I remember back in the 80s when we first moved to St. Louis and we lived in West County. I worked in Clayton, and was a loan officer making a lot of FHA loans. I heard stories about "$1 houses" being for sale in the City.
Having come from California, that was hard to believe. Especially for solid brick houses! How could it possibly be true? It turned out it wasn't. Maybe urban legend, maybe truth. However, if there was ever a time in the City of St. Louis where you could buy homes for a $1, I never saw it.
The City has an agency responsible for dealing with the inventory of abandoned real estate, the Land Reutilization Authority, or "LRA". LRA was created as a state chartered redevelopment agency with the purpose of receiving properties acquired through public foreclosures, typically for the failure to pay real estate taxes.
By the time the LRA gets a building, it has truly hit rock bottom. The city regularly holds tax sales, and like mortgage foreclosure sales, these are public auctions. They are advertised in the newspaper.
Anyone can bid at these sales and buy the properties for the back taxes. The ones no one purchases wind up being transferred to the LRA. There they are held in inventory. There are a lot of them. They range from complete buildings to tiny, remnant, unbuildable parcels.
For the most part, there is very little demand for these properties-evidenced by their failure to draw a bid at the tax sale. The demand for LRA properties can be increased when they are packaged together into a group as part of an overall redevelopment program.
The idea of a $1 building? It doesn't mean much when the cost for renovation is substantial, and often, on an LRA building, higher than the after rehab value of the property. Nonetheless, the LRA does work to maximize the sales prices of LRA buildings.
Which gets to the point of this post. What about one LRA building? How can we guage the best use of a single LRA building? The answer depends a lot on who you're talking to.
If you're the neighbor of an abandoned, LRA building, you might want it demolished for public safety purposes. If you're a preservationist, you might want to see it stabilized for historic preservation purposes. If you're a rehabber, you might want to buy it for rehab to either live in, rent, or resell.
If you're a commercial developer, you might want to buy it for a $1 to tear it down as part of a new strip center. If you're a new home builder, you might want to buy it for a $1 to tear it down and build a new "green" home. There are lots of possibilities. How about the city tearing it down to create a new greenspace, park or "bio-swale"?
The truth is, there is no one answer. It all depends. What are the circumstances involved beyond the building itself? They are what really determines the future of that one LRA building.