GAO report details local cost of vacant properties

In 10 years, vacant properties in the U.S. have increased almost 50 percent, and local governments have spent millions of dollars maintaining them. A new report from the Government Accountability Office (GAO) looks at how much those properties are costing local governments, and how cities and counties are responding to the issue.

The number of vacant properties has increased from nearly 7 million in 2000 to 10 million in April 2010. Ten states have experienced more than a 70 percent increase in that time. In 2010, government-sponsored enterprises reimbursed servicers or vendors more than $953 million for property maintenance costs, but local governments are bearing a considerable amount of the expense, as well. Detroit alone has spent $20 million since May 2009 to raze 4,000 properties.

To maintain vacant properties, local governments are spending money on boarding them, mowing lawns, draining pools and removing debris. Chicago reported spending nearly $875,000 in 2010 to board up 627 properties. Detroit owns approximately 40,000 vacant lots and 5,000 properties, and spends $25 each time one of them is mowed. Cape Coral, Fla., is cutting some of its maintenance costs by recruiting volunteers to mow lawns.

Cities can put liens on the properties to help cover those costs, with varying degrees of success. Baltimore officials report spending about $2 million per year on boarding and cleaning costs, yet say they get most of the money back through liens. On the other hand, Detroit has submitted $16 million in bills and has received a meager $100,000 in payments. Some cities also are mitigating costs by taking advantage of federal dollars for demolition expenses, which range widely depending on the city and type of structure. Chicago planned to use $1.9 million from the city's Neighborhood Stabilization Program funds for demolition.

Of the nine cities studied, eight are acquiring and rehabilitating some of the vacant properties, often with the help of community organizations. Indio, Calif., spent more than $11 million in NSP funds to buy 58 foreclosed home that were rehabbed and sold to first-time homebuyers.

To address the burden vacant properties are putting on cities, some local governments are strengthening property maintenance requirements, while New Jersey and New York recently approved legislation requiring servicers to maintain their properties during foreclosure. Other cities are making servicers register vacant properties to reduce the administrative costs of identifying the property owner.

To learn more about the cost of vacant properties and how local, state and federal government officials are responding, download the entire report, "Vacant Properties: Growing Number Increases Communities' Costs and Challenges."