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Comment by noonespecial | Hacker News Reader

Seems simple to fix. A building sitting vacant is depressing everything around it, pushing an external cost onto the city.

Leave it vacant and your property taxes triple to offset this cost.

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Can’t upvote you enough.

An empty commercial space is also not bringing in any sales tax. No employees implies no income tax. Etc.

Not only that, but empty spaces attract bad things. Bustle and foot traffic are good things. This is one reason why it is nice to have a mix of commercial storefronts (banks, cafes, etc), especially things that are open in the evenings...it ensures a commercial area that doesnt turn into a ghosttown at night.

Growing up in Brooklyn in the 80s, I remember snaking across busy side streets and back-and-forth across the main street to walk along the well-occupied areas. Stumble into a dark corner or and you could get jumped.

Much of her writing is age-old and not directly relevant now, but the concepts life on. All these are well argued in Jane Jacobs' https://en.wikipedia.org/wiki/The_Death_and_Life_of_Great_Am...

In London, it is quite common for real estate companies to own a whole neighborood. They are usually quite smart at preserving the character of the area by taking a lower rent from a local shop/coffee shop/pub, and reaping the reward from higher residential rents as more people want to live in this area. Marylebone is a prime example.

The evening standard has recently started promoting a made-up place called "North Mayfair". I assume it's part of the same strategy.

Shopping malls also manage their occupancy by accepting low-rent complementary services next to their cash cow occupants.

This sort of strategy is also followed at municipality levels such as the Netherlands' ABC location policy.

You should not up vote it even once.

Because next it will be, "the wrong business is using the space" and not generating enough revenue. This is how we ended up with condemnations of private property. Someone decided that it could be put to better use, as in generate more taxes. Kelo vs New London ring any bells?

Simply put. Once a foot in the door of abusing the rights of private property owner's is there, there is no end in sight of justifications to come

And lest people think you're exaggerating about how the administration thinks, this recent gem from our current mayor:

"What’s been hardest is the way our legal system is structured to favor private property. I think people all over this city, of every background, would like to have the city government be able to determine which building goes where, how high it will be, who gets to live in it, what the rent will be. I think there’s a socialistic impulse, which I hear every day, in every kind of community, that they would like things to be planned in accordance to their needs. And I would, too. Unfortunately, what stands in the way of that is hundreds of years of history that have elevated property rights and wealth to the point that that’s the reality that calls the tune on a lot of development."[0]

[0] http://nymag.com/daily/intelligencer/2017/09/bill-de-blasio-...

Seems like a good idea to me, actually. We need more socialism, as a rule, not more capitalism.

Call me cynical, but it doesn't sound like socialism to me. It sounds like an oligarchy anointing themselves the rule makers for a new segment of the population. Because it won't be "the people" making the decisions, it will be "these particular people."

Ow! Warn people before you put in a slippery slope, I almost broke my leg!

You seem to have created a system with a runaway negative feedback loop.

I'm not seeing it. It may not be overall good policy, but it seems like this would induce rental, if perhaps at a lower price. Where is the negative feedback? Care to elaborate?

Suppose I my tenant leaves. I make the calculation that it'd be cheaper to sell the building. No one wants to buy it because it's missing a tenant. It stays unused, depressing the area around it. That depression, in turn, makes companies much more likely to fold if a tenant leaves. This makes more companies fold, which increases the likelihood that more companies will fold. Eventually, the entire area will be poison and not even under the most generous of rent agreements will either tenants or companies want to do business there.

No one wants to buy it because it's missing a tenant.

At some price someone will decide that the building is a worth while risk. You might not like that price, but there will be a price you like more than getting hit with high taxes for owning an empty building. The point here though is not to keep you, the landlord, rich; it's to make a city full of shops with happy customers, taxable sales, etc. If you can't make your building work for you then your business has failed and you need to move aside to let someone else use that real estate asset. That's how capitalism works.

Agreed with everything except the last sentence. Pure capitalism will let some buildings sit idle. But I think many people believe that pure capitalism optimized for things other than human well-being.

That just begs the question: why can't we leave the system as is, because at some price, the tax assessment on a vacant building without any tenant revenue will push the landlord to offer a lease price for which there is demand?

Because the timeframe of the system's feedback loop is too long. By the time the landlord reacts and accepts a lower price point, the customers might have had to move on to a different location, or the business operators too.

The whole reason we even have cycles of growth and contraction is because feedback loops are too slow so we always react too slowly, and when we do we over correct. But that might be an unsolvable problem and just a fact of nature.

No, if this really is a failure for the street-level commercial real estate market to clear due to low price elasticity, which vacant shop fronts seem to announce quite loudly, then a political solution increasing the costs of intransigence should at least cause some landlords to shit or get off the pot. They can ratchet the penalty up a notch every few years to force more of them to come to Jesus.

It is, after all, a purely pecuniary concern on the part of the landlords.

More generally speaking, real estate market failure is very much a problem that local policy can solve. Global investors are looking for safe havens for their wealth. As much of the attractiveness has to come from the local legal environs, which can be more or less friendly to those types of investors.

It just takes the political will, which admittedly, can be quite thin.

You do it as a 18 month rolling window - if the property has been empty for 9 months out of the 18 month rolling window, the penalty should apply, in addition there could be relief triggers based on both local, citywide and regional occupancy, if local occupancy was below a certain level (business close because of prolonged construction, or a crime issue, of if there was a city wide vacant windows problem the penalty could be waived by the city.

I'm not sure if such a policy would help, it could act as something tantamount to rent control - but its not hard to make a policy in such a way that it wouldnt have a negative feedback loop.

Perfect! The economy slows so a landlord can't find a tenant so they hit with triple the sales tax!

I'm sure that won't depress real estate value at all.

And what exactly is the problem with depressing commercial real estate value? Personally I only see upsides for the economy. Incentive for people to try to do productive stuff instead of holding to their precious real estate and collecting rents, possibility for entrepeneurs and companies other than megacorporations to actually open stores in cities...

What's the problem with abandoning ACA health insurance mandates? Plenty of economic upsides there, too. You really can't see any possible unintended consequences with sudden punitive tax conditions on commercial real estate investments?

The point is that you need to tell us what they are instead of becoming indignant.

The point is real estate needs a depression -- it's prohibitively high, such that business can't even operate in their spaces.

> The economy slows so a landlord can't find a tenant

Perhaps they would if they lowered the price instead of raising it.

> I'm sure that won't depress real estate value at all.

If the problem is real estate value inflation then that does represent a solution, don't you agree?

Well part of the problem is that real estate provides a large return without occupancy, if you reduce that return then landlords will seek tenants in order to make a return that beats other investment options.

I fully agree with this, but maybe a little tweak.

When the commercial space goes vacant, increase property tax by the monthly average of the rent charged over the past 7 years (excluding months with zero rent).

If rented to a commercial entity with more than 100 employees (including part-time and temp) the property tax does not decrease, otherwise if to a mom/pop type business the tax will drop.

Maybe this will encourage 'livable' rents.

That sounds like an utter nightmare from the administrative side, and likely ripe for massive gaming and corruption. Among other things, who now will have the authority to notify taxing bodies of new tax rates on a per unit/property basis and what kind of oversight is there?

Yeah, I'm curious about this. This thread has me thinking that it may be in a city's best interest to enact taxes on empty commercial zoned spaces. Something that increases more the longer a space is empty. I'm not sure how you'd avoid malicious compliance with crappy temp phony store fronts, but it otherwise seems like the type of things cities want.

>Leave it vacant and your property taxes triple to offset this cost.

that also may mean that the future tenant would have to pay even higher rate in order for the landlord to recuperate those additional expenses.

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