Philly Land Bank and Land Value Tax – Two Great Tastes That Taste Great Together

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I really can’t heap enough praise on Patrick Kerkstra’s excellent report on the land bank and tax delinquency reforms moving forward in Philly:

For decades, Philadelphia’s city government has struggled to cope with an abundance of vacant land and chronic tax delinquency, two closely related problems that have fueled blight and depressed property values in neighborhoods across the city.

Last month, a pair of laws were introduced in City Council that would upend the city’s approach to vacant land and tax delinquencies. If adopted, the bills would create a powerful agency, a land bank, and give it the authority to snap up tax-delinquent properties as it chooses.

The measures would also compel the city to foreclose on or seize tax-delinquent property within one year. That change alone would have a massive effect on the city’s real estate market, as there are more than 100,000 tax-delinquent properties in Philadelphia, or roughly 19 percent of all parcels in the city. Philadelphia has the worst property-tax-collection record of any big city in America, as detailed last year in an Inquirer/PlanPhilly investigation.

Philly needs the state Senate to pass the land bank bill to make this work. It’s already passed the House.

Also, while I understand the Nutter adminstration’s desire to be cautious, it seems unlikely that anything could be worse than the current system, which is appalling.

On the fiscal side, the thing that would really help this process along is to fund more public services with a land value tax instead of a property tax. This would be helpful in two ways – driving speculators out of the market, and removing the disincentive to invest in property improvements.

The incentives created by property taxes are perverse. If people improve on these vacant lots, they’re going to pay more taxes. Whereas if they just sit on them, they’ll pay less. This is nuts. You want the tax incentives to punish people for not building on vacant land. That’s what an LVT would do, and it would probably mean the land bank would end up owning fewer properties.

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2 Responses to Philly Land Bank and Land Value Tax – Two Great Tastes That Taste Great Together

  1. Constance M Tomlin says:

    I totally disagree with you. The dysfunction in the City’s land management needs to be completely and thoughtfully resolved before any more bureacracy is added to the mix. The citizens should not be subjectedthe manipulations of politicians elected to public office. To suggest that a homeowner, who probably has paid years of taxes on that property could lose it for being late one year is ludicrous. This in no way benefits the citizens as evidenced by the 7,400 properties that the City is already sitting on. Every different administration acts as if they are at the Mad Hatter’s tea party and now that all of the clean spaces have been used, they can just spread a lace tablecloth over the mess and continue to party. By seeming to think that they can just circumvent or just ignore established protocols already in effect is just a means they could just designate who they want to have control of certain sections of the city. These types of schemes don’t benefit the taxpayers in any way. Their bright idea of the 10 year tax abatement doesn’t appear to have manifested anything profitable for this City as the recipients are claiming their properties aren’t worth what they were hyped to be. Enough already!!!

    • Jon says:

      The 10-year tax abatement is arguably just trying to mimic a straight land tax. I don’t know why they wouldn’t just shift the tax burden from buildings to land.

      On the land bank, it’s clear that having 5 different agencies in charge isn’t working. In my view, putting one agency in charge would reduce bureaucracy, not create another layer. What do you think they should do instead?