A Remarkably Simple Idea to End the Cycle of Abandoned Factories
Buildings crumble much less easily than the companies inside them do. And because of this reality, whole communities, particularly in the industrial Midwest, are littered with ghostly manufacturing plants that once produced automobiles, or the parts that went into them, or the components of those parts.
More than half of the auto plants originally built in Michigan have closed, according to the Center for Automotive Research. Nationwide, the statistics are roughly the same. Some of these properties are eventually repurposed. But at last count, 135 former auto plants around the U.S. are now simply sitting there empty, sprouting weeds and dragging down the property values around them. And that's just the auto industry. This same story story recurs any time the commercial owners of a gas station, or a strip mall, or a factory belly up and walk away, leaving structures that may be environmental hazards as much as eyesores.
"People look at that and say 'why doesn’t the government do something?'" says Rex LaMore, the director of the Center for Community and Economic Development at Michigan State University. "Well, the government didn’t cause this to occur. And in some cases it doesn't have any clear authority to do anything with the property."
The communities that have lost these employers, and the tax base that came with them, are also often least prepared to foot the bill for cleaning up what's left behind. So what do you do? LaMore and Michelle LeBlanc have just written a paper [PDF] outlining an intriguing idea. You can't force companies that no longer exist to pay for dismantling these buildings. But what if the government required them – years earlier – to buy property insurance to do that? Think of it as life insurance for commercial sites.
"What is happening now, and what has happened in Michigan over the last 40 years, is likely to occur in other parts of the Untied States," LaMore says. "Your strip mall could be the next abandoned parcel."
A similar solution already exists for landfills, mining sites and oil rigs. In some communities, companies must also put up bonds on new cell phone towers to ensure that they eventually come down (no one wants an abandoned cell phone tower to tip over).
LaMore envisions that an entirely new industry could form around commercial property insurance and deconstruction, with some interesting consequences. Insurers would be motivated to keep close tabs on the condition of properties and what goes on inside of them. Irresponsible companies and the dirty industries most likely to leave a mess at the end of the day would have higher insurance premiums. The whole system, LaMore suggests, might even prompt the development of new building techniques or materials that leave a lighter footprint on the land.
In short, force companies to financially plan for a property's end-game, and it could change how they think about every stage of the building's life.
Undoubtedly, some industries would call the cost of insurance excessive.
"If an industry says that, the first question a community ought to have is ‘what are you doing that’s likely to result in that kind of excessive cost at the end of the life of a building?" LaMore says. "'Are you leaving us with some kind of pollution that’s dangerous that we need to be conscious of?'"
LaMore has only done a few rough calculations of what this cost would look like, and the numbers would be different for a gas station and a shopping center and a tire plant. On average, though, a one-acre property with some environmental contamination could cost about $57,000 to clean up. Amortize that over 30 years, and the insurance premium looks like $200 to $300 a month.
Companies will likely pass that cost on to consumers. But LaMore argues that it makes more sense for the people who buy cars produced in an auto plant to help pay for its deconstruction than to ask all the taxpayers who live nearby to do that, whether they ever bought a car or not. More often, neither of these groups wind up bearing the cost today. Instead, we ignore such properties, LaMore says, and leave minorities and low-income people to live in the neighborhoods around them.
He concedes that there are still details he hasn't worked out yet. How would this idea apply, for instance, to mixed-use buildings? And would the incentives perversely encourage companies to put up shoddy buildings that could be easily and cheaply dismantled? LaMore believes, though, that any law requiring this kind of insurance would likely have to come at the federal level. Pass a law in one community, and the insurance pools wouldn't be large enough to make the concept work. Pass a law at the state level, and states might wind up competing for jobs based on who allows industry to walk away from the biggest mess.
At the very least, it seems odd that this idea hasn't been floated before. After all, shouldn't the companies that create these places ultimately be responsible for dismantling them, too?
"It may just be that we’re a young country," LaMore says, "and we’re just now realizing that this throwaway mentality doesn’t work so well."