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.