November 27, 2006
Slumlords Beware -- The Bloggers are Coming
We've used the power of blogging to get potholes fixed, so why not use it to spur some local development? At least that's what one blogger and Shaw resident is looking to do. The anonymous blogger behind Off Seventh -- My Chronicles of Shaw is sick and tired of seeing properties in the fast-growing neighborhood boarded up and undeveloped, and he wants do something about it. He writes:
My wife and I were heading to Whole Foods this morning and I got to thinking. Walking past The Marion Street Flats and the new building on the corner of 10th and Rhode Island...there are ALOT of people who are working to fix some of the eyesores in the neighborhood. But there are some who sit in their Fairfax/Montgomery CountyTo that end, the blog has kicked of a new feature, "Slum of the Week," that will highlight a property in the area whose owner has done little or nothing to fix the place up, leaving it instead as an abandoned eyesore. His first featured slum is located at 819 Q Street NW, and is apparently owned by a Georgetown businessman.homesMcMansions and wait until they can make maximum dollars. I have NOTHING wrong with making cash off of your investment...but when you keep it as a slum I have a problem with you.
Not to sound like doubters — we do like this idea, after all — but we're hoping that our Shaw-based blogger does his research. After all, not all abandoned properties in the neighborhood are owned by money-grubbing suburbanites looking for the quickest buck. Given the number of obstacles many property owners have to jump through before they put their investment to use — ANCs, zoning commission hearings, and any other number of bureaucratic hoops — it might be that converting that old townhouse into a sellable condo or useable business is a little tougher than expected. Then again, we continually hear rumors that some of the properties in the area are owned by powerful local churches (Shiloh Baptist Church keeps coming up), so we're curious to see what our intrepid friend discovers.
He needs help, too, so if there's one unused property in Shaw that really grinds your gears, let him know.
Picture snapped by OffSeventh
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Maybe the answer is to raise the mill rate for unoccupied commercial spaces. For residential, it's $5.00 for unoccupied buildings (as compared to 88 cents for occupied). But I don't think DC puts the same additional burden on empty commercial buildings. I could be wrong about that though.
Of course, maybe there just aren't business eager to move in. Or perhaps the only businesses willing to move in are Checks Cashed and liquor stores. I hope that that's not the case, and the explanation really is greedy landlords, but can't say I have any evidence either way.
Reid raises a good point. The key is reporting such properties as "Class 3" (vacant homes). For example, an assessment of a $400K property at the $5 per $100 vacant assessment rate would equal $20K/yr vs. ~$3100/yr for non-vacant. Plus the owner gets hit with the difference in the rate for the previous 3 years (unless they can prove it wasn't vacant, which they probably can't because it wasn't). That's a steep cost and hardly a 'turn key' investment.
If you look at the DC Office of Tax and Revenue website, it's surprising how many vacant properties are registered in perfectly good neighborhoods. OTR lists the full registry on its site.
http://otr.cfo.dc.gov/otr/cwp/view,a,1330,q,594317.asp
To save people the inevitable argument:
Blah blah gentrification blah blah class blah race blah blah 1967 blah blah hemp-powered car.
But DC1, can commercial buildings be categorized as Class 3? I really don't know the answer to that question.
Oh, I see from that website that they can be designated Class 3. I guess the thing to do is to get on them for their taxes. But it may be that holding out for a big payday while paying steep taxes is still better than getting tied up in a lease with a tenant business.
Blaming investors for trying to maximize is like blaming God for sending your alcoholic friends to hell. You can complain all you want, but you're not going to change the outcome, and you might well end up screwing yourself over in the process.
The real problem is one of critical mass. No small outfit wants to be the first on the block to open because the risk is huge. Look at the challenges that restaurants like Domku in Petworth face, or even the intrepid businesses that opened first in the new Columbia Heights developments.
That's also why the hot neighborhoods in DC become so hot so fast. There's enough money floating around in this city to sustain more development than exists now, but new development is highly concentrated where business owners know their risk is lowest. Investors who guess correctly reap the benefits of soaring rents, and businesses pay the bills by passing those higher costs on to us.
The city government's solution to this so far has been to encourage big development projects in the hopes that smaller commercial enterprises will cluster around. That works well sometimes (see Whole Foods in Logan Circle), but it also often does as much to destroy the character of a neighborhood as it does to revitalize it. Instead, the city needs to do more to incentivise targeted business improvement districts in areas that already have a large stock of usable commercial space like Shaw. As others have pointed out, investors will stop letting properties remain empty when it becomes less expensive to sign a tenant at today's rent than to wait and hope for everyone else to develop in anticipation of tomorrow's rents. The city has many tools at their disposal, but their penchant for big developer projects often gets in the way of the kind of smaller-scale development that neighborhoods like Shaw actually need.
If you want to encourage productive use of a property, it'd probably be best to research it to make certain it is being assessed and taxed correctly, and that the taxes are being collected or tax liens assigned. You might also try to examine the exterior for safety, and make certain any applicable nuisance property laws are brought to bear. Check with the neighboring property owners. Some of them may have useful information.
All that aside, many of these places probably have some form of title trouble, or the city can't locate the owner. If that's the case, the process of getting the city to seize it for back taxes or fines can take years. You just want to make sure that the process is moving as fast as it can.
The most important thing you can do to get rid of these properties is to report them to the city at 727-1000. Write down the reference number and call back if you don't get a response.
I have had properties put on the "abandoned property" list by doing this.
Lee makes a good point... there is enough money in the new neighborhoods to support retail. But I think one problem is that we don't have a middle class in DC to open new small businesses. Lawyers, government employees, researchers - they don't (usually) chuck it all and open a butcher shop. It tends to be immigrants and "working class" folks who do that. And guess what - they're all out in the suburbs. I know that in my 'hood (Ledroit Park) condo developers have been trying to scare up "1st floor retail" - they've all promised it as part of their development package. But nobody wants to move in. Part of it is the neighborhood (crime, drugs, etc) but I think part of it is just that few people are opening businesses in the city.
in response to Lee- that makes sense, but how do you explain, for example, the empty building on the corner of 14th and U. this is prime real-estate that has been empty for years as the rest of the area has developed around it. How about the random vacant house on 14th and T? Surely the $600,000 plus selling price for the houses next to it would be incentive to unboard those windows...
anyhow- just my two cents.
As noted in the main post, don't underestimate the regulatory obstacles to renovating/developing property here, especially for a smaller investor (as opposed to a big-time developer like PN Hoffman or whoever). I live in DC, and it took me nearly SIX MONTHS to get a permit approved to renovate my home. (By contrast, a similar renovation permit for when I lived in VA took a couple of weeks.) Some friends and I had purchased another investment property that we were hoping to renovate with re-fi proceeds on my residence, but the timing delays just blew that whole scenario to hell, I'm still knee-deep in renovations, and now we're selling the other house after eating months of mortgage.
Sure, mea culpa, we bit off more than we could chew, and maybe it wasn't the wisest investment strategy, but if dealing with DCRA was slightly less laborious than fighting a ground war in Russia, both properties would be finished by now. Lesson learned: I'm not investing in DC again, unless the property is in turn-key/move-in condition.
None of this explains all of the situations these bloggers are covering, and there are no doubt some irresponsible and greedy owners out there, but I'd think at least some of this blame has to lie at the feet of DCRA.
"they've all promised it as part of their development package. But nobody wants to move in."
I would still be curious to see what rent they are asking. My guess is that they are still asking for too much, considering the business risks involved. I'm sure that they could find some entrepenuer willing to open a store if the price is right. It's probably just that when they ran the numbers for the building, they assumed a per square feet rent for the retail, and they're sticking to it, despite the market.
you all are screwed up. mind your own business and don't bother other people about what they do with their property. the neighborhoods are all already selling houses for close to half a million. so calm down. your getting the pristine little city you want. so walk another block to get your frappicino and mind your own business like anyone in any city should do. i bet you don't know that because you grew up in the suburbs. please stop trying to make a city with its own culture conform to your own suburban idea of how the world should be.
Joe needs to take it easy. Blogging and bloggers are entitled to write about property. We certainly do more than the conventional media to raise the bar of awareness of real or perceived issues. I wish more bloggers in Fairfax County would do it.
There's vacant, as in non-occupied storefront, and then there's vacant like on The Wire. Vacant residential properties can pose risks to communities, and could be well suited for adapting to better use. Investors like DCgruntled should be commended for making the effort to rehab such properties and DCRA should better serve DC property owners.
By properly tracking and penalizing slum lords, these properties could generate at least some revenue to offset the social costs of abandonded buildings. They could also potenentially acrue penalties in excess of their value, making them good candidates for adaptive use. Whether that includes private development, workforce housing, etc., it's certainly better than boarded facades.
The basic principles of economics would suggest that as the cost of running a business goes up, the number of businesses would decrease, or at least the number of businesses would certainly not go up all else being equal. In DC, we see the opposite. As individual neighborhoods become popular, businesses open up in spite of the higher rents. The only good explanation for this kind of relationship is that small businesses are very risk averse, and they're willing to pay higher costs (not all of which can be offset by higher prices) in order to ensure that they'll get consistent foot traffic.
As for the empty storefronts, remember that the value of a property isn't related to what it's being used for today, but to what it can be used for in the future. The value of potential rent income has to be weighed against any setup or renovation costs that a developer must incur, as well as the possibility that one will lose out on even higher rents if he leases the property too soon. The folks that are keeping U Street properties vacant are probably doing so either because they expect rents to go up or because they expect startup costs to go down through eased regulations or some sort of government incentive.
That said, like most of us I would say that these people are stupid not to develop their hot properties. As more and more neighborhoods gentify, the supply of low-risk properties for rent will increase, and therefore the rents on existing properties will go down. The run-up in rents of the last few years is basically the result of the fact that demand for certain types of properties can change quickly, but changes in supply take time.
Actually I think respecting property rights above all other things is entirely more of a suburban attitude. Elevating the right of an owner to completely disregard how the use (or non-use) of their property affects the fabric of the neighborhood is the antithesis of urban.
And tearing at the fabric of a neighborhood is exactly what abandoned buildings do. They contribute to crime (both by offering a location and by eliminating the number of "eyes on the street") they reduce the overall tax revenues of the city, and they reduce the urban vibrancy that makes a city different than the suburbs in the first place.
And the fight over the public space goes on...
there you all go talking about your neighborhood fabric. who says we weave together? yall seem way to uptight too do anything with. how about you keep your uptight prying eyes on the street out of my business and leave me alone. i'm not suggesting that buildings be left open and prone to mis-use. i'm only saying that if i want to keep a neat and secure building with boarded or bricked windows then that's my business. you do what you want with your windows. if you got a problem with my property, then contact me directly like a neighbor should. your first instinct is to go crying to the government or to anonymously attack your own neighbor on the web.
Last time I checked, close to HALF of the abandoned properties were owned by the District Government (forclosed or siezed properties, some abandoned). Another 20-30 percent were owned by churches (given in wills or donated). Seeing as neither "owner" has the money, the willpower, the inclination, or the competence to develop these properties, why isn't there some mechanism to put these properties on the market? And I'm not talking about the "auctions" where DC puts the property up for bid to recoup the taxes owed, and either the owner comes in at the last minute to pay or the new owner doesn't do anything resembling development.
joe said, "if i want to keep a neat and secure building with boarded or bricked windows then that's my business."
It's the buisness of everyone affected by that building being vacant. That includes the other people that live in the neighborhood. You may not like that, Joe, but part of being invested in a community is actually being invested in the COMMUNITY, not just in your property.
Robis,
Joe is right, as long as he is following zoning and other laws, he can do whatever he wants with his property; that is what is great about this country and property ownership. It would be great that every neighbor was responsive to the community, but the reality is, that your expectations of your neighbors will never live up to reality...so get over it.
First off thanks for the highlight...I have been a huge fan of DCist for a long time and this is the first time I have been linked.
I completely agree that I need to do my research and last night I sent the following to the person reported as the owner:
My name is Brian and I am the author of a blog called Off Seventh. I do not want to waste your time so here goes...I would like to set up a time to talk about the property that you reportedly own on the corner of 9th and Rhode Island Streets NW. Currently I am starting a weekly feature on my blog called "slum of the week"...PLEASE KEEP READING...my hope is to highlight run down properties and try and foster a dialogue between the community that has to deal with the property and the owner. As someone who has been known to work for "unpopular" causes I truly believe in getting EVERY side to a story and I was wondering if I could set up a time to ask you a few questions. I promise I will not print anything that you are uncomfortable with but I would like to see the other side of why properties sit vacant in Shaw (maybe the ANC or DC Government?).
I am a pro-development and pro-gentrification member of the community and I want to work with property owners to develop property rather than allowing them to sit vacant due to the overly burdensome process in DC. However, I must warn you...my readers may not be as nice...but I promise to moderate the discussion and not allow for information about you to be posted without your consent.
Please let me know if you are up to speaking via phone or email...I realize you are a busy man so I will give you a couple of days to collect your thoughts and decide if you would like to have a discussion.
The D.C. Government has reduced vacant properties by more than HALF since 2000. There are just not as many vacant properties as there used to be in this city, especially residential properties as more people are moving back to DC. Now, commercial properties are a different matter. Retail investment is a few years behind our residential explosion.
Of course, we cannot rest until every vacant property in this city is revitalized, but, if we look at the facts, the number of vacant properties in DC have been cut by more than half since 2000. The number is not getting larger, it is getting smaller. More eyes are in these communities and they will put pressure on the owners of these eyesores.
The D.C. Home Again initiative has been one of many successful program program to date.
dcbiz.dc.gov
i'm only saying that if i want to keep a neat and secure building with boarded or bricked windows then that's my business.
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Joe, take that attitude to a rural area. You're very confused about what your rights are in this matter. I know two people who own damaged houses in my neighborhood, both are trying to raise money to rehab and sell them, but they're people with many faults who will probably never do it. Both keep their properties in good condition. One was heavily damaged in a fire set by a homeless person who snuck in. Another was used as a place where a homeless sex predator lived and stored stolen items from the neighborhood. I remember the house owned by a diplomatic couple in my neighborhood in the 1970s. We snuck into it around 3pm, watched TV, read Playboy, played pool, smoked and were out by 4:30 so the neighbors didn't see us. If I was less innocent there would have been teenage drug use there. There is zero chance that an unoccupied property will not be used by criminals, so you have no argument to stand on. Human rights trump property rights in US law, so you're welcome to move out.
"i'm only saying that if i want to keep a neat and secure building with boarded or bricked windows then that's my business. you do what you want with your windows. if you got a problem with my property, then contact me directly like a neighbor should. your first instinct is to go crying to the government or to anonymously attack your own neighbor on the web."
Joe...I think that there are quite a few of my neighbors who would disagree with you on this point. For the last few years Shiloh and a few other owners have held properties where the trash piles up, they smell like shit (because the crackheads use them as their toilets) and rodents run free.
I am not going to post and run...I want to open up a discussion with the owners of the properties and see where we as a community can help. According to many (and I am not saying they are wrong) there is an affordable housing shortage. Maybe there is a role for the property owners in this issue?
Many posters have accurately pointed out that boarded up buildings do have a negative impact on the surrounding community. And others have pointed out accurately that often the obstacle is DC government itself.
I'm a property owner in DC. It's all residential, but the same ideas apply. I keep my places up very well, often better than the surrounding owner-occupied dwellings.
One factor often overlooked (mostly in residential, but probably to some degree in commercial) is that the owner isn't always responsible for the condition. Sometimes tenants tear a place up or tie a place up in court. In fact, in DC a tenant can often actually prevent a property owner from accessing the property for required maintenance.
I once had a crack-smoking loser renting my basement apartment. Unfortunately the electric panel for the entire house was in his apartment. At one point he actually called police to stop me from entering his apartment to flip the breaker when my power went off.
Owning DC property, both commercial and residential, can be a giant pain in the butt.
That doesn't necessarily excuse those that just never try or buy a place strictly to hold onto it indefinitely as property values rise. That's just rude and inconsiderate of the people that live in that neighborhood. Boarded up properties invite crime, even if boarded up well. And they discourage investment in the adjoining properties.
"One factor often overlooked (mostly in residential, but probably to some degree in commercial) is that the owner isn't always responsible for the condition."
Hillman...COMPLETELY agree! That is why I am sticking to vacant properties that are eyesores and problems in Shaw and surrounding communities.
"Joe is right, as long as he is following zoning and other laws, he can do whatever he wants with his property; that is what is great about this country and property ownership."
True. But the government can and should erect incentives and disincentives to affect the decisions that homeowners make. The balance between property rights and government intrusion is really what makes this country great. We don't live in a libertarian utopia. People's choices affect their neighbors. The government is correct to try to influence those decisions, within boundaries.
Personally, I am not concerned about any particular building or neighborhood, but I think that as a general matter the DC government should erect disincentives to people who choose to sit on an empty building. As Otavio stated, policies like these, along with widespread reinvestment, has reduced the numbers significantly.
The point to stress is that the reinvestment and redevelopment is not the abberation. These buildings and neighborhoods had a history of occupancy and liveliness. The disinvestment and vacancy of the decades before the 1990's was the abberation.
"My wife and I were heading to Whole Foods this morning and I got to thinking."
Already I don't like it. The author begins his criticism by describing an outing that already puts him at odds with half the neighborhood. What he really wants is homogenization of the neighborhood,not ample and proper development. If DC gets filled up with overpriced townhouses and condos, who's going to keep the city grimey and entertaining?
I feel like an ass admitting this, but I kind of like the aesthetic look of abandoned buildings. Worst approach to civic responsibility EVER, I know.
The squatted buildings across the street gave me the sheer amusement of seeing giant fires about once a month and I kind of miss that ever since they finally knocked the damn things down.
K,
Alright I will take the "douchebag" comment...I actually was heading to Stoney's but most would not know where that is located. If you took a moment to READ my post you would realize that at the end of the day I am not asking for million dollar condos I just want to get to the root of why development has stalled at 9th Street. So please refrain from being a presumptious ass and actually read before attacking.
Thanks
K - I've lived in DC when everything you saw was grimey and entertaining. In fact, me and my neighbors got entertained at the end of someone else's gun quite frequently.
You can lambast yuppies and million dollar condos all you want but for those of us that lived through the crappy years I'm quite happy to see real investment in DC.
The alternative of the past DC just sucked beyond belief. And I'm sick to death of people glamorizing it. It sucked. Period. For everyone.
What's disgusting about Brian's posting of slum of the week is that this bastid happens to live about two blocks away from that "Slum of the Week" on 8th Street. I wouldn't be surprised if he's praying every night that his property skyrockets.
Brian, too bad the RE market is so soft that it bugs you so much. Bugs you so much that you have to launch a stealth attack on property owners in the area. Twisted.
Let's be honest here. There's something called full disclosure- if you are opining about something which you stand to make a profit or loss, you should give some disclosure (ah, have you ever watched any news show in which a new anchor divulges that the broadasting conglomerate that s/he works for has an ownership stake or affiliation?). Hell, if you are so proud about that neighborhood, why didn't you post on your blog that you live a couple of blocks away from that house?
Sure, let people profit from RE. I have sold and continue to sell property in DC. But please don't BS about trying to:
"Work with this person (or group) to try and help clean up the derelict property and maybe even work to help them develop it".
You just want to move into Shaw and changes things to profit. Your bottom line. You don't seem to exhibit an interest in architecture, historic preservation, etc.
Its pitiful. People like Rob Goodspeed from DCist get inovlved in urban design/architecture/photography in Shaw, and people like you come to make money. And when you can't make money, you lash out at some slumlord hoping to spur development so you can run to the bank.
Ten bucks sez you won't be around Shaw for long. Pathetic.
P.S. I'm pro-development, but I hate greedy people.
Rob, I think it's a common assumption that this guy lives in the area and would benefit at least tangentially from boarded up properties being used more productively. If you think he has a more direct tie (i.e. maybe he owns the commercial building right next door), then by all means let posters know that. But otherwise I'm perfectly comfortable with him (and all other neighbors) having an active role in trying to improve his neighborhood, even if it's only so his property values will improve.
And what proof do you have that this guy is going to cut and run and cash in at his earliest convenience?
I've worked in my neighborhood to get more decent businesses and such. Will that help my bottom line? Maybe. Tangentially. But that's not my primary reason for doing it. I do it because I live here and because our retail and business corridors often suck even though the residential areas improved years ago. And because I think business owners do have a responsibility to provide a decent service to the neighborhood.
As for greed, I'd say sometimes the business owner is more prone to think only of his bottom line, especially when they leave a property boarded up as an unsafe crime magnet, to the detriment of the neighborhood.
Rob...I see you posted the same thing over here...just found it. I responded last night...come on over would love to hear the answer to my questions.
I live next door to the featured property. The owner is greedy, pure and simple. He had an offer from Abdo to convert the place into condos several years ago and held out for more money. The "for sale" sign out front saves him from paying higher taxes as a vacant property -- which it's been now for over seven years. He whines with Alex Padro about the R4 zoning, but I do not want commercial zoning only to see him flip it into a liquor store, fast-food carry-out, schlock shop. His former tenants were a virulent black racist cult and crack whore squatters.