The Cost of Blight

In the summer of 2013, a collaborative made up of the Steel Valley, Turtle Creek and Twin River Council of Governments (Tri-COG) in conjunction with Delta Development Group, developed a study to figure out just how much blighted households costs homeowners and taxing jurisdictions throughout the Tri-COG’s 41 municipalities. The results were staggering and reveal the magnitude of the problem related to blight in our region.

Download a copy of the Full Report or Executive Summary


Highlights

The study looks at both the direct and indirect costs of blight in our neighborhoods.


Direct Costs

The direct cost of blight is composed of three different costs:

  1. Additional Municipal Services The first cost only affects municipal budgets and reflects the situation when municipalities deploy additional services in order to maintain blighted and abandoned households. While blight only makes up a portion of the housing stock, we found that they get a disproportionate amount of attention from our municipalities in terms of of code enforcement, police, fire, public work and demolition services from the municipalities.
  2. Direct Loss of Real Estate Tax Revenue –  Many of the blighted and abandoned households throughout the Tri-COG were also found to be tax delinquent. In fact 56% of blighted households were found to be delinquent on their county taxes,reinforcing the correlation between a blight and tax delinquency.
  3. Direct Loss of Earned Income Tax (EIT)  The EIT levy is the second largest source of revenue for most municipalities in Pennsylvania. EIT is collected based on where a person lives and is therefore dramatically affected by loss of population. Our study looked at the loss of EIT resulting from both demolitions and abandoned households throughout the Tri-COG footprint.

Annual Cost of Additional Municipal Services

Municpal ServiceCost
Code Enforcement$595,350
Police$6,400,296
Fire$2,378,525
Public Works$727,195
Demolition$618,936
Total:$10,720,302

Annual Loss of Real Estate Tax Revenue

Taxing JurisdictionForgone Tax Revenue
Municipal$5,660,000
School$4,130,000
County$17,630,000
Total:$27,420,000

Annual Loss of EIT

Type of VacancyEIT Tax Loss
Residential Vacant Lot$164,065
Household$2,552,473
Total:$2,716,538


Indirect Costs

The indirect cost of blight on the other hand affects homeowners by deceasing the property values of parcels immediately surrounding it. To find what this cost might look like, a 150 foot buffer was drawn around every blighted household throughout the Tri-COG footprint to make the “Blight Buffer”.

County_Tri_Cog_Blight_png

 

Once the Blight Buffer was drawn, we were able to identify all the stable and non-blighted buildings which were being negatively affected by nearby blighted households. A 15% – 17% decrease was then applied to those non-blighted households, which reflects the studied deflationary effect blight has on property values. In addition to the loss of property value for homeowners, this drop in value affects municipal, school and county budgets for it decreases the revenue garnered from property taxes. The extent of the drop in both property values and tax revenues is provided in the tables below.


2014 Cost of Blight Update

The following figures were derived from the latest county records and millage rates in 2014 and reflect the current Tri-COG jurisdictional footprint.

Allegheny County:

Housing Statistics

Total Households408,985
Blighted Households:16,428
Non-Blighted Households Affected by Blight:96,916
Market Value of Affected Non-Blighted Households:$7,165,448,414
Estimated Property Value Loss:$1,264,490,987

Loss in Property Tax due to Blight Buffer

Taxing Jurisdiction
(Average Millage)
Loss in Tax Revenue
Municipal
(6.105)
$7,719,717
School
(22.795)
$28,824,072
County
(4.730)
$5,981,042

Tri-COG Jurisdiction:

Housing Statistics

Total Households:90,412
Blighted Households:6,731
Non-Blighted Households Affected by Blight:27,528
Market Value of Affected Non-Blighted Households:$1,374,925,296
Estimated Property Value Loss:$242,633,876

Loss in Property Tax due to Blight Buffer

Taxing Jurisdiction
(Average Millage)
Loss in Tax Revenue
Municipal
(7.539)
$1,829,217
School
(21,305)
$5,169,315
County
(4.730)
$1,147,658