Philadelphia is about to become the largest city in the country with a land bank.
A land bank is a nonprofit or government agency whose sole function is to efficiently maintain, clear title to, assemble, and market vacant property in order to transfer it to responsible new owners for productive reuse. On Dec. 12, 2013, after many years of organizing, negotiating, and compromising, the Philadelphia City Council finally passed an ordinance establishing one for the city. Mayor Michael Nutter signed the law on Jan. 11, 2014, calling it “the start of a new era in Philadelphia.” City Council President Darrell Clarke told the large crowd of advocates at the signing ceremony, “I hear you. The city will get properties back online.”
Philadelphia certainly needed a more effective way to return vacant properties to productive use. The city has approximately 40,000 vacant properties. Of those, roughly 10,000 are publicly owned, by four different public agencies: Redevelopment Authority of the City of Philadelphia (RDA), the City of Philadelphia Department of Public Property, Philadelphia Housing Development Corporation and Philadelphia Housing Authority. (The housing authority has not yet agreed to transfer its land to the land bank.) The properties are located in virtually every neighborhood of the city, but concentrated in low-income neighborhoods in North and West Philadelphia. Approximately 17,000 of the privately owned vacant parcels are tax delinquent, most by over a decade. These tax-delinquent properties owed a total of $70 million to the city and school district in back property taxes as of 2010.
Only 1 to 2 percent of the publicly owned properties are transferred each year. At that rate, it would take Philadelphia 100 years trajectory to return publicly owned vacant properties to market, even without any new vacancies.
One of the problems is that in Philadelphia, as in most cities, no single entity is responsible for acquiring, assembling, and disposing of vacant parcels, or for thinking about the entire inventory of parcels and making strategic land use decisions. Under the existing process detailed in this flow chart, the transfer of a single publicly owned vacant property takes from 1.5 to 3.5 years, even when there is no significant opposition. An interested buyer must complete one of four arduous processes involving more than a dozen different agencies and approving bodies to acquire publicly owned land. Many potential buyers make a substantial investment of time trying and never succeed in acquiring the property they seek.
The land bank offers the city the chance to do it better. When fully up and running, it will:
1. Create one owner of publicly held vacant land;
2. Produce and make available an accurate, online inventory of vacant land;
3. Ensure all 10,000 publicly owned vacant properties have clean and clear title;
4. Define a single, written vacant property transfer process;
5. Reduce the average time for property transfer by over one year;
6. Require the land bank to weigh community benefit, and not just price, when deciding between potential buyers;
7. Mandate a more equitable, accountable and transparent disposition process with extensive reporting to the public;
8. Strategically acquire tax-delinquent properties, rather than requiring their sale to the highest bidder at tax sale auction;
9. Appoint community representatives to the board;
10. Acquire and dispose of property in a manner that complies with the city’s comprehensive plan and land bank strategic plan.
An alliance of unusual suspects worked together to convince the city to create the land bank. Statewide groups Housing Alliance of Pennsylvania and Regional Housing Legal Services and citywide group, Philadelphia Association of Community Development Corporations (PACDC), used a grant from the William Penn Foundation, to start the work. The Oak Foundation also offered grants to PACDC and to one of its members, the Women’s Community Revitalization Project (WCRP), to focus on pushing for an equitable land bank and for WCRP to establish community land trusts (different from land banks) in the city that would keep land affordable in perpetuity as market prices rose, and could be disposition options for land bank property that would turn it toward community benefit.
The Housing Alliance of Pennsylvania led the charge for state enabling legislation to authorize the creation of land banks in the first place. State enabling legislation signed into law by Governor Corbett in December 2013 not only allowed land banks, but created huge incentives for Philadelphia to create one: it gave tax sale bodies the option to transfer tax-foreclosed properties to a land bank, rather than selling the properties to the highest bidder at tax sale auction. This new power has the potential to stop a common cycle in Philadelphia of transferring properties from one irresponsible owner to another at tax sale without the ability to ensure that the new owner possesses the capacity, resources, and commitment to reactivate the land.
The Philadelphia Association of Community Development Corporations (PACDC) led the campaign to advocate for a land bank within the city with a three-pronged approach. First PACDC commissioned a report, in partnership with the city’s redevelopment authority, to articulate the costs to the city of having a broken vacant-property process. The report, titled Vacant Land Management in Philadelphia: The Costs of the Current System and the Benefits of Reform by Econsult Corporation, May 8 Consulting, and Penn Institute for Urban Research, found that the city spends $21 million a year just to address unsafe conditions and maintain vacant properties at the most basic level. Loss of tax revenue to the city and school district, and loss of property value wealth, extends to the billions.
Second, PACDC created the Philly Land Bank Alliance, an alliance of citywide groups representing small business, private market and nonprofit developers, environmental groups, and neighborhood groups who wanted to fix the city’s broken vacant property process. Bringing together public interest lawyers, for-profit developers and real estate agents, urban farmers, grassroots neighborhood civic organizations, architects, small-business owners, and anti-blight organizations to advocate for a single reform was unprecedented, and keeping these groups united around a single message throughout the campaign was extraordinary.
The Philly Land Bank Alliance’s message was that it wanted a vacant property system that had: one owner, one inventory, one process, one standard of maintenance, and one standard for enforcement. The group also fought for a land bank that was predictable, efficient, transparent, accountable and equitable.
WCRP also had created a strong grassroots coalition of neighborhood groups called the Campaign to Take Back Vacant Land. The Campaign also joined the Alliance and its steadfast focus on equity and community benefit was adopted by the larger Alliance as it negotiated the ordinance with the city council. As a result, the Philadelphia land bank has unpredecented community accountability measures built into the law: 4 out of 11 land bank board members will be community representatives, detailed reporting to the public is required, and future uses for vacant land must comply with comprehensive and approved neighborhood plans.
The alliance reached out to the mayor and brought him on board. Creating a single agency to focus solely on the city’s vacant land made sense to the administration, with the one caveat that the city did not want to create new bureaucracy or hire new staff.
It was also critical that there be a city council champion to draft legislation and push hard for its passage. Councilwoman Maria Quiñones-Sánchez, whose district has thousands of vacant properties that are harming her constituents, stepped forward. She had worked since her election in 2008 to get this land into the hands of responsible owners and to reactivate these properties, but with limited success due to the complex and time-consuming nature of the four processes to acquire vacant property from the city. Councilwoman Sánchez sees the land bank as a “game changer” that will stop government from “standing in the way of Philadelphians who seek to build a business, home or community garden” on vacant land.
With the need and the constituency and popular support established, PACDC’s third step was figuring out what it would take to create a land bank ordinance that both city council and the mayor (and the Alliance) could support. Not surprisingly, the law represents a political compromise.
Several members of council were not willing to hand over the power to approve property transfers to the new land bank. The president of the city council argued that council needed to retain its historic power to stop a property transfer, called councilmanic prerogative, because if something bad happened on a vacant lot or more than one constituent wanted to buy it, the district councilperson would be blamed. In addition, at the end of the process, a city council resolution is required to approve each transfer and the council retained a 14-member Vacant Property Review Committee established in 1977 to evaluate vacant property transfers under one of the city’s four vacant property transfer processes.
As a result, in addition to the land bank staff and board’s evaluation, every transfer must still be approved by three bodies: the land bank, the VPRC, and council. In return, council added greater transparency and accountability to the process and requirements for the land bank staff to regularly report to the public on their progress in achieving the goals of a strategic plan and annual performance goals. The public will be able to see how long it takes to approve an offer for land and where in the process approvals are being held up or denied.
Some Alliance members questioned whether they could support a land bank where three approvals are required for every transfer, but the majority of the allies viewed this ordinance as a first step toward unified ownership and a single predictable process for publicly owned vacant property transfer. In the end, the allies and the administration agreed that the land bank law represented the best chance to improve the system.
Getting to Work
The new land bank will significantly improve the city’s vacant property process. The city will be able to offer public properties with clean and clear title through a single written process within a time frame of 1 to 1.5 years. The bill also elevates community benefit over obtaining the highest price for a parcel for the first time and requires a detailed strategic plan for bringing properties back online.
But now, the hard work begins. Philadelphia must clean title to almost 10,000 properties and transfer them into land bank ownership from existing public agencies. Then, Philadelphia must staff the land bank, appoint a permanent board, allocate funding, and write effective policies and regulations. Watch with us as we monitor and report on the land bank’s performance as Philadelphia enters “a new era” and brings its vacant land back into productive reuse.