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FREQUENTLY ASKED QUESTIONS
ABOUT BURNT OUT AND DILAPIDATED PROPERTIES in Berlin, NH
Why doesn't the City clean up burnt out properties right away?
In most cases, the burnt out properties are not owned by the City. Therefore, the City has no right to do anything with the building which is in private hands, except by following very specific state laws which are complex and linear in nature and which accord the property owner every protection. This process usually ends up before a judge who also accords the land owner due process protections and sometimes additional time to comply.
Why doesn't the City just take the property by eminent domain?
Eminent domain or the governmental taking of private property for a public purpose is also an involved legal process which requires that the property being taken must be taken for a public purpose. An eminent domain process would at minimum likely take one year before the City would in fact own the land. Even if the process could be used, it would also require that the City pay the property owner the appraised value for the land at the time of the taking. That means that in addition to the cost of having to clean up the site, the City would have to come up with the market value for the land to pay the non-compliant owner who does not clean up his own property. This of course assumes that the City has the money budgeted to pay for such a piece of land, which it normally would not have. Under the state statute (RSA 155-B) that the City typically uses for cleaning up properties, the City at least does not have to compensate the irresponsible property owner for the value of his/her remaining property.
Doesn't the property owner have insurance and why don't they use that insurance to clean up the mess?
Many of the property owners don't have insurance, and there is no state law which requires them to have that. However, even those who do have insurance have often taken the insurance proceeds and simply walked away from the property instead of spending any of their insurance proceeds on cleaning up the site. They do this more in Berlin because property values in Berlin have been so low that pocketing the insurance proceeds and walking away is more profitable to the owner than spending $30,000 on the clean up of a property which may only be worth $5-10,000 after the clean up.
Why doesn't the City get the State to change its laws?
The City has lobbied hard in the last couple of years to get a number of state laws which relate to these matters changed. This past year we finally had a minor success in getting the tax deeding law improved slightly. However, in spite of our attempts to change the current RSA 155-B state law to require that insurance proceeds be spent first on property cleanup, opposition by the various realtor organizations has successfully forestalled any progress in this area. We of course will be trying again in the next legislative session.
Why doesn't the City simply pass its own laws to take care of these matters?
Ironically, unlike many other states in the nation, New Hampshire is not a "Home Rule" state. Although New Hampshire is a small state and claims to cherish local control, the New Hampshire State Legislature has never seen fit to allow the municipalities any significant degree of "Home Rule". What this means is that as a general rule, municipalities in the State have the authority to do only what they are specifically authorized to do by a specific state law. If there is no state law authorizing it, then a municipality can't do it. In a true Home Rule state, a municipality is free to pass any laws that it wants as long as such laws do not conflict with the state constitution or existing state laws.
Well, what does the City do then?
The City of Berlin is unique in the entire State of New Hampshire in dealing with the numbers of dilapidated and sometimes burnt out structures. The City is still actively working its way through a number of state inspection and enforcement laws which are complex and tedious and not often used because most municipalities don't have these problems to the extent we do. Berlin is unique in terms of the numbers of these types of dilapidated structures and in terms of the extremely low underlying value of the properties. Where the rest of the State is trying to encourage and promote "affordable" housing, Berlin has far more than its share of affordable housing which unfortunately, is in some cases, substandard housing. In the case of burnt out properties, the City generally does not own any of these properties and therefore must proceed cautiously and under some specific state law, usually RSA 155-B or RSA 147. In almost all cases, the City must first give the property owner the opportunity to clean up the property on their own. If they don't, the procedure usually has the City, through a stringent and linear process, asking a judge to require the property owner to clean up the property. The judge will also give the property owner another chance to clean up the property on their own. If that doesn't occur, then the judge will usually grant to the City the ability to clean up the property at the City's cost. However, under RSA 155B, the City will at least have the opportunity to lien the property for all of the City's costs in the cleanup. It must be remembered however, that because property values of these properties are so low in Berlin, this is likely to leave the City with a cost that may run $20-$30,000 including legal costs on a property that may end up being worth only $5,000. In other words, every one of these properties ends up costing the City (and obviously the City's tax paying residents) significant time effort and money. Fortunately, the Mayor and Council have been very supportive financially of what has become a new and very monumental effort on behalf of the City.
In a number of cases each year for the past several years, the City has come into ownership of a number of dilapidated structures because the property owners have not paid the taxes on the property and the property is taken by the City by tax deed. This particular state law is also quite complex and detailed and confusing in terms of what the City can or cannot do once it acquires a property by tax deed. It also lays out a convoluted schedule for when the City can or cannot do various things with the property it has acquired by tax deed. In some cases, if the property owner cannot be found to be served notice or in the case of intestate properties, the City is then barred by this same state law from doing anything with the property for another three years unless a Court grants permission to do so. The State law, as one might expect, gives great weight to individual property rights and therefore gives the former owner every opportunity to repurchase the property if they so choose.
In spite of its economic challenges, the Mayor and Council of the City have seen fit to embark on an ambitious program to require that housing in Berlin be brought up to a reasonable standard and that excess dilapidated housing gets either renovated or removed. A Housing Coordinator was hired three years ago who has overseen the acquisition and removal of a significant number of dilapidated properties. A full-time Code Enforcement Officer and a full-time Housing Inspector have also been hired to carry out a comprehensive housing inspection program. For the past several years the Fire Department has been citing and pursuing owners of burnt out and dilapidated properties.
The cost of demolition and removal of dilapidated housing structures today is very high. Once the City gets to the point where it can actually demolish a property it has taken by tax deed, it must carry out environmental studies to test mostly for asbestos and lead, which if found must be abated. Once that is done, the City, if it can find money somewhere, will bid a contract for the demolition. The typical structure the City demolishes weighs 100-200 tons. Just the disposal cost of this tonnage at the regional landfill is $67/ton for an average disposal cost of $7,000-15,000 per demolished structure. If there is asbestos contamination, the cost is $107/ton and the precautions surrounding the handling of contaminated debris drives the demolition cost up significantly. To this must be added the cost of the demolition contractor and the trucking to the landfill which would typically be in the range of $5,000-20,000 per structure depending on the complexity.
Why do these processes have to be so slow?
With respect to the clean up of burnt out properties, in terms of time, if everything fell into place perfectly in a particular case, which it never does, the very quickest that the City would be able to effectuate a property cleanup under RSA 155-B or RSA 147 would be around 8 to 9 months after the fire. Both RSA's are linear in nature and not many of the steps required can be completed concurrently. However, given the way the process works in reality, it is typically going to be more like 12 to18 months especially if the owner appeals the order in the court.
Further, often there is more than one building and therefore more than one property owner involved. If the two buildings burned together, the fire debris is now generally all in one pile which means that the debris can only be cleaned up all at once and not separately. Yet, two separate property owners means that each property owner is afforded separate legal processes under the law. This means that the overall cleanup process can go no faster than the slower process which develops for either owner. Obviously, this can slow the process much more than if there is just one owner involved.
With the number of fires the City has suffered recently, there is no question that the City has become more than a bit overwhelmed. In February and March, the State Fire Marshall's office assisted the City with an inspection blitz of about 100 properties or roughly 300 units in the period of a few days. This was a great help to the City from the State in the sense that it got the attention of a lot of landlords that business as usual was changing. It also got the attention of a lot of tenants who, seeing the fires, began to realize that they had an interest in finding a place to stay that was safe. This inspection blitz led to well in excess of 1000 violations which have to be followed up on. Clearly, this can only be dealt with a little bit at a time. This is in addition to the comprehensive housing inspection program the City has started and dealing with the fire properties themselves.
It is going to take several years for the City to see the rewards of this effort which will reverse the downward property spiral the City has been in and will result in housing in Berlin which is decent, safe and attractive.
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