Local Government and Residential Real Estate and Property Management and Urban development and Development/Redevelopment and Government & Economic Development and Government and Real Estate & Retail

City ready to take down 1,100 abandoned homes

July 18, 2011

With the sale of its water and sewer utilities cleared by regulators, the city of Indianapolis is preparing to deploy $15 million to $25 million in funds from the deal into tearing down abandoned houses.

The city has selected a contractor to help administer a massive effort to demolish about 2,000 vacant homes by the end of 2012. City officials wouldn’t disclose the name of the company before its contract with the city is signed.

About 1,100 of the houses, which are spread across Marion County and have been identified as structurally deficient, have gone through the lengthy legal processes required before the city can tear them down.

Once paperwork from the utility sale to Citizens Energy Group is completed—estimated to be in about six weeks—the city will start taking bids on demolition for dozens of properties per week, said Reggie Walton, abandoned buildings administrator for the city’s Department of Metropolitan Development. He estimates 300 to 500 houses will be demolished by the end of this year.

“We’ve been in hurry-up-and-wait mode while we’re waiting for this money,” Walton said.

The money from the utility sale—about $425 million in total—comes from a couple of different sources. Last spring, the City-County Council approved a measure to issue about $153 million in bonds to pay for upgrades to roads, bridges and sidewalks, many of which have been taking place around Indianapolis. Those bonds will be covered by payments in lieu of taxes, or PILOT, that the sewer utility makes to the city and which are expected to increase in coming years.

But the city’s receipt of the remainder of the money was contingent upon the Indiana Utility Regulatory Commission's approving the sale of the water and sewer utilities to Citizens Energy Group, a public charitable trust. That approval came Wednesday.

Mayor Greg Ballard said in an interview that the majority of the remaining proceeds from the deal would go toward infrastructure projects. But a big chunk will go toward addressing abandoned houses, and some also will go toward a few other initiatives. Ballard declined to say what those initiatives will be or how much will be allocated for them.

By pre-qualifying bidders, the city can conduct 50 to 100 demolitions per week to get through the pile of properties, Walton said.

The DMD earlier this year brought on an additional administrative law judge to get through the legal processes, which include mandatory time periods to allow  property owners to remediate structural shortcomings to avoid demolition.

Those legal processes will continue with the remaining 900 homes the city intends to demolish.

Walton said while demolition isn’t desirable with every abandoned house, it can spur interest in redeveloping the properties and eliminate neighborhood blight.

“Sometimes you have to wipe the slate clean to get someone interested in doing something new with the property,” Walton said.

The city owns about 60 of the 1,100 properties first to be demolished. Some of those will be converted into urban gardens or pocket parks, and others could be enclosed with fences to keep looters off the property.

The rest are owned by the original owners or have gone through tax sale and are eligible to become city-county property. The city will work with adjacent homeowners and not-for-profit developers to find uses for those parcels.

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