Dirt Into Dollars: Converting Vacant Land into Valuable Development

American cities have always been about growth. A hundred years ago, boosters organized boomtowns to exploit resources like minerals and cattle. Today, growth coalitions design New Urbanist towns to maximize value while deflecting political backlash by husbanding resources like farmland and road capacity. But from Sunbelt cities to suburbs everywhere, growth is the logic, the politics, and the policy of American places.

For the past half-century, this reality has made the older, once-central cities of the Northeast and Midwest awkward anomalies. St. Louis, Pittsburgh, and Cleveland lost about half their population between 1950 and 2000. Yet even after 50 years it remains difficult for such cities to adapt to a world in which the policy problem is one of managing decline rather than growth. That failure has allowed several consequences of long-term depopulation, namely abandoned property and blight, to reach overwhelming levels in many older American cities.

When depopulation and blight are addressed at all, it is piecemeal: by attacking the environmental issue of brownfields, the public safety issue of crack houses in empty row homes, the quality-of-life issue of trash-strewn vacant lots. But depopulation is so fundamental and has been so sustained in older industrial cities during this century that blight is now a problem in its own right and demands bold and comprehensive policy responses.

Philadelphia, my own home town, is a powerful illustration of these concerns. Like all the nation’s older cities, it has suffered major population loss. Like them, it has been slow in coming to grips with the problem of depopulation. But in the past five years the tide may have begun turning. Philadelphia may now have the opportunity to lead the way in what I call “civic speculation.” Guided by a strategic vision of a “right-sized” city for its current population, civic leaders could leverage abandoned and vacant land and change the subject from decline through abandonment to growth through consolidation.

The Good Old Days

From its founding in 1683, Philadelphia grew steadily for more than 250 years. The city’s boundaries were enlarged in 1854, when what is known today as Center City was consolidated with the townships of the surrounding county. In 1860, with 565,529 residents in the consolidated city, Philadelphia reclaimed its traditional rank as the nation’s second largest city (it had slipped to fourth behind Baltimore and New Orleans after 1840). By 1900, the population of this economic and political powerhouse had more than doubled to 1,293,697 residents. And by 1950, it had increased another 60 percent to 2,071,605. With the largely undeveloped tracts of Far Northeast and Southwest Philadelphia beckoning, it seemed that the city’s population growth could continue unimpeded.

But troubling signs existed, even at mid-century. A 1952 city planning report noted that many older wards had been losing population since 1920 or even earlier. These planners calculated that because the population of the city’s older neighborhoods had already peaked, the city’s housing stock was capable of accommodating nearly 2.5 million people in 1950. With the actual population only 2.1 million, it was clear that the city’s older neighborhoods were being left for newer housing farther north, south, and west of city hall. The city’s overall population growth was hiding this depopulation in the older neighborhoods.

What no one could foresee then was the extent to which the city as a whole would begin to lose population. From 1950 to 1970, the city’s population fell about 6 percent, from 2,071,605 to 1,948,609. In the next two decades, the pace picked up dramatically. The population dropped from 1,948,609 in 1970 to 1,585,577 in 1990, a loss of 19 percent. And it has continued falling. In a widely cited statistic, Philadelphia has lost more people than any county in the United States in the past two years. Its population now hovers around 1.4 million?roughly what it was at the turn of the last century.

The population loss since 1950 is related, of course, to suburbanization and the fixed political boundaries of the metropolitan region. While Philadelphia lost half a million residents between 1950 and 1990, its surrounding suburbs gained nearly four times that number.

Depopulation and Blight

Philadelphia’s steady, sometimes precipitous, decline since 1950 has many causes, some good and some bad, some intended and some not. Rising prosperity allowed middle-class households to purchase privacy in suburban subdivisions, while racial prejudice drove whites out of cities where minorities lived. Technological innovation made sprawling one-story business campuses more efficient than dense multi-story loft buildings, while redlining by lending institutions made stability in older neighborhoods virtually impossible. Public policies fostered the growth of modern and lower-density housing, as well as over-subsidizing growth at the suburban edge and over-depreciating assets at the urban core.

But regardless of the causes, the city’s oldest neighborhoods, outside of Center City, have suffered catastrophic residential losses. Between 1950 and 1990, one neighborhood in North Philadelphia lost nearly half its population, dropping from 210,000 to 109,000. Another lost two-thirds, down from 111,000 to 39,000 residents.

Vacancy and abandonment have been extensive. As of 1992, the Department of Licenses and Inspections identified 27,000 abandoned residential buildings and 15,800 vacant residential lots. More recent estimates approximately double both those estimates, and the number of abandoned houses is now thought to exceed 50,000. In 1999, a study by Fairmount Ventures for the Pennsylvania Horticultural Society identified 30,900 vacant residential lots of one acre or less in the city, about two-thirds of which are privately owned. About 1,000 residential structures have been demolished every year during the 1990s?not nearly fast enough to keep long-term vacant buildings from becoming unsafe.

A series of recent reports has attempted to sound a warning bell. In June 1995, the Philadelphia City Planning Commission released Vacant Land in Philadelphia, an excellent analysis of both vacancy conditions and the administrative procedures that have evolved to deal with them. The report, which has become the definitive source for the underlying state law relevant to the myriad departments and procedures affecting vacant property, makes two recommendations. First, the city needs to build an information base on vacant property that is comprehensive, timely, and capable of supporting strategic decisionmaking. Second, it must coordinate agencies and streamline procedures in accordance with a strategic plan for property acquisition and disposition.

In September 1995, the Pennsylvania Horticultural Society with the financial support of the Pew Charitable Trusts released Urban Vacant Land: Issues and Recommendations, a state-of-the-art review of vacant land and how it is managed not only in Philadelphia, but in other pioneering cities, including Boston and Cleveland. The report describes a variety of management techniques, both short-term strategies related to greening and gardening and long-term techniques such as parcel assembly and intensive reuse. The report echoes the two key City Planning Commission recommendations. First, Philadelphia should create an integrated land records database or an inventory that is easy to access and update. Second, it should coordinate decisionmaking to assure that various city agencies are working toward common goals.

By the end of 1997, the City’s Office of Housing and Community Development had issued Vacant Property Prescriptions and Neighborhood Transformations, two reports that advanced public debate by illustrating the variety of partnerships and specific projects that the city and nonprofits had pursued during the administration of Mayor Edward Rendell. Distilling lessons from that experience, the reports recommend that the city tailor programs and interventions to neighborhood-specific needs, which can vary considerably, and coordinate efforts, especially between the Philadelphia Housing Authority and the Office of Housing and Community Development.

The William Penn Foundation has also supported a far-ranging series of reports under the auspices of the Pennsylvania Horticultural Society. The first was a cost-benefit analysis of remediating and maintaining the inventory of over 30,900 vacant residential lots in the city. Later reports highlighted demonstration efforts in target neighborhoods, suggested changes in city policies and practices, and developed a financing plan for citywide vacant land management.

Barriers to Progress

Philadelphia is now in the forefront of policy analysis and action on the issue of vacant property. But several barriers to significant and lasting progress remain. The most important is the administrative apparatus available to confront the problem of blight.

The responsibility for vacant property in Philadelphia is divided among 15 public agencies. Anyone wanting to buy a property may spend weeks negotiating the maze of agencies just to apply. A developer often invests months to meet the differing agency requirements. Decisions made by one city agency can undermine those made by others. A single city block can contain homes owned by the Pennsylvania Horticultural Society, slated for demolition by the Department of Licenses and Inspections, included in a Redevelopment Authority urban renewal project, awarded an Office of Housing and Community Development grant for rehabilitation, and promised for a specific redevelopment plan by a council person. Each action, taken independently, has a profound effect on the others.

The current system of land management, complete with numerous checks, balances, and mandatory waiting periods, evolved to help structure and organize a growing city. Despite a half-century of decline, the complex system continues to define the city’s approach to managing vacant property today.

The 1995 City Planning Commission report exhaustively summarizes the missions and procedures of the key public agencies. As just one example, obtaining a certification of blight (which allows the Redevelopment Authority to condemn, acquire, and ultimately transfer a property to a new owner) involves no fewer than six city agencies.

Improved interdepartmental cooperation during the Rendell administration has made transfers such as this one more efficient, cutting average time from two years to six months. But it is not enough to expedite the current approach to property disposition, which operates on an individual first-come, first-served basis and largely without reference to any strategic plan for the affected block, neighborhood, or city as a whole. To the extent that these small-scale property transfers reduce the inventory of available parcels and transfer them to individual owners, they also reduce the opportunity for assembling and consolidating parcels into larger redevelopment opportunities. Transferring a small parcel to an adjacent owner to use as a side parking lot or to a local group to use as a community garden will often be the appropriate use for vacant lots. But these transfers should be held to some standard comparison with alternate uses rather than simply determined by who’s in line at the title window.

Repeated recommendations to strengthen interagency coordination have arguably led to improvements in the past year or two but still have not created a strategic vision or public apparatus bold enough to confront the effects of 50 years of depopulation. Coordination, even if it could be achieved, is not likely to be a strong enough response. As noted, the dozen or so agencies to be coordinated evolved during an era of growth and remain oriented to the obsolete land uses that abandoned properties had decades ago.

Prior use too often determines jurisdiction under this administrative regime though it is a weak criterion for determining responsibility and authority for vacant property. To be sure, in some cases prior use has technical implications for vacant property’s future disposition (for example, remediating the contamination of some former industrial properties; preserving the historic character of some former residential properties). But 50 years of depopulation and its accumulated effects on vacancy and abandonment demands an administrative capacity that can think strategically beyond prior use and understand vacant property as a generic resource. These vacant properties must be viewed in the context of surrounding neighborhoods. In some Philadelphia neighborhoods half the lots have no houses, and half the houses left standing are abandoned. Areas that often look like Dresden after World War II must be consolidated and, in some cases, the remaining households relocated.

A single authority should replace the current fragmented efforts to acquire, manage, consolidate, and dispose of the abandoned buildings and vacant land in Philadelphia. This is the crux of the policy debate now under way in the city in the first months of the new administration of John F. Street. Mayor Street has made blight removal the top priority of his first year, and a transition planning committee has endorsed the idea of a single blight authority. But the devil is in the administrative details, and right now Philadelphia is the center of a fascinating debate on both blight policy and municipal governance issues.

A consolidated public authority in a city like Philadelphia should have the administrative capacity to pursue three functions. First, it should create a strategic plan with a citywide view of the vacant property inventory. This change of scale is essential to “right-sizing” a city’s land use to serve a much smaller population. Fairly obviously, this approach implies a triage strategy. Triage will always be difficult. But its object, it is important to note, is near-empty streets and blocks, not people or neighborhoods. Properties can be assembled with minimal relocation to improve every person’s housing quality and stabilize vulnerable neighborhoods. What is valuable is the land, not the largely obsolete buildings. Demolition, maintenance, redevelopment?almost everything?is cheaper with assembly and consolidation. Only a citywide strategic plan can motivate and sustain a “right-sizing” approach.

Second, a single public authority could redevelop its consolidated inventory as market conditions warrant. The complex, and politicized, maze of fragmented public authority in Philadelphia impedes even when private actors want to act, whether it be a homeowner wanting to acquire an adjacent lot for parking or a supermarket chain looking for a 10-acre parcel. There is certainly demand, especially in this economy, for some sites in some locations to develop some uses. A consolidated authority can help restore the property market to places like North Philadelphia.

Finally, a single authority can serve as an intentional land bank. Philadelphia has several unintentional land banks in the form of the dormant holdings of multiple public agencies. A single authority probably facilitates redevelopment. But even more important, it creates the capacity for responsibly maintaining the undoubtedly large fraction of the vacant property inventory that is unlikely to be redeveloped any time soon. That maintenance is an obligation all too easily shirked in Philadelphia today.

Of course, all this administrative capacity would be pointless without financial resources. The consensus estimate in Philadelphia is that more than $750 million would be needed to fund demolition alone. To his credit, Mayor Street in his first few months in office has backed his commitment to blight removal with a new $250 million anti-blight proposal. The jury is still out on the financing and administrative details of that proposal.

But it is increasingly clear that managing the effects of 50 years of decline is an issue whose time has come for Philadelphia and for the nation’s other once-central cities.