Dept. of Urban Ideas: Can Philly's Land Bank Improve the City?

Over the past few years, many observers of America's housing market have been documenting a remarkable rebound in demand for walkable housing and office space in urban areas, driven by Millennials and empty-nester Baby Boomers.

This trend presents a huge opportunity for progress on a range of issues important to progressives, from climate change, to wage growth, to a fairer distribution of public services. But to fully capitalize on this opportunity, cities will need to rethink their land use policies to meet the challenge of keeping housing affordable in the face of increased demand, while simultaneously addressing the left-over problems caused by decades of disinvestment.

To give an example, Philadelphia has recently seen a surge in demand for housing in its center city districts and neighborhoods closest to center city, and land prices have been rising in emerging neighborhoods. This is happening alongside an enormous problem of vacant and blighted properties, many of which are privately owned and long-term tax delinquent, and many of which are owned by the city.

There's an opportunity there to sell some of this city-owned land and make some money off of the renewed demand for urban housing, but it's not as easy as one might think.

Management of these properties is currently spread across 4 different public agencies, which are bad at coordinating with each other. This has made it unduly hard for people who want to buy land from the city to acquire it.

Recently the city created a Front Door website where people can shop for properties all in one place. But it's still way too hard to buy land from the city, and the Front Door site is just a change on the front end. The really big problems are on the back end.

To address the mismanagement on the back end, a coalition of housing activists has been advocating for the Pennsylvania state legislature to enable Philadelphia and other cities to create land banks - a single agency to manage all of the city-owned properties, and acquire problem properties. And in the year-end legislative session they finally won.

As I've argued here previously, I think a well-managed land bank could be a powerful tool to rationalize the city's vacant property inventory, improve neighborhoods, and promote growth and development.

But now that the land bank campaign is starting to heat up again and the city legislation is taking shape, it's not clear how well-managed Philly's land bank will be.

Instead of turning around city-owned land parcels and putting them back on the market for development, there are signs that the bank could become a potent tool for opponents of housing development, and exacerbate all the worst features of Philly land development politics.

 The land bank is needed to do the following jobs:

1. Organize all of Philadelphia's land inventory within one agency.
2. Seize tax-delinquent and long-term vacant properties through tax foreclosure or eminent domain.
3. Sell city-owned land to interested buyers in a timely manner, with minimal red tape.

And that's about it. A land bank that can do these things in a transparent and professional manner is absolutely worth supporting.

The trouble is that various politicians and activists want to saddle the land bank with extra political goals that are unrelated to these core functions.

One such goal involves giving explicit preference to uses like non-profits and community gardens and urban farms and other causes activists like, instead of just selling land parcels to the highest bidder. Another popular idea is selling land below market rates or giving it away to politically-favored groups.

Don't get me wrong -- I like non-profits and community gardens as much as the next liberal -- but this is just bad economics.

It might make sense to just give away land in some parts of North Philly where there's little development interest, and community gardening groups want to do some value-adding civic activity in the neighborhoods.

But it's also easy to see how prioritizing land for politically-favored uses could go badly wrong in emerging neighborhoods like Point Breeze, where land prices are rising and developers want to build new housing. In that case, selling expensive land below market prices is just going to lead to housing shortages.

This dovetails with another political goal that has no business being in the land bank bill -- giving City Council members veto power over land purchases in their Districts.

The Fight Philly Blight blog recently wrote about how the land bank bill as currently written puts members of Council between the land bank and potential land buyers, ensuring that land sales will remain an unprofessional political process:

[T]he legislation explicitly states if the council person and the land bank get together and don’t like your proposal for any reason they can prevent you from acquiring land, without an appeal:

“Upon discussion, the District Council person and the Land Bank may agree to withdraw or modify a proposed transaction at any stage… Council person shall be given the opportunity to review the transaction. Upon receiving a reason in writing for any disapproval by the District Council person, the Lank Bank may not enter into the transaction.…The Land Bank may re-propose a transaction that has previously been disapproved by the District Council person only if new information has been obtained or there has been a change in circumstances.” Bill No. 120052; Section 16-508(4a,4b,4c)

Even worse, only members of City Council will have access to the electronic records of land bank properties held in their districts:

Bill No. 120052 section 16-506(3) District Council persons shall be granted electronic access to relevant information maintained by the Land Bank regarding those properties owned by the Land Bank and located within their Councilmanic District. The Land Bank shall provide each District Council person with a mechanism to request either periodic aggregate reports or ongoing notifications as to changes in the status of those properties until that point at which the property is conveyed by the Land Bank

These policies are excessively political, and seem more likely to cause the land bank to hoard too much land, than to achieve the stated goal of transferring more city properties to private owners. It would be much better for the land bank's mission to take an agnostic approach to uses and buyers, and focus on the narrow goals of selling city-owned land at market rates, and getting more properties back on the tax rolls.