Encouraging Productive Development

The city needs to impose a vacancy fee to make land speculation impossible.

When you see an empty lot in Portland, do you ever wonder why it’s not being developed? Surely there is a need, even a drive, to use that land more productively.

There are a few reasons why these lots remain vacant in Portland, but one of them has to do with land speculation and investment. This is where land is bought by an investor when it is cheap, and then held onto until it goes up in value so it can be sold for profit. Vacant lots do not serve the city. They attract rubbish, and owners often put up fences around them to prevent loitering and camping. Owners of vacant lots pay little in property taxes to the city. This is due to the way property taxes are weighted towards improvements (i.e., buildings) rather than land. This leads to higher taxes on larger, more modern buildings, with much less being paid by lots that are empty or surfaced only for parking, despite many of them being in highly desirable neighborhoods.

Many of these empty lots are owned by the same investors, who earn enough money off their surface parking lots to pay the meager tax bill. Those of us who live and work in Portland subsidize their earnings, while they sit on valuable land, waiting for the asking price to go up so they can turn a profit. What incentives do these investors have to actually develop the land if they don’t have to pay anything to keep it as it is? Pair this with the expense of actually building anything in Portland right now, and you are likely to be looking at that empty lot for a lot longer.

However, there are several ways that the City of Portland can make simple moves to help change this. Along with incentives for development the city can also impose fees on investors holding onto empty lots for long periods of time. In Portland this could be achieved by a sliding scale of fees on undeveloped properties and surface parking lots. Exceptions could be granted to lots that are in the approval process for development, as long as progress is shown. Properties in higher-demand neighborhoods and those that have been vacant for longer, could pay higher fees.

This is a housing emergency: housing prices are rising, we are experiencing a housing shortage, and many families are severely cost-burdened by housing. We need to treat this as an emergency, and pursue urgent, creative solutions. Empty lots are not compatible with that and should not be profitable to sit on.

We love Portland and want to see our city thriving. Downtown would be better served by housing, mixed-use buildings, parks, food-cart pods, small local shops, and third places, than by empty lots and long-abandoned vacant buildings. We ask our city leaders to impose a vacancy fee on undeveloped lots and surface parking lots.

If you're a Portlander interested in supporting this effort, join Strong Towns PDX.