Philadelphia Land Bank 101: Will it fight blight, or enrich the rich?

Above: Brewerytown, in the shadow of Philly’s skyscrapers. Photo by Lison Joseph

You’ve seen the words “Philadelphia Land Bank” in headlines, and perhaps gawked at the release of its 182-page Strategic Plan. But unless you’re working on a PhD in how post-industrial American cities fight urban decay, you may not get what the fuss is all about. Hence Billy Penn‘s attempt at explaining the idea behind the Philadelphia Land Bank, and some of its pluses and minuses.

“Philadelphia’s (real estate) market is improving every day, and the growth in some neighborhoods is quite brisk,” according to Beth McConnell, Policy Director at Philadelphia Association of Community Development Corporations, a strong backer of the Land Bank. She believes that it would accelerate the progress that Philadelphia has witnessed over the past few years.

So what is this Land Bank?

Simply put, it’s a government body that would enable faster sales of vacant lots, empty buildings and abandoned houses in Philadelphia. The Land Bank will acquire such properties, and make sure the titles are clean — so new owners won’t be burdened with unpaid tax or other municipal dues. The Bank would look for a buyer who can turn these empty, ugly eye-sores into things like affordable housing, urban farming, and community gardens. New buyers would need to agree to start construction in about six months, after agreeing with the city about how long the whole thing would take.

Why do we need one?

There are around 32,000 abandoned buildings or vacant lots in Philadelphia — they’re falling apart (literally) and obviously they’re not generating tax income, either. In fact, different government bodies own around 8,000 (one-sixth!) of those. Every year, the city spends $20 million of your tax dollars on them, just to keep them standing. The unpaid tax bill is now $70 million, and it goes up $2 million per year. Also, having a bunch of empty, boarded-up, falling-down buildings are dragging down everyone’s property values – a 2010 government study estimated that property prices in the city took a hit to the tune of $3.6 billion. Oh, and they tend to attract squatters, drug dealers and pimps.

The city just wants to sell vacant land and abandoned properties to make money?

Well, there’s more to it than that. Let’s say you live next door to a decaying building or a vacant lot that has turned into an ad hoc trash dump for the neighborhood. Let’s also say you had enough cash to buy it. Wouldn’t it be nice to do that without jumping through many hoops and convert it into a side yard or build an extension to your house? As of today that process can take YEARS, including the perks of tons of paperwork and running around — with no guarantee of successfully negotiating that bureaucratic minefield. Potential buyers have to deal with different government departments and sort out many years’ worth of unpaid taxes and other dues. Sometimes simply tracking down the owner of an abandoned building is a challenge in itself. The city is apparently able to sell only about 1-2 percent of lots it owns. At that rate, advocates of the Land Bank say, it could take 100 years to sell off all the city’s decaying buildings and vacant lots.

With the Land Bank, interested buyers are being promised a much simpler and far less time-consuming process and just one office to work with.

So everyone’s into the idea?

Hey, this is Philly! Of course not. A public hearing last month attracted 125 people, many of which work for a for-profit or not-for-profit organization. They came to praise the Land Bank or to bury it — one big complaint is that the whole exercise may end up benefitting only the city and some profit-seeking real estate developers. This is because in low-income neighborhoods where there is a real need for affordable housing, residents are not going to benefit from property sale at price points way beyond their reach.

So why didn’t the city think this was a problem until now…?

There have been previous attempts and the longest-standing one is the Philadelphia Redevelopment Authority. In many ways the mandate of the Authority was not very different from what the Land Bank is now setting out to do–fight the blight (that’s just another fancy word for abandoned buildings). But things didn’t quite work out as planned, and a lot of it boils down to politics and bureaucracy. Two years ago, the Authority got worldwide notoriety (cue post from the Daily Mail) when it demanded that real estate developer and City Council wannabe Ori Feibush — who put money into turning a vacant lot that had become a trash dump into a garden — to return the plot to its “old state”. The Authority did set up something called Front Door, to be the one interface for those interested in buying empty and vacant properties owned by the city. Apparently, between budget cuts and lay offs, they haven’t been able to do much. The key difference in the case of the Land Bank is that instead of being a mere facilitator, it will actually hold titles to the vacant land abandoned houses until they are sold.

How much this thing going to cost?

The Land Bank is talking about a budget of around $4 million, and a lot of that is supposed to come from Philadelphia Redevelopment Authority budgets besides some fresh funding (of about $500,000) from the City. The real challenge will be in transferring the properties to the Land Bank because that involves approvals by City Council and Councilmen.

What’s in it for me?

So once up and running smoothly, the City (and schools districts) will have more money to work with as abandoned and vacant properties are sold and put to productive use. Overall property value will go up once such properties stop being an eyesore. If you happen to live next to decaying or vacant property, you will be given preference in buying it and converting it into something useful. Also, and this is very important, the Land Bank would really like it if that vacant land can be turned into a community garden or an urban farm. So expect to see more gardens and farms in the city. They would also be looking for developers who can be trusted to, say convert an abandoned building into an affordable housing unit. That’s good news for a city where about 26 percent of residents are below poverty line (less $20,000/year in income) – or about 370,000 people.

Are we there yet?

Yeah, no. The legislative merry-go-around required to set up the Bank has been going on for about a year, but in theory it’ll be up and running by early 2015. The City Council passed an ordinance in December 2013, and Mayor Michael Nutter signed it into a law. Last month, the Land Bank released a Strategic Plan (Executive summary in PDF here)– basically a blue print of what it plans to do in the near term. And then they held public hearing on October 15 so that any Philadelphian with an opinion on what the Bank needs to do and how it should be done, had a chance to say their piece. If you are interested, take a look at what people said. The Strategic Plan, with public’s suggestions incorporated, is now waiting for City Council’s approval. Once through that hoop, the Land Bank can start transferring all government-owned vacant land and buildings on to its books, and prepare them for sale.

Has anyone else ever tried this?

Philadelphia is the largest city to attempt an urban land bank. But smaller cities in states like Michigan and Texas has done it with varying degrees of success. In other cities, the attempt happened at a time when the overall market was weak and with a revival in Philadelphia real estate market, our odds are better.