Limiting Property Rights in the Public Interest
Edward J. Dodson
GroundSwell, November-December 2007]
Despite the demographic trend bringing people back into cities to
live, large sections of our cities remain nearly empty, with
hundreds or even thousands of abandoned, boarded-up buildings. As
city agencies demolish these buildings, the number of empty lots
expands -- lots for which there is no market demand (not even by
speculators). Not more than a few decades ago, these properties were
occupied and used. Abandonment and dereliction occurred rapidly,
however, as employers moved elsewhere to protect profit margins or
went out of business altogether. The most-skilled young followed
them, leaving poorer residents of an older generation behind to age
in place. Again and again, these older residents were joined by even
poorer people who leased deteriorating housing from absentee owners
who cared little or nothing about their properties or the
For many reasons, including ignorance, destructive public policy
and corruption, governments proved unable to respond to this crisis.
The quality of life for millions of people suffered while our
societal and institutional framework slowly adjusted. In many U.S.
cities, a long process of negotiation and engagement brought public
and private resources together to stimulate housing and business
investments in targeted areas. Subsidies were and continue to be
utilized to get the ball rolling, so to speak, and market forces are
then unleashed with a long list of unforeseen consequences.
The remnants of historic neighborhoods avoid the wrecking ball
and gradually recover to become the heart of a city's residential
community -- occupied, now, by high income households -- who return
to the city when children have grown -- or professional singles who
value the cultural diversity of urban living.
This progress of gentrification has occurred in U.S. cities such
as Philadelphia, Boston, Chicago, Baltimore, Charleston, and
Savannah. In the nation's heartland, the revitalization of
Chattanooga, Tennessee is frequently pointed to as a remarkable
success story. Even so, nearly every city continues to suffer from
blighted sections. Gentrification succeeds at the price of
diminished economic diversity, the poorest citizens pushed into the
areas with the worst housing, poorest services, highest crime and
lowest quality of life.
As we know, none of these cities has taken the step to shift
taxes from property improvements and onto land values. As indicated
above, the core parts of the cities are doing fine; poorer citizens
are even more marginalized today than in the past; and, some
sections of the cities continue to deteriorate while ringed by a
very limited and selective prosperity.
Altering the source of public revenue is, ultimately, the
solution to this problem. Then, market forces will gradually create
a full employment economy. These critical measures are not even on
the reform agendas of the main political parties, unfortunately.
Only a scattering of local officials have come to appreciate the
harm caused by how public revenue is today raised. They face
determined opposition by entrenched interests who benefit by
existing socio-political arrangements.
Even with tax shifting (i.e., land value capture) measures in
place, communities ought to exercise rights to protect their quality
of life against those who leave property unattended for an
inappropriate length of time. Under current laws, the process of
condemnation of derelict properties takes forever. Only when the
owner fails to pay property taxes for several years or after
numerous complaints by other residents will government move to take
the property at a tax sale. What happens then only makes the
situation worse: the property goes into the city's inventory with no
firm plan for rehabilitation or demolition. Years pass, and
properties become a worsening blight on the neighborhood.
City government needs to work in tandem with neighborhood
organizations able to take properties, quickly make repairs and
return them to occupancy. This could, be accomplished by deed
restrictions stating that ownership of land and the improvement
thereon is conditioned upon continued occupancy, that if the
property becomes unoccupied for a period of three or five years,
ownership would automatically be transferred jointly to the
community and a nonprofit community development organization.
Special circumstances will always occur; for example, the owner of
an aging building in need of extensive rehabilitation and
modernization might need to remove all tenants for an extensive
period while rehabilitation is underway. However, when abandonment
has clearly occurred, the community's interest ought to take
priority over any privacy or property interests of the deedholder.
Communities will remain communities only when empowered to protect
the overall quality of life.