Last week, after several arsons at the property, the city announced that Lehman Brothers Holdings Inc. would pay to clear the 20-acre Washington Bottoms site near Poplar and Cleveland.
Lehman Brothers foreclosed on the site last April, and it's been deteriorating since before then. But Lehman isn't the only financial institution that needs to come clean about its property.
As part of its "Issues First" campaign, the Mid-South Peace & Justice Center recently began filming "Blightwatch," a series spotlighting vacant and blighted properties, and posting the footage to YouTube.
"We wanted to show people the extent of what is out there," says Brad Watkins with the Peace & Justice Center. "If you live in certain parts of the city, you don't see how pronounced the problem is."
Two weeks ago, the group started producing the videos, showcasing vacant property in New Chicago, Beltline, Annesdale-Snowden, and Smokey City. The impetus, however, was the organization's focus on the homeless.
"Providing housing and services is cheaper than the ramifications of having people living on the street," Watkins says. "It's not just a moral issue; it's an economic issue."
Peace & Justice found that there were 900 fires on vacant property in the city from August 2004 to December 2009. They estimate each fire costs the city about $17,000.
They began to wonder: Why were there so many vacant properties being allowed to rot in Memphis' urban core?
Beginning with a blighted property near Annesdale-Snowden, they looked up the address with the county register, trustee, and assessor and found it was owned by a real-estate investor.
With a little more digging — the initial plan was to confront the investor — they found that the investor had filed for bankruptcy in 2007 and surrendered her property back to the lender. But the bank never registered the property in its name — something Watkins began to see as a pattern — leaving the land in limbo.
"Why should people in this neighborhood even bother when we allow banks to do this to us?" Watkins asks in one video. "Add another $1,493.42 to J.P. Morgan Chase. That's the unpaid taxes on this. ... After a while you have to ask: Why should anyone bother?"
Memphis filed a lawsuit against Wells Fargo in late 2009 under the Fair Housing Act, citing discriminatory lending practices and alleging those practices damaged the city financially. It's clear that the lenders are still chipping away at Memphis' fiscal health, even if it's $1,500 in back taxes at a time.
Add in the loss of property values of adjacent and nearby homes, and the city's coffers take another hit.
"My personal opinion is that the system encourages blight," Watkins says. "The county has to wait three years before it can seize property for back taxes. By that time, it's in pretty terrible condition."
And it seems that for lenders — reluctant property owners, at best — it can be a waiting game.
"If you're not in the rental business, and you can't sell them, you're better off letting them die on the vine," Watkins points out. "Fines and fees only work on someone who wants to keep the property. If they wait long enough, taxpayers will eventually take the burden of the property and the banks can walk away."
Watkins is seeing some bright spots among the blight. A number of the properties featured in "Blightwatch" have had their yards mowed since then, a development he doesn't think is a coincidence.
It also shows residents that things can change.
"It's shaken some of the apathy," Watkins says. "When we came by the first time, people weren't very optimistic. Now they're ready and eager to get involved."
The organization is working with code enforcement and the fire department to do demolitions, and they are working with neighborhoods to create redevelopment plans. But they see another option, similar to that of the city.
In the last year, attorney Steve Barlow has filed several test cases under the Tennessee Neighborhood Preservation Act. Under the statute, property owners can sue the owners of blighted adjacent property — provided the defendants are not owner occupants — for the loss in their home's value plus attorney's fees.
But any organization, business, or interested party can sue property owners to abate a public nuisance.
"We wanted to do some test litigation to demonstrate that this is an effective way to deal with abandonment or vacancy without having to wait for anyone in a bureaucracy," Barlow says. "An individual, group, or institution can take matters into their own hands, if they feel it's not going to happen any other way."
So far, Barlow has sued the owners of five vacant multi-family properties. Two have since been demolished, one has been renovated, and two are still pending.
"To me, the bottom line is there is very little reason to maintain property in Memphis today," Barlow says. "Litigation changes that equation."
To read more about this and other topics, visit Mary Cashiola's In the Bluff blog at memphisflyer.com/blogs/