How to fix Philly's massive vacant land problem

This is the first in a series that The Next Mayor project is embarking on throughout the summer that looks at some of the problems facing Philadelphia's next mayor. We'll identify problems, examine why they exist, and find best practices implemented elsewhere. At the end of each piece, we'll offer a fix. Today, we tackle Philly's vacant land. If you have a problem in the city that needs fixing, email us at rbriggs@philly.com.

Crammed into tiny Duffield Street in Frankford, Arway Linens has supplied the city's booming culinary scene with freshly laundered napkins, tablecloths and uniforms since 1979. In a neighborhood that's watched the flight of industry for decades, Arway has held out. Three years ago, it even started looking to buy more land to accommodate its growing delivery needs.

Arway's chief engineer Jay Elliot saw a solution to the company's growing pains staring back at him every time he stepped onto the company loading docks: Three of Philadelphia's nearly 40,000 vacant lots sit empty directly across the street.

"It's three lots right in a row. They would allow our trucks move more freely and handle overflow parking... . The houses there were torn down 10 years ago," Elliot said. "They're sitting vacant and not getting any tax revenue for the city. The city comes and mows them, so they're actually putting more money into them than they're getting out."

Two of the lots are city-owned, one is private — held in title by a man who Elliot said had passed away years ago. Elliot's company was a motivated buyer but had no clue how to actually go through with the purchase.

After doing some research, he called his councilwoman, Maria Quinones-Sanchez, who has championed the "Land Bank," a public authority created almost two years ago that was supposed to streamline the process of getting vacant and tax delinquent private and city-owned land sold and back onto the tax rolls.

Her staff has helped him secure agreements for the two city lots. The idea was that the Land Bank would be empowered to seize the private lot, which was years behind on taxes, to seal the deal.

That was a year ago and Elliot still doesn't have the land.

Despite attempts by the city to make it easier to sell off these properties, the scope of the problem remains staggering. Data collected by the Land Bank estimates there are 32,000 vacant and tax-delinquent properties in Philadelphia held by private owners, like the one Elliot wants for his business. Somewhere between 8,000 to 9,000 more are held by government agencies. These figures are nearly unchanged from a decade ago.

The Land Bank was designed to fix many of these issues, but it still isn't operational.

Theoretically, private, tax delinquent lots are supposed to be auctioned off by the city Sheriff's Office once they go into arrears.

At an auction, there is no guarantee that someone like Elliot would actually win the lot he wanted. But the Sheriff's Office is also both highly politicized and inefficient. It can take years for properties to go to auction, and politically connected people can and do intervene to withhold properties from auction.

But the pace of sheriff sales does appear to have improved. Over the last few months, the sheriff's office has listed about 1,000 tax delinquent properties for auction each month, a marked improvement from just two years ago, when only about 500 a month were listed. However, a sampling of deed transfers showed that, at those sales, only about a quarter to a third of properties listed actually are sold. A May 2015 auction of 1,089 properties resulted in 275 sales.

Hundreds more were held from auction at the last minute.

"The good news from my perspective is that the office is now addressing some of those issues, in contrast to four years ago. But that question of why so many properties are withheld is something that I've never seen addressed," said John Kromer, a University of Pennsylvania professor who unsuccessfully ran for sheriff on a platform of abolishing that office. "The assumption in most cases is that there was some political interference, that a councilperson got involved. But sometimes people may have come in and put money down to stop the sale of their property. I don't think anyone really knows."

At the current rate, even if the sheriff only focused on auctioning off vacant properties, it would take nearly a decade to plow through the 32,000 properties.

Of the city's 8,000 to 9,000 properties, 90 percent are vacant lots. Elliot was lucky to have a supportive council office in his attempt to get two city-owned lots, but many aren't as fortunate.

Applicants are supposed to submit an "expression of interest" in a lot, get verbal support for buying a lot, get a tax certificate showing they're paid up on their taxes, and they are then scheduled for a meeting with a city board called the "Vacant Property Review Committee." Then, weeks later, City Council puts in its two cents and has to pass a resolution supporting a sale. The Law Department and the Department of Public Property then both have to sign off on the transfer of deeds, which often takes months.

Even then, the process still isn't over. The property has to first be "sold" to the Philadelphia Redevelopment Authority, and then finally to the person who applied for the property.

Right now, according to City Hall staffers, the turnaround for someone interested in buying land from the city, in an absolute best case scenario, is about nine months.

The Land Bank was designed to solve this mess. Yet it's still not operational due to bureaucratic wrangling and what one source described as "internal divisions."

"They also need to do a lot of work just on inventory for city-owned lots they're acquiring," said Rick Sauer, head of the Pennsylvania Association of Community Development Corporation, a major advocate for the Land Bank's creation.

Individuals involved with the Land Bank and outside observers alike added that the outgoing Nutter administration has not made it a priority to push past these issues.

"The current administration, for their legacy, is concerned about other things," said economist Kevin Gillen, a senior research fellow with Drexel University's Lindy Institute and a consultant for the Land Bank. "They probably figured that once the Land Bank was created, that was an accomplishment. But the real payoff in the Land Bank, the real change it's going to make, isn't going to be for years down the road, for the next administration."

Once its labor issues are resolved, the biggest issue facing the Land Bank is getting district Council members to agree to let the authority put city-owned land up for sale.

"The hope is that the administration will sit down with district Council members to begin those conversations in the fall," said Sauer.

Some observers say that even in its half-functional state, the Land Bank could be doing more to get land onto tax rolls — through a closer partnership with the backlogged Sheriff's Office.

Currently the Land Bank is focused on absorbing a massive collection of city-owned lots from a variety of different agencies, with plans down the road to acquire more lots independently. Kromer believes it would be more effective for the Land Bank to start exercising its ability to get "first dibs" on properties headed to sheriff's sale.

When asked about teaming with the Sheriff's Office for strategic acquisitions, a Land Bank spokesman, Paul Chrystie said in an email, "It is premature to be talking about acquisition of tax-delinquent properties."

The Land Bank could also pay off outstanding liens and assemble lots into contiguous parcels that are more attractive to developers and affordable housing agencies than individual properties.

"Assemblage is a very easy way to create value for vacant lots," Gillen said.

Gillen also believes the Land Bank could be used as a tool to knock down severely blighted structures, do environmental remediation work, and "green" lots to make them more attractive for development. But the Land Bank's budget is relatively small to other urban areas, with just $4.5 million in startup funds — Cleveland's land bank received a federal grant for more than double that amount just to demolish blighted structures.