Council proposals would reinvent vacant-land and tax-delinquency systems

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.

The two proposed ordinances would amount to a top-to-bottom reinvention of the city's vacant land and delinquency systems.

"I'm extremely frustrated with where the city is, and I've only been doing this for four years," said Councilwoman Maria Quiñones Sánchez, lead sponsor of the land-bank bill. "I can't even imagine what people who have been dealing with this for 20 or 30 years must feel like."

Sánchez said she saw the need to overhaul the city's approach to the problems in 2008, within her first two months on the job. "There was no thought to it, no strategy," she said of the city's approach at the time. "But I also know what our potential is, and I think we can get there."

Both proposals appear to be poised to be well-received by City Council and could be in place this year. But there are some concerns. For instance, while many developers support the notion of a land bank, others see it as a power grab by a city with a poor track record for managing its land holdings. And the Nutter administration, though open to the land-bank concept, warns against moving too quickly, given the scale and complexity of the problems.

One risk, the administration warns, is that the city could just end up stockpiling land that it has little chance of ever selling.

"We have to ask the fundamental question as a city of whether we should be in the real estate business, period," said Managing Director Richard Negrin. "Clearly, this is something that's hard to do, and we don't manage it well over time. We shouldn't be a problem in the neighborhood."

Which explains why the Nutter administration wants to move cautiously and prove that it can manage and sell the land it already has before acquiring any more, Negrin said.

"We're trying to be thoughtful about the structure of this and how we create the checks and balances, so that this can be broadly accepted," he said. "Shame on us if we put this together quickly and do it in a way where it will get unraveled."

It is clear, though, that existing systems are not doing the job.

Property-tax delinquency is an epidemic in the city, one that touches almost every neighborhood but is most prevalent in low-income neighborhoods where blight and abandonment are commonplace. Most other large cities seize tax-delinquent property within a few years, then sell it off to the highest bidder at sheriff's sale or place it into a land bank.

In Philadelphia, however, tax delinquents frequently are able to avoid sheriff's sale for years, even decades. In 2011, property-tax delinquents owed the city and cash-strapped School District $472 million in unpaid taxes, penalties, and interest.

The city's system for managing vacant land that it owns is equally troubled. The 13,000 parcels under city control are split among five departments and agencies, each with different policies and priorities. Developers say the system is opaque, confusing, and - because of the frequent delays - expensive.

The tax-delinquency ordinance in Council would require the city to "commence foreclosure proceedings" on all properties that have been tax-delinquent for a year, unless the property owner is in a payment plan. The shortened foreclosure period would represent a huge departure from business as usual: An analysis of delinquency records found that past-due properties owe an average of 6.5 years' worth of property taxes.

The proposed law also would overhaul the city's tax-delinquency notification system and create a more lenient set of repayment agreements. Property owners who breach their payment agreements - which happens frequently - would be out of luck. The ordinance requires the city to begin foreclosure proceedings against payment-agreement violators within 90 days.

"Hopefully, this will make it easier for people to pay their taxes, and if they don't, this will allow us to put the land bank into productive use," said Councilman Bill Green, who introduced the delinquency bill in response to last year's Inquirer/PlanPhilly investigation. "Even if we can only sell some of these properties for $1, we get a new owner in there who's willing to pay the taxes."

When asked for comment on Green's bill - which has 10 Council cosponsors - the administration said only that it was working with the councilman on his proposal. Green, though, characterized the Nutter administration as uninterested. "What the administration is saying to us about this bill is: Their current system works."

The administration does not dispute that its vacant-land-management system is broken. For more than a year and a half, the city's landowning departments and agencies have been crafting a new strategy for selling off vacant property.

Deputy Managing Director Bridget Collins-Greenwald, who has coordinated the city's new plan, likens it to a "virtual" land bank. Although properties will continue to be owned by a number of different agencies, the administration is creating a "front door," or single point of contact, where would-be buyers could go to acquire many of the properties in the city's inventory.

Collins-Greenwald will soon be named the city's new property commissioner, Negrin said. That will put her at the head of one of the city's largest landowning departments, he said, and will keep the vacant-land issue front and center.

Where Sánchez's land-bank ordinance departs from the Nutter administration's plan is in its scope and ambition. Instead of creating a front door, the land bank would seize all properties from three of the city's five landholding agencies and unify them in a single entity with a board of directors. Board members would be appointed by the mayor, confirmed by City Council, and include at least three representatives from nonprofit community-development corporations or civic associations in low-income neighborhoods (where the vast majority of city-owned vacant land is concentrated).

In addition, the land bank would have the power to acquire property by seizing tax-delinquent properties before they go to sheriff's sale. The city needs state authorization before it can do this, however. State Rep. John Taylor (R., Phila.) pushed a land-bank bill through the House in February, but it has not yet been acted on by the state Senate.

Sánchez said she would not rush the ordinance, particularly while the Nutter administration has concerns.

Outside City Hall, some question the wisdom of creating yet another city agency to manage land, in light of Philadelphia's poor record and the fact that there has been no discussion, if a land bank were created, about eliminating or scaling back the city agencies that now own vacant property.

"The government systems have broken down," said Anne Fadullon, vice chairman of the Building Industry Association of Philadelphia, a development-advocacy group, "and now the government is proposing another system, so of course there's going to be some trepidation."

And yet, she said, the concept of a land bank makes sense. And the BIA considers it promising that - for the first time in a long time - serious attention at high levels of city government is being paid to vacant land.

"This is our chance," Fadullon said. "We should try to take it and be as hopeful as we can."