Is the Philly Land Bank Going to Be a Tool for NIMBYism?

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As a fan of the Philaphilia blog, this is something I’ve been worrying about, and Bruce Stahl and Audrey Spalding are confirming my worst fears.

Land banks are a good idea, but they need to be designed well. What I mean by this is that decisions around who can buy land and what can be built on it need to be relatively insulated from narrow neighborhood politics. You can’t have NIMBYs blocking the Land Bank from selling parcels to developers in order to block new development.

Unfortunately, that’s what Philly’s land bank ordinance seems likely to do:

One rundown St. Louis building had offers from four different buyers, all rejected by the land bank. But when the area alderman showed up at a land bank meeting and asked that it be sold to another buyer, it was.

Unfortunately, the same policy has been written into Philadelphia’s land bank bill. In its current form, it would forbid the bank from entering into a transaction without the approval of the district Council member. This will almost certainly thwart development.

That’s what often happens in St. Louis, where a former deputy mayor for development told us that “the sort of working arrangement we have with the aldermen is that if they don’t want to do something, we don’t want to do it.”

To get land back to productive use as quickly as possible, a land bank should accept all reasonable offers, even if politicians oppose them.

Philadelphia should also take note of St. Louis’ misguided efforts to hold on to properties for future development. Research by the Show-Me Institute revealed that from 2003 to 2010, the St. Louis land bank rejected nearly half of all purchase offers, mostly because it was holding properties for future development. But these hoped-for future developments rarely materialize.

Philadelphia’s land bank proposal similarly establishes goals that may undermine efforts to return land to productive use. They include such laudable priorities as encouraging “affordable or mixed-income housing that is accessible or visitable,” as well as “community facilities that provide needed services and enrichment opportunities; side and rear yards; urban agriculture; and community open space.” Such goals may have the unintended consequence of providing reasons for the land bank to reject purchase offers that don’t fit its vision.

Affordable housing and mixed-income housing are excellent goals, and they are goals I care very much about, but the best way to keep rents low is simply to build more supply.

Attaching these extra requirements to what can be done with vacant land parcels could have the perverse effect of raising rents. If NIMBYs are able to hijack the land bank to block development of more housing square footage, you could end up with a shortage of housing, and rising rents.

City council should change the proposed Land Bank ordinance to remove District reps from the approval process, and remove the extra requirements for land uses.

The goal of the Land Bank is to convert vacant land into productive buildings that contribute to the tax rolls as quickly as possible. Tacking on a bunch of red tape is going to slow turnover and defeat the purpose. The regular zoning rules should be sufficient to ensure acceptable uses.

This goes back to another point I’ve been trying to make, which is that funding more of Philly’s public services with a land value tax would be a great complement to the land bank. An LVT would create a strong incentive for developers to develop land parcels to their highest and best use, raising the bar to ensure that only high-quality projects get built, and discouraging low-value uses of land.

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