Executive Summary Fels Public Policy Challenge Team: Land Philadelphia (Tim Potens, Dan Gershwin, Matt Rader, Evan Smith, and Katie Milgrim)

Transcription

1 Executive Summary Fels Public Policy Challenge Team: Land Philadelphia (Tim Potens, Dan Gershwin, Matt Rader, Evan Smith, and Katie Milgrim) Introduction Land Philadelphia will transform Philadelphia s neglected, tax delinquent properties into the city s greatest asset in the battle to stabilize and grow thriving neighborhoods. In a radical departure from the current sheriff s sale process, Land Philadelphia will use tax delinquency as an opportunity to move at risk properties into responsible, stable ownership in a way that aligns with the city s homeownership and community planning policies. The new system will form a meaningful partnership between City Council, the Redevelopment Authority, and neighborhoods to break the cycle of disinvestment and decline that undermines stable neighborhoods citywide. Under Land Philadelphia s proposed reform, tax delinquent properties will no longer be sold through traditional sheriff s sales to relatively unknown private buyers. Instead, the City will transfer its tax delinquency interest in these properties to a land bank entity within the Redevelopment Authority (RDA). RDA will sell the properties to responsible private buyers under a managed process guided by the existing developer prequalification and redevelopment agreement procedures used for RDA projects. The RDA will monitor the sales to ensure that new owners invest in properties and return them to the tax rolls. If they do not, the RDA will reserve the right to take back the properties. The reform requires a mindshift from managed decline to opportunistic growth. The current sheriff s sale process encourages a cycle of disinvestment and decline. The properties are currently sold to individual buyers meeting rudimentary requirements, who are under no obligation to the City to improve or even occupy the properties. In the worst circumstances, previously tax delinquent properties can pass into the hands of speculators who sit on the properties in anticipation of market upswings, exacerbating neighborhood deterioration. The new process will focus on stabilizing taxdelinquent properties to protect their neighborhoods and plant the seeds for future growth. Existing Conditions Philadelphia needs a new approach to tax delinquent properties. Although recent, more aggressive efforts to recoup past due tax obligations have been modestly successful, the benefits are potentially fleeting. Over the course of three Sheriff s Sales in 2008 after the City began focusing on tax delinquent properties, the City collected $1.78M in Executive Summary Land Philadelphia 1

2 delinquent taxes through the sale of 81 properties out of 240 offered for sale. 1 At the time, there were an estimated 23,000 city properties with overdue tax obligations, for a total of $206M in tax delinquency. Taking in $1.78M in delinquent taxes was certainly better than the status quo, which had allowed these properties to accumulate tax delinquency for an average of 13 years each. However, this limited success does not justify continuing down a path of short term satisfaction of tax obligations at the expense of long term neighborhood prosperity. Unpaid taxes represent only a fraction of the revenue the city loses from tax delinquent properties. Philadelphia incurs much greater losses resulting from the current tax delinquency strategy: Loss of tax base. Selling a property at sheriff s sale can take years, allowing a delinquent taxpayer the opportunity to defer maintenance or abandon a property before it reaches sale. In some cases, properties decline so severely that they are demolished before reaching sheriff s sale. This reduces the value of a property and the long term tax revenues that the city can expect. Impact on neighboring properties. The decline of a property facing sheriff s sale can lead to deterioration in surrounding properties as owners face declining resale values. A 2005 study by the National Vacant Properties Campaign estimates that properties within 150 feet of vacant properties experience a $7,627 loss in value. 2 Cycle of decline. The City has very little control over who purchases properties at Sheriff s Sale. Even speculators and others who are delinquent in paying property taxes to the City are able to purchase properties at Sheriff s Sale, provided that they are not more than one year delinquent, or if they are engaged in a payment plan for past tax obligations. This illustrates a major failing of the Sheriff s Sale process. The City should be getting these properties into the hands of responsible, taxpaying citizens who intend to do something useful with the properties. Indirect costs of tax delinquency. Under the current system, tax delinquency is associated with vacancy. In Philadelphia, one in twenty five residential properties are vacant, and one in twelve commercial properties are vacant. Nearly 60% of the vacant, privately owned properties are tax delinquent. The direct costs of tax delinquent vacancy are estimated at $70M per year in lost tax revenue and expenditures. Indirect costs such as decreased neighborhood property values, increased utility costs for residents, expensive monitoring of vacant properties for safety hazards, and a host of other administrative costs push the $70M figure even higher. 1 Kostelni, Natalie, Tax Sale Gives City its Due Philadelphia Business Journal Vol. 27, Num. 25, August 8 14, The True Costs of Vacant Properties, National Vacant Properties Campaign, Page 1, Executive Summary Land Philadelphia 2

3 Sheriff s Tax Sale Process The Pennsylvania Real Estate Tax Sale Law (72 P.S ) provides the overarching legal framework for sale of properties with delinquent taxes. Because Philadelphia is a first class county, it is not explicitly bound by the Real Estate Tax Sale Law. However there appears to be a requirement under 53 P.S that tax delinquent properties be exposed to sheriff sale. In September 2007, the City of Philadelphia announced its intention to broadly address tax delinquency, including outstanding business and real estate taxes. 3 As previously mentioned, the City has begun to utilize the Sheriff s Sale process more aggressively, enlisting the assistance of Linebarger Goggan Blair & Sampson, LLP, a private law firm specializing in tax collection. Linebarger and the City began notifying the 23,000 delinquent taxpayers that their real estate would be sold if they did not pay their back taxes. When these notification efforts fail, Linebarger and the City Solicitor s Office file civil tax actions against delinquent taxpayers at the Philadelphia Court of Common Pleas. The Court of Common Pleas can then issue an order requiring the Sheriff to attempt to sell the property to an outside buyer, with the goal of recouping delinquent taxes. At no point during the process does the Sheriff s Office or the City of Philadelphia own the property. The Sheriff s Office simply enforces the judicial order, auctioning off the property, and collecting the sale price from the buyer. Linebarger recoups its fees and the City takes a portion of the revenue to pay the delinquent tax liability. Interested parties are forced to buy blindly and there is no obligation to use a property once purchased. The highest bidder is expected to immediately deposit 10 percent of his or her bid, and is obligated to pay the remainder of the bid within 30 days. Successful purchasers must also demonstrate prior to settlement that they are either no more than one year delinquent in paying real estate taxes to the City, or that they have entered into a payment plan to repay delinquent taxes. The Sheriff s Office makes no guarantee as to clean title and buyers are expected to research the property prior to purchase. Delinquent taxpayers entering into a recognized repayment plan with the City can have the sale of their property postponed. The Philadelphia Code provides a number of exemptions to real estate taxes for senior citizens and other low income homeowners. In general, these homeowners enter into agreements with the City to pay real estate taxes on an installment plan. (Philadelphia Code ) Tax sales are of course inextricably intertwined with tax assessment. The recent Tax Travesty series in the Philadelphia Inquirer pointed to many of the worst inequities, leading to the creation of an independent Board of Revision of Taxes which cedes more control to City Hall. 4 Until every property citywide can be reassessed though, piece meal 3 Kostelni. 4 Executive Summary Land Philadelphia 3

4 reassessment will cease until In the meantime, the City should consider how it can revamp its tax sale process so that neglected, tax delinquent properties can be dealt with quickly and efficiently. Summary Proposed Initiative Land Philadelphia proposes a transformation of the disposition process for neglected, tax delinquent properties. We propose to end the current sale of tax delinquent properties through Sheriff s Sale, through state statute change. Instead, the City will sell its tax delinquency interests to a land bank entity constructed within RDA. The RDA will finance purchase of the tax delinquency interests at a mutually agreed upon rate by floating a bond, allowing the City to quickly recoup much of the past due tax revenue. RDA will sell the properties to responsible owners under a managed sale program. The RDA will allocate the proceeds from sales to three areas: 1) Financing the program, including debt service on the bond issued to purchase delinquent tax interests from the City. 2) Funding a City Council community improvements fund, allocating a percentage of the sale price of a given property for the discretionary use of the Councilperson in the relevant district. 3) Financing strategic acquisition of additional properties to support redevelopment goals. Targeted Outcomes Land Philadelphia views effective treatment of tax delinquent properties as the key to stabilizing neighborhoods and unlocking value in adjacent properties. Realizing this value requires an entrepreneurial approach with a long term view towards placing properties in responsible ownership and growing tax base. The proposed reform will create value from tax delinquent properties by: Placing properties into the hands of responsible owners. The RDA will use its existing pre qualification process to evaluate purchasers of tax delinquent properties to ensure that they have the financial and operational capacity to maintain, pay taxes on, and operate the properties they purchase. 5 Kerkstra, Patrick & Tanfani, Joseph, City Reassessment Put on Ice for 2 Years Philadelphia Inquirer, Jan. 27, tml?page=1&c=y\ Executive Summary Land Philadelphia 4

5 Providing financing to stabilize tax delinquent properties. The RDA can use HUD entitlement funds to make rehabilitation loans to the purchasers of deteriorated tax delinquent properties. In addition, the RDA can work with the OHCD to help distressed homeowners restructure their financing to enable them to retake control of their properties. RDA adds value by cleaning title and assisting new owners with the entitlements process. Managing the process after sale. The RDA can use its existing redevelopment agreement process to set clear standards for reinvestment and maintenance after sale. Funds from the sales can support a staff to inspect properties after sale and, if new owners fail to comply with the redevelopment agreements, retake properties. Reducing the time and cost of recovering delinquent taxes. Following the Genesee County example, the RDA will float a bond to purchase tax delinquency interests on an annual basis. Thereafter, RDA will quickly move to sell the properties through a managed, strategic process. The City will continue to receive compensation for the tax delinquency interest as it does through Sheriff s Sales, but in a more predictable fashion. Revenue from sales will cover the RDA s costs of financing the transaction and managing the program. Increasing the city s tax base. By stabilizing tax delinquent properties early in their cycle of decline, the reform will protect and grow the city s tax base. This will generate much greater revenue than the delinquent tax revenues recovered under the current sheriff s sale process. Similar Initiatives Similar approaches have been successful in a number of cities. New York City, New York New York City s Third Party Transfer program replaced the City's previous in rem foreclosure process. In the past, the City took possession of residential properties that had simply ceased paying their property taxes through foreclosure. Under Third Party Transfer, New York uses a targeted foreclosure action on several hundred tax distressed properties in a single, annual filing. This gives the City an opportunity to work with residents, giving them the option of paying their outstanding taxes. Property owners who refuse to do so have their properties moved in a timely manner to entirely new, third party ownership at the end of the foreclosure process. Owners who have paid their tax liens in full retain their property, those who choose not to lose their property in foreclosure. The Third Party Transfer program considers the quality of the new owner s documented history and qualifications. Genesee County, Michigan From 1970 to 2000 Genesee County, which includes the city of Flint, lost 38% of its Executive Summary Land Philadelphia 5

6 population after the GM plant closed. This resulted in 12% of the county's housing stock being abandoned. In response, the state law for the sheriff sale process was revised to allow a quicker process that was both more forgiving to those suffering from hardships and also more attractive to reinvestment by providing a clear title and eliminating tax liens. All tax delinquent properties were considered brownfields and were given tax exempt status. The statewide Michigan Land Bank Fast Track Authority was formed to manage this process and individual counties could enter into intergovernmental agreements with the authority to form county level land banks. The Genesee County Land Bank has assembled a team of experts that decides whether a property should be sold, demolished, or developed. Since 2003 the Genesee County Land Bank has addressed half of the total vacancies and has been involved with a foreclosure prevention cases for approximately 2.5% of the county's households. 6 The National Vacant Properties Campaign has drawn from the experience of Genesee County and other jurisdictions, and has assembled a collection of policy resources. The Campaign also provides technical assistance to local governments. 7 Conclusion Land Philadelphia proposes a paradigm shift in the approach to tax delinquency. By envisioning tax delinquent properties as an opportunity, rather than a liability, Philadelphia can create a long term solution that will ultimately return properties to the tax rolls under responsible ownership. 6 Kildee, Dan, Urban Sustainability Forum, Sept 17, Executive Summary Land Philadelphia 6

7 Campaign Planning and Implementation The initiative is multi phased and will involve stakeholders and key players at multiple stages of the process. During the first phase, we will identify and contact experts within key government departments, the non profit and academic sectors, as well as other experts in the field such as lawyers, developers, and consultants. The goal of contact is to better understand perceived and real barriers to the creation and management of a land banking entity in Philadelphia. Obtaining several differing perspectives is a critical part to developing an effective strategy. It is also an important step in developing consensus by involving key players early in the process. We will enlist the support of regional organizations such as 10,000 Friends of Pennsylvania, Economy League of Greater Philadelphia, and the Urban Land Institute. Local foundations such as William Penn Foundation, Fels Fund, and the Pew Charitable Trust may provide support during the research phases. During the research phase we will form a Steering Committee to provide organizing structure and political momentum to the process. The Steering Committee may include the Directors of the Redevelopment Authority, Department of Public Property, Philadelphia Housing Authority and Philadelphia Housing Development Corporation, Planning Commission, Philadelphia Industrial Development Corporation, the Mayor, and City Council members. Public Opinion Research will follow the research phase. This will be an opportunity to present the issue in a localized way, framing the issue appropriately for concerns throughout the city. This is also an opportunity to understand and address citywide voters concerns and the positions of City Council members. Once data has been gathered and analyzed, a simple central theme and branding will be developed. Following the public opinion research phase, the group will work to establish a critical consensus among the City Council, the City s Delegation to the State Legislature, and other elected officials from the City of Philadelphia. Once consensus is developed, the City lobbyist will work with the City s delegation to develop broader political consensus for this effort. We believe that Allegheny County may be a viable partner in this effort. Together these legislators will sponsor the legislation at the state level. We don t anticipate significant opposition as this initiative has the potential to benefit all counties facing delinquency. Organizations with sympathetic missions may be contacted at this point to mobilize further support among a broader base. Once the legislation is passed in Harrisburg, the issue moves to City Council. Council will then work towards establishing an MOU that empowers the City to implement the program. This legislation will act as the guiding framework for the entire program and will direct the City to sell delinquent tax interests to the RDA and guidelines for how the RDA sells the properties and uses the funds. This phase will include additional Op Eds, outreach to stakeholders, and community meetings. Our public opinion outreach phase will inform the level and location of Campaign Planning Narrative Land Philadelphia 1

8 these efforts. The goal is to ensure voter support for this effort so that City Council remains supportive. With City Council s guidelines in hand, the RDA will develop a set of Redevelopment Agreement Standards to classify how certain types of properties will be sold. This classification rubric will consider sale price and community planning goals. Insights provided by the steering committee during the research phase will help guide these efforts. Sharing the new Board s goals and objectives with the public occurs in the next phase. A website and blog, press conferences, and a launch event will kick off the effort. Meetings with editorial boards, presentations to special interest groups, and neighborhood engagement will permit the Board to penetrate different markets. The land bank s long term success depends on its ability to produce early, strong results. Quickly after the creation of the Redevelopment Agreement Standards, the land bank will execute a series of (acquisitions and) sales. The RDA s initial purchases will be informed by City Council and key Department Heads through regular meetings. With the sales completed, we will publicly present big checks to key constituencies that are of interest to the land bank s key political supporters (e.g. school district, libraries, etc.). Following initial activity, the land bank will undergo a first cycle of internal and external review. During this phase, management will work with the advisory board to select an interval for program review (e.g. six months, one year, two years) and protocol for the review process. The land bank will hold its first biennial meeting of the stakeholders following the review phase. Here, it will present the results of the first phase, and plans for the next interval. The biennial meetings will provide an opportunity for broad comment on the land bank s efforts which the management team will use to correct course. The meetings will be accompanied by a written publication highlighting the land bank s successes, failures, and next step goals. Campaign Planning Narrative Land Philadelphia 2

9 ACTIVITY EARLY 2012 Individualized conversations with potential partners and members of advisory board Planning meetings and phone calls with partners to define how Land Philadelphia will work with the partners on a daily, weekly, and monthly basis Definition of point persons Based on initial feedback from partners Land Philadelphia has follow up conversations to understand concerns and possible hurdles Frame Issue: create a message platform common message to be used by partners in early phase of campaign. Address name/branding issues Establish clear guidelines on how documents/messages released to others will be handled and approval process Train partners on issues and communications strategy SEEK SEED FUNDING FOR RESEARCH AND PLANNING Define communications and reporting schedule for funders Research (Market, Public Opinion, & Legal) Reframe issue? Launch informational website Develop communications strategies and tactics to Develop targeted be used through the 3 media list; target key month public phase reporters, editorial during early summer writers, columnists, show hosts Tactics listed to the right will be pursued in a proactive and reactive way since there is a need to be flexible and responsive to Develop issue brief and expert source list for media Pitch story idea to print and broadcast media APRIL 2012 MAY 2012 JUNE 2012 LATE 2012 Campaign Planning Narrative Land Philadelphia 3

10 events happening that connect to the issue and help leverage the collaborative position and messages. Create sample advocacy materials for use by grassroots networks Press Conference by Mayor Community Outreach Make Presentations at community meetings, have conversations w/ ward leaders and leaders of CDCs, etc. Consider PSA as tactic Work with bloggers and targeted websites (e.g. PlanPhilly.com) to arrange interviews and stories Develop tactics to promote community meetings and rallies Present at conferences and relevant professional associations Information kits to influential individuals. (legislators, business, media, community leaders, etc.) Kits will be tailored to specific audience. Letters to editors Letters to policy makers Talking points for visits with policy makers Talking points for community leaders engaging others Start Program Track media to determine influence of campaign. Provide summaries that evaluate and measure impact Campaign Planning Narrative Land Philadelphia 4

11 Voters Council Harrisburg Mayor Pittsburgh & other cities Community Reps CDCs, ward leaders Media Philadelphia Region State Delegation Business Chamber of Commerce Bldg Industry Ass n LAND PHILADELPHIA Partner Orgs The Reinvestment Fund Economy League Nat l Vacant Prop. Campaign Funders: e.g. Wm Penn, Pew, Fels Fund

12 Op Ed for Philadelphia Inquirer Philadelphia s system for dealing with tax delinquent properties is broken. Currently, the City recovers past due property taxes by selling properties to virtually anonymous private buyers in a blind buy Sheriff s Sale. While these sales allow the City to recuperate a portion of the delinquent taxes, the City misses an opportunity to use tax delinquency as an engine for neighborhood stabilization. Land Philadelphia proposes a mindshift from managed decline to opportunistic growth. We intend to create a system that both encourages long term growth of the City s tax base and strengthens communities. What if, rather than putting tax delinquent properties up for auction and hoping for the best in terms of responsible ownership, the City thought more strategically about turning these properties into revenue generators? What if the goal was to put all tax delinquent properties back into the market with responsible owners to ensure long term tax revenues? The City should abandon the current shortsighted Sheriff s Sale process, and enable the Redevelopment Authority to manage the sale of tax delinquent properties. Using buyer qualification standards and redevelopment agreements, the Redevelopment Authority can ensure that buyers actually invest in and improve these properties, returning them to the tax rolls and increasing revenue for the City. Through partnerships with City Council, the Planning Commission, and neighborhood groups, the Redevelopment Authority will make strategic property sale decisions. Using revenues generated from these sales, the RDA will finance its own operations and make targeted neighborhood reinvestments. Philadelphia can create a long term solution to the tax delinquency issue. By envisioning taxdelinquent properties as an opportunity, rather than as a liability, we can create stronger communities, grow the tax base, and improve the overall health of the city economy. Element of Communications Plan Land Philadelphia 1

13 Mayor Michael Nutter City of Philadelphia Philadelphia, PA March 17, 2010 Dear Mayor Nutter, We represent Land Philadelphia, an initiative to reform vacant land management in the City of Philadelphia. Under your administration, the City has made great strides towards strengthening communities through better land use planning and strategic growth initiatives. In this vein, we ask that you support our proposal to improve the current fragmented and inefficient Sheriff Sale process for tax delinquent properties. We believe that under the leadership of Terry Gillen, the RDA can usher previously tax delinquent properties to active use and return them to the tax rolls. Tax delinquent properties have long been a problem in Philadelphia, greatly reducing the City's tax base, a constant problem in times of fiscal strain. These properties are often associated with higher instances of vacancy and neglect. In an innovative departure from the current Sheriff s Sale process, Land Philadelphia will use tax delinquency as an opportunity to move properties into responsible, stable ownership in a way that aligns with the City s homeownership and community planning policies. The new system will form a meaningful partnership between City Council, the Redevelopment Authority, and neighborhoods to break the cycle of disinvestment and decline that undermines stable neighborhoods citywide. The Redevelopment Authority is tasked with addressing these issues, but the process for purchasing and selling takes place at the level of individual properties rather than considering the development needs of an area. There is no role for the planning commission in the process, no role for neighborhood groups or CDCs, and very little thought given to encouraging smart development. Between the RDA and sheriff sales, the process for recycling vacant and tax delinquent property is too scattered to make a serious impact. We propose to end the current use of Sheriff s Sale for tax delinquent properties through a state statute change. Instead, the City will sell its tax delinquency interests to a land bank entity constructed within RDA. The RDA will finance purchase of the tax delinquency interests at a mutually agreed upon rate by floating a bond, allowing the City to quickly recoup much of the past due tax revenue. RDA will manage the sale of the properties to responsible owners under a managed sale program. The revenues RDA makes on the sales will be redirected toward repaying the bonds, buying more property, and making targeted community investments in the districts where the sales

14 occur. Beyond the sale revenues, revitalizing these neighborhoods will improve property values, increasing the City s tax base in the long term. Given the inter departmental nature of the proposed landbank, we need support across all levels of City government. Your support of this proposal is vital to the success of this project. Sincerely, Katie Milgrim Land Philadelphia

15 Representative Dan Frankel House of Representatives, Allegheny County 2345 Murray Avenue, Suite 205. Pittsburgh, PA March 17, 2010 Dear Representative Frankel, We represent Land Philadelphia, an initiative to reform vacant land management in the City of Philadelphia. In many ways, our efforts are similar to your work with the Allegheny County Democratic Delegation and its efforts to remedy the Pennsylvania s property assessment process, which you referred to as broken and fragmented. Similarly, counties throughout Pennsylvania are working with a fragmented and inefficient system of property disposal. We believe that our proposed model could be easily applied in Allegheny County, and your support for our efforts in Harrisburg will allow us all to approach the tax delinquency problem in a more strategic, efficient fashion. Tax delinquent properties have long been a problem in Philadelphia, and in many counties throughout the state. These properties greatly reduce city tax bases, a constant problem in times of fiscal strain. Additionally, these properties are often associated with higher instances of vacancy and neglect. In an innovative departure from the current sheriff s sale process, Land Philadelphia will use tax delinquency as an opportunity to move properties into responsible, stable ownership in a way that aligns with the city s homeownership and community planning policies. The new system will form a meaningful partnership between Philadelphia City Council, its Redevelopment Authority, and neighborhoods to break the cycle of disinvestment and decline that undermines stable neighborhoods citywide. The Redevelopment Authority is tasked with addressing these issues, but the process for purchasing and selling takes place at the level of individual properties rather than considering the development needs of an area. There is no role for the planning commission in the process, no role for neighborhood groups or CDCs, and very little thought given to encouraging smart development. Between the RDA and sheriff sales, the process for recycling vacant and tax delinquent property is too scattered to make a serious impact. We propose to end the current use of Sheriff s Sale for tax delinquent properties through a state statute change. Instead, the City will sell its tax delinquency interests to a land bank entity constructed within RDA. The RDA will finance purchase of the tax delinquency interests at a mutually agreed upon rate by floating a bond, allowing the City to quickly recoup much of

16 the past due tax revenue. RDA will manage the sale of the properties to responsible owners under a managed sale program. The revenues RDA makes on the sales will be redirected toward repaying the bonds, buying more property, and put towards targeted community investments in the districts where the sales occur. Beyond the sale revenues, revitalizing these neighborhoods will improve property values, increasing the City s tax base in the long term. We need your support in Harrisburg, and we would like to arrange a summit where legislators from Philadelphia and Allegheny County can meet to discuss the feasibility of our proposal. We can move forward together and create a system that encourages long term growth rather than quick fixes. We are most interested in your input regarding our proposal, and we would be happy to send you more information if you are interested. Sincerely, Katie Milgrim Land Philadelphia

17 Jeremy Nowak The Reinvestment Fund 718 Arch St, Suite 300N Philadelphia, PA March 17, 2010 Dear Jeremy, Allow me to reintroduce myself. While studying at Fels in the year I interned at The Reinvestment Fund helping with the Neighborhood Gardens Association project and impact assessment for Crane Arts and Avenue North. I am writing to seek your involvement in Land Philadelphia, a campaign to reform the management of neglected, tax delinquent properties in Philadelphia. As someone who has dedicated your career to market- building and built one of the most successful CDFIs in the country, your help would be invaluable and I believe Land Philadelphia s goals of improving government efficiencies, recapturing delinquent taxes, and revitalizing neighborhoods mesh well with The Reinvestment Fund s mission. We believe this issue has the potential to address a long- term problem in Philadelphia while also having enough quick wins to sustain interest and hope that you will consider joining us. Land Philadelphia is proposing a revamp of the process by which the RDA handles the acquisition and disposition process. The new process will establish an inter- departmental land bank entity benefiting from the expertise of representatives from the Planning Commission, City Council, the RDA, the Philadelphia Housing Authority, and others. By consolidating properties that are currently sold in a fragmented way within the land bank, they may be more easily prepared for redevelopment. With the properties prepared with City and neighborhood planning goals in mind, they may then be sold. The revenues RDA makes on the sales will be redirected toward repaying the bonds, buying more property, or put towards targeted community investments in the council districts where the sales occur. We hope that this funding could possibly be to leverage other market- building developments. The above ideas are just a sketch of some preliminary ideas. I would be happy to provide more information and would be honored if you would arrange a time to provide us with your initial feedback and thoughts and to talk about whether The Reinvestment Fund might be interested. Sincerely, Evan Smith Land Philadelphia

18 Councilman Frank DiCicco First District, City of Philadelphia 1600 Arch Street Philadelphia, PA March 17, 2010 Dear Councilman DiCicco, We represent Land Philadelphia, an initiative to reform vacant land management in the City of Philadelphia. Your support of the RDA s pilot program to streamline the disposal of City-owned land was a vital part of its implementation. We are counting on your continued support as we work with the RDA to improve the efficiency of the City s land management. Tax delinquent properties have long been a problem in Philadelphia, greatly reducing the City's tax base, a constant problem in times of fiscal strain. These properties are often associated with higher instances of vacancy and neglect. In an innovative departure from the current sheriff s sale process, Land Philadelphia will use tax delinquency as an opportunity to move properties into responsible, stable ownership in a way that aligns with the city s homeownership and community planning policies. The new system will form a meaningful partnership between City Council, the Redevelopment Authority, and neighborhoods to break the cycle of disinvestment and decline that undermines stable neighborhoods citywide. The Redevelopment Authority is tasked with addressing these issues, but the process for purchasing and selling takes place at the level of individual properties rather than considering the development needs of an area. There is no role for the planning commission in the process, no role for neighborhood groups or CDCs, and very little thought given to encouraging smart development. Between the RDA and sheriff sales, the process for recycling vacant and tax delinquent property is too scattered to make a serious impact. We propose to end the current use of Sheriff s Sale for tax delinquent properties through a state statute change. Instead, the City will sell its tax delinquency interests to a land bank entity constructed within RDA. The RDA will finance purchase of the tax delinquency interests at a mutually agreed upon rate by floating a bond, allowing the City to quickly recoup much of the past-due tax revenue. RDA will manage the sale of the properties to responsible owners under a managed sale program. The revenues RDA makes on the sales will be redirected toward repaying the bonds, buying more property, and making targeted community investments in the districts where the sales occur. Beyond the sale revenues, revitalizing these neighborhoods will improve property values, increasing the City s tax base in the long term.

19 Given the inter departmental nature of the proposed landbank, we need support across all levels of City government. We would like to invite you to a stakeholder meeting of City and elected officials to discuss the opportunities and challenges to such a proposal. We want your input on this proposal and support towards solving the development problems Philadelphia faces. Sincerely, Katie Milgrim Land Philadelphia