Opinion and Economic Analysis and Development/Redevelopment and Banking & Finance and Real Estate & Retail

HICKS: Lessons to glean from Keystone Towers demolition

September 3, 2011

The pre-dawn hours of Aug. 28 found me sitting in the grass outside an Indianapolis liquor store.

My reason for being there was not as it might seem—though after four years of this economy, one might suspect the worst. I was there with my family to watch the demolition of Keystone Towers and expose my kids to the accompanying big bang.

This Keystone explosion (or implosion as my fifth-grader so often reminds me) was most interesting and accompanied by a carnival atmosphere. The only disappointment of the whole affair was the discovery that the detonator button was pushed by the 6-year-old daughter of the engineer supervising the event. This led my second-grader to comment unhappily on my career choices.

The demolition of a vacant apartment building is common fare in American cities. It is part of the urban renewal that is much needed in many U.S. cities. This demolition does not mark decline, but rather recovery. The severest forms of urban blight and decay occur during the long period between the time property values dwindle to near zero and when they begin to rise again.

Easing neighborhoods out of this condition often requires local government to support the demolition. While markets will eventually restore these communities, local government typically has a role. It is an unpleasant truth, but bare land is often of higher value than that with a blighted structure on it.

Of course, there is often a bitter debate over which properties should be preserved. I prefer to err on the side of preservation.

Unfortunately, enthusiasm for historic preservation is rarely accompanied by a solid understanding of market forces. There are abundant examples of $100,000 government grants for restoration resulting in homes worth $35,000. Historic preservation cannot be the first or only urban investment. Schools matter more, as does basic infrastructure.

Detroit is the largest city to face this challenge on a widespread basis. The city is carefully shrinking its footprint to sustainable levels. This requires triage of neighborhoods, some of which will die. Inevitably, these choices are shadowed by the racial and ethnic ghosts that haunted the last century.

In the end, few will debate the aesthetics of Keystone Towers, which, despite past glories, retained all the beauty and grace of East Berlin circa 1974. I enjoyed watching both implode.•

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Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.
 

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