IBJOpinion

Abandoned houses should be torn down

October 24, 2009
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IBJ Letters To The Editor

[In response to the Oct. 19 viewpoint] Some of [Kurt] Wiegand’s points were spot-on, but his analysis of the economic impact regarding Mayor Ballard’s plan to demolish abandoned homes misses the mark by a wide margin.

First, consider one of the reasons that population has fled to outside of the Interstate 465 ring at the expense of inner-city Indianapolis: the quality of public education. I know that [IPS superintendent] Dr. [Eugene] White has his hands full and this is not meant as a criticism of his efforts, only a statement of fact. In 2008, Arlington High School, at 4825 N. Arlington Ave., had a graduation rate of 48 percent, according to the Indiana Department of Education. Lawrence Central High School, located at 7300 E. 56th St. (four minutes, or two miles north and east) had a graduation rate of 78.6 percent. If you had a choice of buying a house, which school system would you choose? Fix the school system, reduce the crime and people will buy homes inside of I-465.

Second, Wiegand’s criticisms of the mayor’s plan to demolish abandoned homes ignores economics. It costs approximately $7,000 to smash an abandoned home, cart the rubble away, and make a buildable residential lot. It costs $15,000 to $25,000 to make an abandoned/foreclosed home livable again. After that, the home that you bought at foreclosure for $25,000 and invested another $20,000 in will appraise for $38,000 in today’s market, and be taxed as if it were worth $80,000. This is a real-life experience with which I’m all too familiar. Bottom line: there is very little economic incentive for investors to buy foreclosed homes in inner-city Indianapolis at any price.

Third, Wiegand is critical of the blight that is a vacant lot, but ignores the blight that is an abandoned house. Abandoned homes attract drug dealers, gang activity, vandalism, arson, etc. Ask any inner-city homeowner what he’d rather live next to, an abandoned home or a vacant lot? You know the answer.

Finally, I think that Wiegand ignored the lessons espoused by proponents of “creative destruction.” Cities such as Tokyo that were totally leveled in World War II came back very quickly because they were a blank canvas that people were willing to invest in. As long as the existing stock of abandoned homes blights the inner city, there will be no growth and no economic recovery for the areas that Weigand characterizes as zones of “economic apartheid.”

If you want jobs, economic growth, higher home prices, and more tax revenue, tear down every abandoned home in Indianapolis. It’s that simple.

__________

Bradford Barkley
Rebound Properties LLC


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  • abandon house
    i would to buy a abandon house so i could put my money and time into.

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  1. Apologies for the wall of text. I promise I had this nicely formatted in paragraphs in Notepad before pasting here.

  2. I believe that is incorrect Sir, the people's tax-dollars are NOT paying for the companies investment. Without the tax-break the company would be paying an ADDITIONAL $11.1 million in taxes ON TOP of their $22.5 Million investment (Building + IT), for a total of $33.6M or a 50% tax rate. Also, the article does not specify what the total taxes were BEFORE the break. Usually such a corporate tax-break is a 'discount' not a 100% wavier of tax obligations. For sake of example lets say the original taxes added up to $30M over 10 years. $12.5M, New Building $10.0M, IT infrastructure $30.0M, Total Taxes (Example Number) == $52.5M ININ's Cost - $1.8M /10 years, Tax Break (Building) - $0.75M /10 years, Tax Break (IT Infrastructure) - $8.6M /2 years, Tax Breaks (against Hiring Commitment: 430 new jobs /2 years) == 11.5M Possible tax breaks. ININ TOTAL COST: $41M Even if you assume a 100% break, change the '30.0M' to '11.5M' and you can see the Company will be paying a minimum of $22.5, out-of-pocket for their capital-investment - NOT the tax-payers. Also note, much of this money is being spent locally in Indiana and it is creating 430 jobs in your city. I admit I'm a little unclear which tax-breaks are allocated to exactly which expenses. Clearly this is all oversimplified but I think we have both made our points! :) Sorry for the long post.

  3. Clearly, there is a lack of a basic understanding of economics. It is not up to the company to decide what to pay its workers. If companies were able to decide how much to pay their workers then why wouldn't they pay everyone minimum wage? Why choose to pay $10 or $14 when they could pay $7? The answer is that companies DO NOT decide how much to pay workers. It is the market that dictates what a worker is worth and how much they should get paid. If Lowe's chooses to pay a call center worker $7 an hour it will not be able to hire anyone for the job, because all those people will work for someone else paying the market rate of $10-$14 an hour. This forces Lowes to pay its workers that much. Not because it wants to pay them that much out of the goodness of their heart, but because it has to pay them that much in order to stay competitive and attract good workers.

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  5. It is sad to see these races not have a full attendance. The Indy Car races are so much more exciting than Nascar. It seems to me the commenters here are still a little upset with Tony George from a move he made 20 years ago. It was his decision to make, not yours. He lost his position over it. But I believe the problem in all pro sports is the escalating price of admission. In todays economy, people have to pay much more for food and gas. The average fan cannot attend many events anymore. It's gotten priced out of most peoples budgets.

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