Owners Keep Zombie Malls Alive Even When Towns Want to Pull the Plug

https://www.wsj.com/real-estate/commercial/malls-real-estate-shopping-24c3d7fd

by Stratoscope • 3 years ago

38 42 3 years ago

wsj.com

Stratoscope• 3 years ago

https://archive.is/SIe26 (but I was able to view the article directly on WSJ by closing the popup)

ethanbond3• 3 years ago

Wow, another problem that the Land Value Tax solves

pstuart2• 3 years ago

I was under the impression that LVT was not without concerns, but when I looked it up again to find such issues I didn't seen anything that was all that worrying.

So yes, this would be a perfect application of a LVT.

BirAdam2• 3 years ago

Well… except that a land value tax would only make home affordability far worse than it already is.

4death4• 3 years ago

How does a LVT solve this? If anything, with property taxes, the owners should be incentivized to destroy their mall to pay less taxes. With LVT, they would pay the same tax whether or not the mall still stands. This assumes, of course, the mall has positive value (for tax purposes)

ethanbond3• 3 years ago

The idea is for the LVT to be high enough to make this behavior infeasible.

So yes, they’d pay the same tax rate, but that rate is high enough that it’d be prohibitively expensive to keep it in its current state for very long. They’d have to either turn it into something useful for the community (bring in more businesses or allow people to live there), or sell it to someone who will.

hakfoo• 3 years ago

I prefer the variant where nobody owns land-- the local government can lease it out on a term basis. Homes might be leased on a long term-- 10-20-100 years, but commercial land should be on 5 years or less.

This gives the local government an opportunity to identify properties that are going into decline and intervene quickly. It also creates an incentive for developers. Any money they put into improvements disappears if they don't meet a minimum anti-blight standard for lease renewal.

My city spent decades playing chicken with the owners of a dead strip mall. This wasn't even "dead" as in "down to a Spirit Halloween and seven smoke shops", it was "fully fenced off and crumbling." This was a decent location-- right opposite a major mall (when they first boarded things up, but finally closed around 2020), 2km from a freeway, 2km from a community college, but the buildings were circa 1979, and the owners really wanted to get the local government to pay part of the cost to renovate it.

Since there was no "normal process" way to regain control of the situation, there were just years of simmering squabbling and occasional legal nastiness, that ended with the city handing out some tax incentive, and suddenly the blight was knocked over for fancy condos inside of 6 months.

Now imagine if that property had been leased from the city. The mall owners close the doors in 1996 or whatever. By 2001, the lease would have expired, and the city could either say "you let it rot, no renewal", retaining an asset with only a few years of decline to repair, or the lessee would have to present-- and deliver-- a compelling refurbishment plan if they expected to keep the lease.

devwastaken• 3 years ago

The reason this is not done is for the same reason HOA's are nightmares. It's a conflict of interest to committee others private property. Government becomes incentivized to look for and generate infractions. If you are wondering why politics never truly changes it's because gov power actively suppresses competition.

busterarm• 3 years ago

Demolition costs can be very expensive. You don't want that to be taxpayer responsibility.

KingMob• 3 years ago

I prefer the variant where nobody owns land-- the local government can lease it out

That means the government de facto owns all land.

Something1234• 3 years ago

It's embarrassing when it's your home town, and everywhere else in that area is becoming nicer and more gentrified.

ethanbond3• 3 years ago

All the more incentive to hang onto the failing mall: the land underneath it continues to grow in value while the owners put in no work and hardly any taxes! No wonder it’s one of their portfolio’s stars.

toomuchtodo• 3 years ago

Eminent domain? Sounds like the perfect use to force demolition and redevelopment. Perhaps it’s just a matter of putting the resources together to legally fight the mall owner until you exceed their economic pain tolerance for litigation.

A land value tax is ideal, but that will take substantial time to work towards. You can get this done today.

https://en.wikipedia.org/wiki/Kelo_v._City_of_New_London (“Wikipedia: Kelo v. City of New London“)

(I was not a fan of this SCOTUS outcome for obvious property rights reasons, but it seems ideal for use against the capital investment opportunists described in this piece)

pinewurst• 3 years ago

Reading the article, it’s clear this is about a very specialized sort of parasitic buyer looking to reap the residual value from final decline. It’s hard to generalize from this to, “Yay current hot LVT thing!”

LastNevadan• 3 years ago

https://archive.is/SIe26

greatquux• 3 years ago

this just keeps going into a captcha loop for me, tried multiple browsers; anyone else?

Owners Keep Zombie Malls Alive Even When Towns Want to Pull the Plug

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