Land Banks - How Do You Feel About Them?

Sorry if this will bore Fishtown people since there's not much land to be land-banked. It's however a gigantic issue that will affect Kensington.

I've noticed the chatter about land banking has come up again. I've held some serious reservations about it since the idea sprang up early last year. Has anybody attended anything or read anything about the proposed land bank idea that addresses this stuff?

- How are the boards for the land banks going to be selected and the people who sit on them vetted? Let's say I am a crooked developer who is in and out of court for code enforcement issues on a weekly basis. How do you keep someone like me from negatively impacting neighbors?

- How are land banks going to get rid of property squatters: the investors who do nothing but buy up lots, don't develop them, don't pay any revenue to the City of Philadelphia and sit on them for years hoping to hit the jackpot one day, all the while not cleaning trash that accumulates on the lot or maintaining security of the lot? If an investor, not a developer, approaches a land bank to purchase a lot, how will the land bank trustees know if the buyer doesn't intend to do any improvements to the lot being purchased?

- What's happened to the Side Lot program that was created under Mayor Goode? The old factsheet for it has virtually disappeared from phila.gov; is that basically dead now? Is your only hope of annexing attached lots is to use the Sheriff Sale process?

- How do you keep the land banks from being politicized? If a buyer don't donate money to so-and-so's campaign fund, will that make that person's quest to acquire the lot more difficult? At the present time, nobody develops anything larger than 1/4 of a city block without sexing up their council member. Is that going to continue to be the case because I've seen nothing from PCPC, PlanPhilly or presentations at various civics that tells me that land use, zoning and property acquisition isn't going to be anything other than palm-greasing like it's been since Noah built the Ark.

- When will there be more community meetings actually held in the area that will be most affected by land banks... namely Kensington, where residents of all ages and backgrounds can ask questions about this? Property issues affect the world around us more than anything, and it has direct influence on schools, crime, trash on our streets, safety... you name it. Why do I get the feeling that we're being left out of the discussions going on in Harrisburg and in Center City about it?

These questions need honest answers and if we can't get them, then I think Kensington---which stands to lose the MOST here, should start a campaign to thwart the creation of land banks in our area.

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sandi

I say the community rally around and advocate for a reinstatement of the sideyard program! Although, that's just my jaded opinion!

"If a child is to keep alive his inborn sense of wonder, he needs the companionship of at least one adult who can share it, rediscovering with him the joy, the excitement, and the mystery of the world we live in." --Rachel Carlson

dan

I like the idea of a land bank if it does what it's supposed to do - namely, put all the miscellaneous city-owned lots into one place for information and acquisition.

As I understand it, the side lot program died over concerns that the city was essentially giving away land that could have been sold at a much higher value.

Godwin was basically a Nazi.

2014 york's picture

I'm not a fan of landbanking. It can slow or stop development in many ways. If a local CDC wants to build 45 (or more) rental properties they would get first shot at this program. While rentals are important the tenants typically don't add much to the fabric of a neighborhood. That's just one example. Another is large scale cookie cutter development of substandard housing or that type with the large front yards that looks like it belongs in a Florida suburb.

If there is demand for housing it will be built. East Kensington is a perfect example. More than 80 new homes in the past two years. While I'm not a fan of all that's been built, I believe there have been a pretty good mix of developers and housing styles.

Neilpuck's picture

The sideyard program was discontinued because the people who were awarded the sideyards were violating the agreement by building homes on them and selling. The agreement specifically prohibits building on those lots, or selling it for profit for a period of 30 years. It will unlikely be reinstated in its previous form. The only movement for the program was to award those lots to applications already in progress when the program was shut down. It's a shame, because it was a great way to minimize blight and ease density issues by creating open green space.

Kenzo's picture

Now that I've read more about it (it's packaged in Act 90)... it seems like the City is actually doubling-down on Pay 2 Play. Each and every sale transaction has to have the blessing of your City Councilmember for the Land Bank to sell the parcel. So that means essentially you'll have to continue greasing the palms of City Hall, FIRST, before you even approach the Land Bank about it to seek approval.

I think the Land Bank can act in its own interests and apply for zoning chances on parcels it holds, via the usual ZBA appeal process.

Basically this just adds more people to an already-broken system. The problem with City dispersal right now is that it is heavily politicized and the Lank Bank process only increases it. And it doesn't even fix other issues with vacant parcels that cause more immediate problems for neighbors: trash & taxes, and spot zoning doesn't get curbed either.

Plus: everyone serves at the pleasure of the Mayor.

This doesn't sound like a win.

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ExUnit4's picture

Yep. as evidenced by the former side yards on 1300 E susque that were sold for a buck. Then sidenly became 2 brand new 300K townhouses with garages9 taking up precious street parking) with taxes of only $ 600 plus a year. Meanwhile, all the regular homes around it have had their taxes raised each year since and are now at over $1100. Lets not worry about the fact the owners don't even live in them( still own and live in house next door) or that the renters are running a commercial business out of a row home and the other works in new jersey . If your going to give away property then require the owners actually live and work in the city...and prove it via payroll and background checks and NO building rental properties...period. Only owner occupied homes.
Plus, don't punish the low income, or retired on a fixed income neighbors when they build brand new townhomes.

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c0llins's picture

I don't see why it would matter where you work. You pay the wage tax no matter what....

ExUnit4's picture

You pay wage taxes based on where you SAY you live. Not where you actually live. These folks used political insider knowledge to get the side yard for a buck then built 2 homes they rent out in violation oif the law. They're running a business out of the home( not zoned for business let alone have a permit) Their cars have jersey plates. so what makes you think they've told their employers( or the state /city if it's a business) that they are living in Philly.

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dan

It's time to start snitching.

Godwin was basically a Nazi.

codergrrl's picture

I think that's the only thing that has annoyed me when the neighborhood started to revitalize. I couldn't even begin to comprehend a ten year tax abatement. That would be sooo sweet, and extra hundred a month for myself.
Before you start explaining it to me, I understand the concept, ("comeback & buy in the city"), but I still kinda resent it.

"Je Suis Prest"

Kenzo's picture

codergrrl wrote:
I think that's the only thing that has annoyed me when the neighborhood started to revitalize. I couldn't even begin to comprehend a ten year tax abatement. That would be sooo sweet, and extra hundred a month for myself.
Before you start explaining it to me, I understand the concept, ("comeback & buy in the city"), but I still kinda resent it.

Just to dispel one myth: it's not a $0 tax abatement, it's actually a tax freeze.

If you got a vacant lot that owes $85 a year, the taxes stay at $85 for ten years as if nothing was ever built on it. Usually when the lot is developed there's likely to be a lot of years of unpaid taxes on it, so those are paid off when the developer buys the parcel.

If you eliminated the abatement you could have something happen that would tick off neighbors even more than the abatement--the City could be motivated to reassess comps more often. Let's say there's no abatement and someone filled in a lot with 3 houses. BRT could send down the little man with the clipboard to do the assessment and while he's down there, the neighbors on the block get readjusted.

Until lately, the abatement plan guaranteed the City wouldn't bother with assessing anything. I think most folk would rather have their taxes stay the same vs. a house going up next door and no sooner than it gets sold, at Christmas you receive the unpleasant assessment in your tax bill.

Win some, lose some.

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Kenzo's picture

Look on the bright side... most of the early-days of tax abatements in Fishtown proper are near expiration. They're also getting reassessed just like everyone else, so not only do they come off the abatement program they're supposed to be reassessed at Full Market Value.

I would imagine quite a number of folk will probably run to their mortgager and re-fi their mortgages and fold-in the new taxes into their new escrow. The City is expecting this revenue to start coming in to offset all the property tax lost due to foreclosure/recession.

(PS... I live in new-ish construction but I do not have an abatement property.)

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codergrrl's picture

So what if it wasn't an abandoned lot, and it was a working property? The Rag Flats were a business before they turned it into what it is...but it advertised a ten year tax abatement? In plain English, do the people who paid all that money to live there have to pay property taxes, yes or no?

"Je Suis Prest"

Kenzo's picture

codergrrl wrote:
So what if it wasn't an abandoned lot, and it was a working property? The Rag Flats were a business before they turned it into what it is...but it advertised a ten year tax abatement? In plain English, do the people who paid all that money to live there have to pay property taxes, yes or no?

Yes. Every owner is paying $72.44 a year right now (the taxes for the original structure subdivided equally among the new units).

Once the abatement is gone, they're all going to be slapped with a re-assessment.

Just looking at the sale price alone, once the abatement is gone they're going to be paying well north of $1,000 a year. Probably more like $1,400/yr I would imagine. Buyers are supposed to be aware of how many years they got left on their property before the are hit with full market value.

So ugh... when the Rag Flats was a shuttered building it wasn't paying that much, but once the abatement is gone this one building is going to be generating quite a bit of income into City/SDP coffers.

888180016 1342 E BERKS ST Unit: A
RES.CONDO.2STY MASONRY HAPPY HOMEOWNER $498,000 01/18/2008 $287,100 $72.44
888180018 1342 E BERKS ST Unit: B
RES.CONDO.2STY MASONRY HAPPY HOMEOWNER $342,500 09/24/2004 $287,100 $72.44
888180020 1342 E BERKS ST Unit: C
RES.CONDO.2STY MASONRY HAPPY HOMEOWNER $480,000 11/18/2005 $2,400 $72.44
888180022 1342 E BERKS ST Unit: D
RES.CONDO.2STY MASONRY HAPPY HOMEOWNER $367,853 12/21/2004 $287,100 $72.44
888180024 1342 E BERKS ST Unit: E
RES.CONDO.2STY MASONRY HAPPY HOMEOWNER $1 11/28/2011 $287,100 $72.44

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boiledpeanuts's picture

I agree with ya'll.

codergrrl's picture

Ok...I guess I feel better.
I don't know that the Rag Flats was even a shuddered building. There used to be a shop of guys that worked out of there doing brickwork and powerwashing.
An of course, it was home to a virtual tribe of feral cats.

"Je Suis Prest"

Kenzo's picture

codergrrl wrote:
Ok...I guess I feel better.
I don't know that the Rag Flats was even a shuddered building. There used to be a shop of guys that worked out of there doing brickwork and powerwashing.
An of course, it was home to a virtual tribe of feral cats.

I would imagine the City got tired of the cats sending in their tax payments in kitty litter dumplings.

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Kenzo's picture

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Kenzo's picture

My letter to the Committee of Seventy asking them to place the (once it's formed) Land Bank board and its activities under a permanent watch:

https://docs.google.com/document/pub?id=1YtQ-JJiES50JRGEJE-re_mmE9zI_8Drm-XBlE81N1BA

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jbette01's picture

This seems to be a centralized option for city owned land only. There is much debate about how many vacant lots their are, but even if this centralizes the 10,000 that the city owns, it might be a win. We will still have the 20-30-40K (?) that are privately owned.

Also, the City of Cleveland supposedly has a very successful land bank program. I dont know the details, but I am sure Kenseau will take it beyond google.

http://www.citypaper.net/news/2011-04-28-vacant-lots-philadelphia.html

Kenzo's picture

I'm familiar with how the land bank works. The problem I have is governance. The City's bill to ride on the state Land Bank measure has zero ethics provisions in it.

Left unmonitored, I can see a future where enthusiasm builds for the land bank, only to have our hopes dashed as a few nasty politicized transactions occur which sours opinion on it.

The Land Bank is going to remove a lot of dead weight in getting property out of agencies like the RDA, and without the need to draft a Council bill to authorize the transfer and sale from the big holders like PAID and RDA, I would bet my paycheck that sleazebuckets will be lining up to either try to insert themselves on to the board, or do other ethically-questionable activities to smooth transition of properties out of the City's hands.

Like for instance: property squatters.

A property squatter is an investor who buys property and does nothing with it, doesn't maintain it and rarely even pays taxes and maintenance, holding it in a portfolio hoping for a Powerball someday. The City of Philadelphia is charged with the maintenance of all of its holdings, but once the LB transfers to a private actor, it ends there and it's up to the new owner, whether it's a non-profit or a developer, to do something. I don't have a positive vibe that the land bank will enter deed restrictions forcing buyers to undertake renewal--I could be wrong but that's the feeling I get when I read the text of the bill.

Say I want to be the Sam Rappaport of Kensington and I sex up Sanchez, Clarke and Squilla and support them monetarily. They will be less likely to issue a veto of a transaction. And if I'm also pals with the Mayor's office, his appointees to the Land Bank board are also inclined to transfer property to me.

The Land Bank is not going to fool-proof out transactions to bad actors. That wasn't put in the bill.

Simple example of how to fix this bill so that's is more ethical: Insert a simple proviso that says "no counterparty to any Land Bank transaction may have held property in arrears or default of the Philadelphia Real Estate Tax [as defined in section] no greater than 2 years within the past 5 years of the calendar date of the transaction on any parcel in Philadelphia owned by the counterparty, registered principals, their agents or assigns, and for no consecutive period of arrears greater than 5 years on any other parcel owned by the counterparty, registered principals of the counterparty, their agents or assigns."

Because property squatters, malfeasant developers and other bad actors have such a horrible track record of paying the Real Estate Tax on time, this proviso would virtually kill off most of the bad people we do not want taking over City property.

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Kenzo's picture

Oh yeah, most civic members aren't really told this and it's not heavily publicized, but Harrisburg included default powers in its bill that authorizes land banks.

If the City enacts its land bank, it automatically not only has the powers of disposal, but also to purchase, to write promissory notes and post its properties as collateral against those notes, to lease out its property, to build structures, hire contractors, write contracts, apply for zoning changes and the like.

In essense, if you take what PHA does and what the RDA does and you combine all those powers, they're going to be in the land bank as well. It's being marketed to neighbors as a property disposal entity that will place emphasis on disposing to renewal efforts.

The land bank is not just a bank; it's a complete real estate company. Whether the City exercises those powers is up to the City. But if the City wanted to build some market rate apartments on land banked land, it could totally do it--the way this is going.

Is that necessarily bad? Not usually, but not if the counterparties in transaction with the landbank are benefiting on advantages that nobody can get unless they pay political tribute. And since it's up to a single person to authorize a land bank transaction in their district... the City is doubling-down on Pay to Play.

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jbette01's picture
Kenzo's picture

Just a few bullet points. CP did read my letter and I hope they're reviewing the Commonwealth bill in more detail. (Believe me, the City is well-aware of the powers granted to the Land Bank by the Commonwealth)

I think this bill can work so long as there's ethics provisions added to it to keep something like a "LandVest" from getting access to City-owned property. And the City of Philadelphia has the unusual power to block certain buyers from doing transactions with the City, which private property owners do NOT legally have the right to do [there's ways around that but it will get you sued].

The problem is that if it's not written into the bill, then the City has no moral obligation to make sure that the counterparties are responsible parties wishing to take City-owned property off its hands. Come on peeps--you've seen all sorts of sleazy folks in Real Estate at all levels of the market from low income to luxury. They will be licking the boots wearing cheap suits at campaign fundraisers at night, and shooting off cutesy emails with lots of : - )'s in them while they work through a Land Bank deal.

There's nothing in the Land Bank bill that says the Land Bank must check the real estate background of the counterparty doing business with the City to ensure that they are a good actor. And by good actor, they are not interested in property squatting, they have a positive history on other properties in the Commonwealth or Philadelphia, they are not a tax deadbeat and they take care of L&I violations promptly and don't let them fester.

If you don't do this, then 5 to 10 years from now you'll be seeing the embarrassing scandals splashed across the pages with the Land Bank sitting center stage.

It will happen. There's zero protection to keep Pay to Play Away.

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Kenzo's picture

Hmm another one: someone picks up a City property, that of course should be transparent, including the principals full legal NAMES shown on state-issued ID. That should be a matter of the public record, even if the LLC shell company is buying the property from the City.

It will save community groups a ton of time asking questions ("who owns this?") if a City lot is picked up and drama ensues after purchase. Nobody should have to play Agatha Christie for every single lot that's picked up near their homes and neighbors should not be kept in the dark about it.

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Kenzo's picture

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stein's picture
Kenzo's picture

http://planphilly.com/philadelphias-imminent-vacant-land-plan-major-progress-or-major-letdown

PlanPhilly includes more critiquing.

I really hope Jennifer means what she says at the end about inserting ethics provisos into the bill language before City Council passes it. They seem determined to get it inked by Michael Nutter by the end of April.

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