, continued and approved.   
Section 6.  This ordinance shall take effect 60 days after enactment into law.

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MEMORANDUM IN SUPPORT OF LEGISLATION
ORDINANCE NUMBER 65.72.07
Introduced July 16, 2007 Meeting

TITLE:  AN ORDINANCE AMENDING ARTICLE XIA (VACANT BUILDING REGISTRY) OF CHAPTER 133 (BUILDING CONSTRUCTION) OF THE CODE OF THE CITY OF ALBANY IN RELATION TO REGISTRATION STANDARDS AND REPORTING REQUIREMENTS

PROPONENT(S):  Council Member Conti

SUMMARY OF PROVISIONS:  Section 1 amends Section 133-78.3(A) to expand applicability of Vacant Building registry to all vacant buildings regardless of location.

Section 2 amends Section 133-78.3(C)(2) to make a technical correction in the cross-reference to the section of the Building Code regarding exterior protection of vacant buildings.

Section 3 amends Section 133-78.3(I)(1) and (2) to establish an initial vacant building registration fee of $250 and a graduated scale of registration fees in succeeding years of  $500 for the second year, $1,000 for third year, $1,500 for the fourth year and $2,000 for the fifth and succeeding years.

Section 4 amends Section 133-78.6 to specify dates upon which quarterly reports to the Mayor and Common Council regarding vacant buildings are to be submitted by the Department of Fire, Emergency and Building Services, and specify additional content for such reports.

Section 5 continues Chapter 133.

Section 6 provides for an effective date 60 days after enactment.

STATEMENT IN SUPPORT:  A recent report by the Department of Fire, Emergency and Building Services identified nearly 1,000 buildings subject to the Vacant Building Registry program.  Not all buildings have been registered.  The original intent of the Vacant Building Registry was to identify vacant buildings, assure they were appropriately maintained and secured, and to require rehabilitation plans that would return buildings to appropriate occupancy or use.  This ordinance seeks to provide additional incentives for the appropriate rehabilitation of vacant buildings, and recognizes there are additional costs in terms of program administration and neighborhood blight the longer a building remains vacant.  It is the further intent of this ordinance to support enhanced enforcement of existing law.

FISCAL IMPLICATION:  Increased costs of administration would be off-set by a restructured graduated fee schedule.

EFFECTIVE DATE:  Sixty days after enactment.

Vacant Building Registry Fees

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Municipal Comparisons

City                            Year 1    Year 2    Year 3    Year 4    Year 5

Albany, NY (current)    200        200        200        200       200
Albany, NY (proposed)  250       500        1,000     1,500     2,000
Binghamton, NY [1]      500       500        500        500        500
Burlington, VT [2]         2,000    2,000     2,000     2,000     2,000
Kingston, NY                250       500        1,000     2,000     4,000
Minneapolis, MN           2,000    2,000     2,000     2,000     2,000
Newburgh, NY              720       720        720        720        720
Richmond, VA              25         25         25          25          25
St. Paul, MN                 250      375        500        500        500
Sioux Falls, SD            200        200        200        200        200
Troy, NY                    100        100        100        100        100
Willmington, DE [3]     500        1,000    2,000    2,000        3,500

High                           2,000    2,000    2,000    2,000    4,000
Low                            25        25         25          25            25
Average [4                 613        693        840      931      1249

1  Based on 5/31/07 pending draft by Mayor Ryan.  Proposal calls for $50 one-time registration fee and $500 annual vacant building fee.
2  Fees are paid quarterly at $500 per quarter.
3  Fees extend to $3,500 for years 5 thru 9; $5,000 for year 10; and $5,000 plus $500 for each year over 10 years.
4  Does not include proposed Albany levels.

Comments

[duffbeer703]

Sounds like a good start. Are there any plans to get a system on the books where city services are getting billed to the abandoned property owners? (And the owners of rogue properties for that matter) The SDAT folks seemed emphatic about that, and it seemed like a no-brainer to me.

[Miriam Axel-Lute]

Yeah, they did emphasize that quite a bit, on top of a registration fee, and this ordinance seems to imply that the fee's purpose is to cover those costs.

I'll see if I can find out if anyone's thinking about that.

[Jack]

Vacant building fees are fine, but why not get radical? We should look at ways to charge property taxes based on the size of the lot rather than on the value of the building on it. We would avoid the whole assessment debacle, encourage density and discourage vacant buildings and lots.
You could come up with categories that reflect the use of the buildings but it would be a clean, neat, less arbitrary system.
You could have one rate, per square foot for residential, one for multi-family, one for commercial, industrial etc. You could still offer time-limited discounts for those who but and improve in distrressed neighborhoods, but why are we still trying to fund our city and schools based on the imagined value of properties if you were to sell them?
We would also avoid this sham of officials claiming to have reduced taxes (or held the line) while reassessments and revaluation is driving up tax bills. And it would end the crazy appeals process. It could be phased in over 5 or 10 years.

[MIriam Axel-Lute]

Jack,

What you're suggesting sounds similar to a model called land value taxation, where taxes are based on the value of the land not the building. Such a system discourages speculation and removes the weird disincentive caused because property taxes go up when you fix up your property and down when you let it run down. In some ways it is those disincentives that vacant building fees are trying to make up for. (On the other hand, vacant buildings do impose specific costs of their own on a municipality and it's fair to try to recoup them.)

With a land value tax your taxes would still go up if your land became more valuable: say if you were right next to a new train station.

Land value taxation dramatically reduced the amount of vacant buildings in Harrisburg, Pa. We might want to consider it here.

[Jack]

Miriam,
Thanks for the feedback. I see your point about recouping the costs that vacant buildings generate. Such fees would also make it a lot more difficult for speculators to sit on a bunch of vacant properties for years.
But if the owner had to pay full taxes on a vacant parcel (with some exceptions) there would be few incentives to hold on to a piece of land hoping sombody will drop a convention center out of the sky. The Wellington parcel comes to mind.
My thinking is to radically simplify the property tax system, so that property owners know exaclty what their taxes will be year to year, and that city officials need to actually change the rate to raise revenue.
Property taxes are a citizen's most intimate connection to the municipal government and it shouldn't be shrouded in the mysteries of the real estate valuation assigned by assessors. And consider the time and expense incurred by repeated, periodic reassessments, and all the hassle one has to endure to appeal.

[Miriam Axel-Lute]

Yep, full taxes on a vacant parcel would make a huge difference.

I'm intrigued by your simplification proposal, but uncertain about how it would work exactly. I definitely agree that simplifying dramatically and making the system transparent would be a good thing, but if you don't set the tax rates based on value at all, how do you set them? Should Albany as a whole pay taxes as high as NYC even though our real estate values are lower? Should a homeowner in the South End pay taxes as high as someone with the same sized parcel in Center Square, even though they wouldn't be able to sell their home for a quarter the price (even, it should be noted, if the homes were in similar condition. This is land value I'm talking, not building)? Wouldn't that be a disincentive to reinvesting in currently depressed areas?

[Jack]

I'll look at your "land value" idea. Did you say it's been tried in other places?

My thinking is this; that the use and benefit from government services isn't at all related to the market value of a piece of property so that your property tax shouldn't be tied to it either.
I also believe in absolute government transparency so there shouldn't be any mystery about how a person't tax amount is arrived at.

Market value only really matters when one sells a piece of property not when they live in it.

The toll for diving the Thruway isn't dependent on the value of the car, but on the weight and number of axles...a more accurate reflection on the wear and tear on the road. I know cities are not the same as toll roads but the idea is the same.

I would establish a tax rate based on the type of property (residential, commercial, multi-family, mixed use, industrial, institutional etc...)and the size of the lot. That way it would discourage sprawl and encourage infill development. If I had a 10,000 sq. ft. lot I might be encouraged to build or renovate a carriage house or in-law appartment. That would encourage greater density and open up more affordable housing.
How many land owners would be willing to let a vacant lot go over to parking if they had to pay the same tax on it that they would if they'd built a residence on it?

I would allow for temporary discounts in distressed areas, having them phased out over 5 or 10 years for each new owner. I would also allow for a discount for the elderly similar to the enhanced STAR.

If we need to tie tax rates to a person's ability to pay, and I think we should, we can institute a city income tax, collected the way it is in NYC. I'd also consider charging it to those of us in the suburbs who earn our incomes in the city.

[Miriam Axel-Lute]

Yes, it's been used in many places in Pennsylvania, especially Harrisburg, to good effect.

You're definitely asking the right questions. I guess I just wonder if you could come up with a rate low enough not to hurt homeowners in poor areas and yet high enough to discourage speculation in appreciating neighborhoods.

If you could, and if it were paired with a progressive income/commuter tax I could see it working. But that latter bit, of course, would be a major political challenge.

These are the conversations we need to be having though.

[duffbeer703]

Changing the basis of property taxation may or may not be a good thing, but its a pie in the sky idea that is outside of the scope of a citywide master-planning process.

In the end, all the current assessment system does is assign everyone a share of the city's financial obligations. Changing the way to compute it is no more or less arbitrary than the current system. You'll just screw over people with big lots on street corners and shift more taxes to Arbor Hill & the South End. Those rents will go up, and 50-70% of those rents are government subsidized anyway, so we'll still pay!

You'd need legislative action to be able to implement land-value taxation anyway, and that's just not going to happen.

Likewise, a income/commuter tax in Albany would serve to drive out the middle class and businesses into Colonie, East Greenbush and Guilderland. This isn't San Francisco or Boston -- you can commute as far as Saratoga in 30-45 minutes. Albany would look like Detroit circa 1975.

Even in NYC, with the allure of Manhattan and Wall Street, the commuter tax was hurting the economy, and was a major factor that led several financial firms to move operations to Jersey City.

Albany's problems aren't caused by an empty treasury -- they're fueled by the the migration of taxpayers (ie the middle class & business) and stagnant economic growth. Financial companies like KeyBank and Bank of America have slowly eliminated most of their Albany operations over the last decade because it costs more to do business here than in Ohio or New Hampshire or even Massachusetts.

A master plan should encourage growth. Growth equals jobs which means more commerical tax revenue, and more residents with jobs paying taxes.

Look at the area around Everett Road -- it's a prime location that is currently a no-man's land, filled with trashy commercial buildings and decaying rental properties dating back to the NY Central days. That should be a prime shopping area with new rental/condo housing. New development would stimulate the values of the surrounding area, particularly the Colvin/Lincoln corridor and upper Central Ave.

This is just an example to illustrate the notion that seeding new growth is the best way to get new revenues -- not new tax schemes.

[Miriam Axel-Lute]

First of all, yes, tax schemes are not enough by themselves.

But I think you misunderstand my motivations here. All this is emphatically not intended to raise revenue. It'll be about revenue neutral. It's intended to create a better climate for redevelopment and growth by encouraging development over abandonment and speculation, and catalyzing some revitalization that will encourage those fleeing taxpayers of which you speak to take another look.

Why do people leave cities? Crime, visible blight, poor services for high taxes. Getting abandoned buildings rehabbed and back on the tax rolls addresses all of those things.

Encouraging job growth can and should happen in other ways, but this is definitely part of it. Businesses these days are not actually making decisions primarily on cost--they are making decisions based on where their employees want to live. That's the reality of "the new economy."

Functional, attractive neighborhoods are an economic development strategy.

[duffbeer703]

Miriam -

I agree with you about intentions, I just don't think that re-inventing the property tax system is feasible. It's a "heavy lift" to convince the city/school/library/county/state to do anything, and a new system will always introduce new losers who will fight hard to stop any change.

You're better off working with the system to achieve your aims. Nobody, other than absentee landlords (who are absent anyway) objects to attaching stiff fees to abandoned buildings. The other inequities in the system should be addressed, but addressed seperately -- not through the master plan process.

[duffbeer703]

Oh and "one more thing".... businesses absolutely make decisions based on cost. Ask one of the 50,000 ex-IBMers in the Hudson Valley whose roles are now performed in India.

[Miriam Axel-Lute]

Hey duffbeer, have you heard of the rule in brainstorming sessions where no one is allowed to shoot down ideas as infeasible, just generate more? The time for assessing and prioritizing and figuring out what can work comes later. You need a brainstorming session every once and a while or no one ever considers making big important changes--and they do get made, all the time. It's also important to move on from that stage into practical nitty gritty, but we're at the brainstorming stage for Albany's comp plan right now. I don't thing "That would be hard" is an argument against anything at this point.

As for businesses, yes, they still take cost into account. But it's not the only thing, and there are increasing examples of competing regions where the company does not pick the biggest subsidy package. People are the knowledge economy's greatest asset, and places like Sematech want to go where their people want to be. I'll get some references for you on that when I have a little more time.

All that said, I have no problem working within the system. Often it's the best first step.

[duffbeer703]

That's a good point. If you don't identify as many ideas up front as possible, it can be impossible to incorporate new ideas later.

I'm actually involved in a large project at work that similar to the Albany comp plan in terms of it's impact on all aspects of our business, and we just moved out of the brainstorming stage into the nitty gritty technical/political/fiscal analysis phase.

In my other project, several of us became very attached to several related ideas that came up in brainstorming, but not-doable. It was difficult and time consuming to let these go and really slowed down our overall progress.

So I think my POV is/was slanted because of that. I'll try to keep that in check :)

[Jack]

Good points Miriam...and nice job Duff in keeping our feet on the ground.

From my perspective I'd like to see the CP process start with big, really big ideas. Nothing is too hard, too fantastic, too out there. I think it's the best way to honestly craft a vision for Albany over the next half century.
I'm one of those people who sees a great future for cities, especially those of modest size like Albany.
The price of gas and upkeep on all the suburban neighborhoods we've built over the last half century is already starting to have an impact, and I think the middle class, empty nesters and professionals will re-discover Albany. (Hey, I said nothing was too out there) So let's start to plan for that now...at least as a vision.
Then, we need to take a cold, hard look at just what can be accomplished; how it can be paid for; how long it will take and if there is the popular will to try....but it has to start with a big vision.
None of this will be easy or cheap; big changes are hard, but continuing to try to maintain an increasingly unsustainable development pattern is neither easy nor cheap. Energy costs, environmental impacts and the high cost of infrastructure and government will force us to transition to a more reasonable scale.
An alternate vision of a vibrant, livable, sustainable city that provides a healthy place to live, work and play may make that transition more manageable.