Davenport, IA is a city adjacent to the one I'm currently living in and as a neighbor (and previous resident) of Davenport I have noticed that crime seems to be an even more pressing issue lately. In fact, I can't remember a time where I've looked in the morning newspaper and can daily find an article stating that someone has been stabbed or shot. These crimes seem to generally happen and stem from certain population areas of Davenport that the police just can't seem to get under and keep under control. So, here is my Libertarian idea of how I would resolve the problems if I were the Mayor and/or Police Chief of Davenport:
The number one way, and most popular way, is to spend more tax money by hiring more police officers to patrol the streets. However, even though Rudy G. in New York proved this method can work at what tax ramifications are we shoving down the throats of the city's citizens? I believe I have a better idea; although half-baked I thought I would list it here and see what kind of comments I could drum up from the audiance.
My plan would be to designate swafts of population centers that seem to house those who cause the most issues. For example, take the area between Locust, Bridge, 14th, & Brady and call it Zone Alpha. Zone Alpha properties will now be given special tax breaks in order to make them highly appealing to investors. For example, the average home price in that area is probably around $60,000 and the age of the home is nearing 70-100 years old and in fairly poor condition. However, these homes were built during a time where bigger was better and hardwood floors, stairs, and other areas were all the rage (as we know these features are in major demand now-a-days as history repeats itself like clockwork) and with excellent square footage and great bones can be turned into beautiful masterpieces.
So lets give investors the tax breaks as follows:
- Investors who purchase a property within the next 18 months will be given a 100% break on capital gains if they bring the property up to code and refurbish the entire home and lot with 12 months.
- Investors will be required to sell the property within 24 months from the 12 months refurbishment deadline giving them a total of 3 years from start to finish to fix and sell the property.
- Investors will not be required to pay property taxes on the property during that 3 year period. In addition, to help spur sales new homeowners will not be required to pay property taxes for an additional two years from purchase of the property.
I believe this plan could work because investors would automatically make a large % of their flipping profit on the capital gains tax savings and the property tax savings right off the top. That doesn't even count the spread they will make from the original purchase price and final sales price with appreciation factored in as well. The city may lose out on some tax revenue initially but in the long run they will make much more because the values of the properties will have massively increased (thus increasing property tax income) and because the purchase price of the properties will be out of the range of previous tenants and incoming hooligans which would immediately reduce crime.
Two major questions come to mind when I present this scenario. 1.) How would you get current homeowners and/or renters to move out? and 2.) Where would these people go?
Well, the first question can be complicated but I think I can tackle it. Let's say that someone purchased one of the properties in this area two years ago for the average $60,000. Well, an investor could come in an offer a 5% premium over the current assessed value of the property (maybe more) and convince the owner to move. Afterall, the neighborhood knows that the prices of the homes will only come down due to the age of the properties and violence in the neighborhood so I could take an educated guess that very few, if any, would pass up such an opportunity. Afterall, the investor stands to make an automatic profit from the tax savings alone and so has a lot of room to negotiate an acceptable offer.
Secondly, we must answer the question of where would these people go? Well, once the neighborhood properties have outpriced the previous owners/dwellers they would be forced to rent/buy elsewhere. Of course some will find local homes in other local neighboorhoods but many will generally move out of the city. In fact, if this plan takes place all over the city there will be nowhere for these people to reside within the city or surrounding areas. So then it begs the question of, "What about neighboring cities, won't they have to deal with these people and the crime?". Honestly, yes they will and with that being said I say, "Who cares." No really, we resolved the problem here and so when these hooligans move out of our city where do we care where they go, as long as they aren't here to cause us problems it truly is... no longer our problem. Those cities will have to deal with the issue in their own way.
I'd love to hear comments about my idea and perhaps someone can shoot me down and explain why they believe this wouldn't work. So fire away!
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