Demolition and economic hardship

February 10, 2021 Blog, Economics, Historic Districts, Texas Comments (0) 33

For as long as historic preservation ordinances have been judged appropriate exercises of the police power (40+ years) they have included provisions for economic hardship. This makes sense, if a building is so far gone that it cannot be economically rehabilitated, there should be an exception. But how did it get there? And what are your (legal standard spoiler alert!) “reasonable investment-backed expectations?”

Like this one, right? It was going to be demolished 4 years ago.
Until it wasn’t

See, San Antonio is pretty good at fixing old buildings that people in other towns won’t. So, when you hear that someone is trying to tear down a salvageable house, odds are they aren’t from here. And their claims of economic hardship? Even sillier.

=Owned by an out-of-town company. Not maintained for most of a decade.

So, let’s say you owned this house for eight years. During that time you could have invested a couple thousand dollars a year and slowly brought it back to life. Or you could ignore it, allow the homeless to congregate there, and hope that your investment would turn – magically – into a lucrative vacant lot. Except it’s not magic and it is very deliberate. Even the well-worn phrase “demolition by neglect” sounds more benign than malignant, and this behavior is malignant.

This is next door. Wonder who owns it.

See, this isn’t some poor guy who can’t maintain a house. This is an out-of-town investor who has more than a dozen business entities, each of which owns one of these houses in the neighborhood. This isn’t economic hardship – this is malignant neglect and a business model built on NOT taking care of the assets you own.

I know I promised to save it in exchange for building two dozen new houses around it, but now that I built the new houses, I just don’t wanna anymore and it’s gotten so much more expensive….

How do you argue economic hardship when you have created all of the conditions that made the building expensive to rehab? What are the “reasonable investment-backed expectations” of this business model?

This house had massive holes in it, all porches falling off and it still got rehabbed because it is in a HISTORIC DISTRICT and the neighbors don’t put up with scalawags.

And how do the neighbors like it? Well, if you are behind one of these single-house-owning-LLCs, you should reasonably expect that your investment and your business practice model are going to piss off the neighbors. Indeed, that is one of many reasons for putting the asset into a one-off corporate entity – to hide from the neighbors.

Why do neighbors dislike ignored vacant properties?

Heck, those pesky neighbors might insist that the city enforce the same regulations on you as they do on them. What’s that called? Equity?

No, not that kind of equity.

Time for a new business model.

Guy: I just want to build a nice new house (or two) for my family!
Internet: Guy is an international property developer.

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