Inga Saffron has a great column on the blighted gateway to Center City Philly between 21st and 22nd Street on Market that I read as a story about how the land value tax could help Philadelphia in a concrete way.
The main villain of the story is Richard Basciano, and the activity we want to shame him for is land speculation:
Much of what does remain of Rappaport’s kingdom is now controlled by Richard Basciano, a close friend and business associate who served for a time as executor of his estate. Dubbed “the undisputed king of Times Square porn” by the New York Times – back in those ancient days when Times Square and porn were synonymous – Basciano has hewed faithfully to Rappaport’s recipe on real estate: Hold tight onto properties. Invest nothing, even as your buildings crumble in full public view. And wait patiently for the big payday to come along.
Now Basciano is saying that he wants to find a developer for these two blocks, and he’s willing to level all the properties he owns to make the parcel more attractive.
But now he needs the city’s help to 1) acquire the remaining properties on the blocks that are owned by other people and 2) agree to move a city firehouse.
There are two obstacles standing in the way of Basciano’s plan. One is that the other landowners on the blocks are also playing the speculation game, holding out for more money for their properties. The other is that the city doesn’t want to move the firehouse.
Until these issues get resolved, Basciano is going to knock down his buildings and pave a giant surface parking lot in their place until the blocks are ready to be developed, whenever that is:
Basciano abruptly shut down the porn operation last month, over a rent issue. He now says he will level everything he owns on the two blocks in January to create surface parking and to make the sites more appealing to developers. But who knows how long this new blight will serve as Center City’s gateway?
To fix the problem of blight on these blocks, 3 things need to happen. The city needs to agree to move the firehouse, the other landowners need to sell their parcels relatively quickly, and Basciano and the city need to approve a building proposal for the site.
These blocks are in a CMX-4 zone. That means high-rise development. You’re allowed to build a skyscraper this lot. A whole lot of tax revenue for city services is at stake here. But because everybody has an incentive to speculate, and hold off on developing the land, the city’s not going to see that revenue for who knows how long.
Here is how a land value tax would help this situation.
Under the city’s current tax rate spread between land and buildings, the high-rise across the street from Basciano’s blighted properties pays dramatically higher taxes than Basciano.
Under the land value tax, Basciano and the other blighted building owners on those blocks would pay roughly the same tax bill as the high-rise building.
They’d pay taxes on the highest and best use – what could be developed on that land, rather than the existing use. The higher land tax bill would push the other landowners to cut a deal with Basciano sooner, and it would push Basciano to develop the site sooner, since he’d be paying skyscraper-size taxes on his crappy parking lot.
This would be good for the city in a number of ways. First, there would be no more blight in an important gateway to Center City. Second, city government would collect more revenue for public services in a pro-growth way. Third, the resulting increase in office space and/or housing units would help push down office and residential rents in a desirable part of the city, taking some gentrification pressure off of peripheral neighborhooods. Fourth, more high-rises on Market Street will enable even more people to get to work via SEPTA train, increasing ridership and fare collections and the transit system’s financial outlook.