Determining the co$t of vacancies in Baltimore.

• Author: Winthrop, Bob

[ILLUSTRATION OMITTED]

As the number of home foreclosures rises nationwide, cities face mounting costs related to vacant and abandoned properties. Aside from subsidizing these costs through general funds, fees and fines, cities are suing mortgage financing companies and banks to recover costs, charging that irresponsible lending practices have led to increased foreclosures and vacancies. However, with any of these measures, it is necessary to demonstrate that there are specific costs associated with vacancies.

STATISTICAL ANALYSIS

In 2008, the city of Baltimore, Maryland, used econometric analysis to rigorously quantify the cost of police and fire services associated with vacant properties. Many studies have addressed the cost of vacant properties in a general sense, but Baltimore was the first city to undertake a detailed study of this nature. Working with a consultant, the city determined that the cost per block of police and fire services showed an annual increase of $1,472 for each vacant and unsafe property on that block (vacant and unsafe is a technical designation used by the City of Baltimore Housing and Community Development Department).

The cost of the extra safety effort was determined based on 911 call data, a list of properties designated as vacant and unsafe for at least one month, and police and fire department budgets, all for fiscal 2008. The call data and vacant property information was used to construct an econometric model that measured the statistical relationship between the number of properties designated as vacant and unsafe on a block and the amount of time police and fire personnel spent on that block. In the analysis, "officer minutes" and "fire fighter minutes" were the base measures used, indicating one minute of time for one officer called to a specific block. For police officers, the officer minutes were calculated from the time an officer was dispatched until he or she left the scene, multiplied by the number of officers who responded. For fire fighters, the number of staff responding was not broken out in the data, so the Fire Department provided an estimated number of fire fighters who responded, based on the type of call. The econometric model used zip codes as a proxy control for geographic differences in public safety costs (i.e., areas with more or less crime). The analysis determined a positive relationship between vacant and unsafe properties and the officer and fire fighter minutes spent on a given block.

To calculate the cost of one officer or fire fighter minute, the portion of police and fire department budgets dedicated to responding to 911 calls--known as the response budgets--was divided by the total police and fire response minutes. These response budgets included most, but not all, of the departments' activities. They excluded, for example, police special investigative teams and the fire prevention inspectors.

This cost per officer or fire fighter minute was multiplied by the marginal increase in public safety response minutes associated with each additional vacant and unsafe designated property on a given block, as calculated by the model. The results of this analysis are shown in Exhibit 1. The analysis indicates a correlation between vacant and unsafe properties and increased police and fire cost, and it measures the size of that increase. But the analysis does not address...