"Zombie subdivisions" — some platted but vacant land, others partially built and then abandoned — plague parts of the Intermountain West, siphoning valuable resources from struggling local governments, dragging down property values and causing blight.
Millions of these undeveloped lots exist, many requiring public services in remote neighborhoods that generate little tax revenue. The unfinished developments have become the "living dead of the real estate market," according to a report released Wednesday by the Cambridge, Mass.-based Lincoln Institute of Land Policy.
The problem is especially prevalent in states including Idaho, Montana, Wyoming and Arizona — where wide-open spaces and booming economies drew new residents and developers before the recession began.
In Colorado, local planners have done a good job of avoiding the damage of failed development, but the Centennial State still has its share of distressed subdivisions, with large numbers of vacant lots in Eagle and Montrose counties, said Peter Pollock, a former city of Boulder planning director who now is a Lincoln Institute fellow.
Many of the current crop of desolate developments were planned before the 2007 recession dealt the country the greatest economic blow since the Great Depression, Pollock said.
"The boom and bust real estate cycle is nothing new in the West," he said, "but the Great Recession was a noticeable one and it left a lot of premature subdivisions."
Much of the problem results from developers planning for demand that didn't materialize quickly enough.
"Some rural counties don't have very good planning capacity and they let the developers have at it," said Martin Zeller, president of Conservation Partners, a Denver conservation planning firm. "The bankers were providing loose lending and (the counties) are very unprepared."
In Teton County, Idaho, 68 percent of 10,225 parcels are undeveloped. The county, west of the posh Jackson Hole ski area in Wyoming, experienced population growth of almost 70 percent between 2000 and 2010, Pollock said.
The growth fueled an exuberant real estate boom, but started subdivisions didn't attract enough buyers, Pollock said.
Teton County has tried to recover by adopting ordinances allowing it to work with developers, landowners, lenders and others to replat troubled developments — in some cases reducing the number of lots.
The Lincoln Institute and its partner, and the Sonoran Institute, studied five Colorado counties: Douglas, Eagle, Garfield, Mesa and Montrose.
On Colorado's Western Slope, about 27 percent of parcels in 2,570 Montrose County subdivisions are undeveloped. Most of the 4,232 undeveloped lots are within Montrose city limits, county planning director Steve White said.
"There are definitely subdivisions where there are only one or two homes, and the rest is just weeds," he said.
About 31 percent of 19,363 lots in Eagle County are undeveloped, and in Garfield County 17 percent of 17,271 lots are undeveloped.
On the Front Range, 14 percent of 59,904 are undeveloped in Douglas County.
Mesa County, which includes the city of Grand Junction, experienced a oil and gas boom in the 1970s that ended with a big bust in the early 1980s, and yet only 12 percent of 52,871 lots are undeveloped today.
County regulations at the time of the oil bust called for developers to provide only a letter from a bank promising it would back infrastructure construction.
The collapse of the oil industry hit the county hard, and some subdivisions went into default. Development agreements were unfulfilled in nearly 20 percent of those subdivisions.
"We had several thousand lots that didn't have completed infrastructure that was required when they were approved," Mesa County' planning director Linda Dannenberger said.
Some of the developments had drainage and other systems that weren't working.
"Buyers had expectations based on the contracts we had with the developers," she said. "I did a lot of work with banks, and sometimes property owners, to try to reach solutions to get those subdivisions out of default."
The county hammered out a new way to guarantee infrastructure improvements — such as roads, drainage, water and sewer — are funded. Now developer's lenders are to disburse payments according to a schedule which assures the work is completed, Dannenberger said.
The county also now requires inspection before developers are paid for the work.
It took the county 15 years to fully address the problems caused by the 1980s bust, according to the report. "But the work paid off: During the Great Recession, the county had the lowest ratio of vacant subdivision parcels to total subdivision lots among approximately 50 counties examined in the Intermountain West."
Tom McGhee: 303-954-1671, email@example.com or twitter.com/dpmcghee