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Land Recycling Task Force
June 3, 2011
City of Pittsburgh – Department of City City of Pittsburgh – Department of City PlanningPlanning
Agenda
City of Pittsburgh – Department of Neighborhood InitiativesCity of Pittsburgh – Office of the Mayor
Welcome, Introduction & UpdatesKyra Straussman, Urban Redevelopment
Authority
Committee Initial Summary RecommendationsJason Wrona, Buchanan Ingersoll & RooneyKendall Pelling, East Liberty Development, Inc.Kirk Burkley, Bernstein Law FirmBethany Davidson, Pittsburgh Community Reinvestment Group
State Legislation Update and Mayor’s SupportKendall Pelling, East Liberty Development, Inc.
Discussion of Recommendations Next Steps City of Pittsburgh – Office of the Mayor
Land Bank Committee
Preliminary Findings
City of Pittsburgh – Bureau of Police
Land Bank Structure Options
City of Pittsburgh – Department of Neighborhood InitiativesCity of Pittsburgh – Office of the Mayor
Consolidated City Department
Within the URA – new department or entity
Non-Profit
New Authority under the Municipal Authorities act (problem: Law does not allow the activity)
Land Bank Authority – under new state law
City of Pittsburgh – Bureau of Police
Land Bank Structure – Best 2 Options
City of Pittsburgh – Department of Neighborhood InitiativesCity of Pittsburgh – Office of the Mayor
Within the URA – new department or entityExisting expertise & structureLender and funder of developmentTax collection is not a permitted functionSocial/political baggageStrings attached: layers of regulations and funder restrictions
Land Bank Authority – under new state lawDesigned to be the ideal structure for land bankingDesigned to engage in tax collectionFew strings attached – few funder restrictions & requirementsEntrepreneurial entityCostly and time consuming to create a new authority
City of Pittsburgh – Bureau of Police
Land Bank Authority – HB 712
City of Pittsburgh – Department of Neighborhood InitiativesCity of Pittsburgh – Office of the Mayor
ProsDesigned to be the ideal structure for land bankingDesigned to engage in tax collectionFew strings attached – few funder restrictions & requirementsEntrepreneurial entityExempt from property taxesTransfer Tax Exempt (between City & URA)
ConsCostly and time consuming to create a new authorityNot yet adopted!
Urban Redevelopment AuthorityPros
Already land bankingExisting expertise & infrastructureTransfer Tax Exempt (between City & URA)Lender and funder of development
ConsLack of fundingSubject to property taxesTax collection is not a permitted functionSocial/political baggageDisposition Policy Practice
Finance Committee
Preliminary Recommendations
Financing a Land Bank: Costs
Start-Up Costs:$16m – to clear the backlog of liened
propertiesAnnual Operations
$3.7m – to Acquire new delinquent parcels, maintain the portfolio and fund disposition
Cost ComponentsAcquisitionMaintenanceDispositionOperations
Financing a Land Bank: Costs
Start-Up Costs:$16m – to clear the backlog of liened
propertiesAnnual Operations
$3.7m – to Acquire new delinquent parcels, maintain the portfolio and fund disposition
Cost ComponentsAcquisitionMaintenanceDispositionOperations
Financing a Land Bank: Revenue Options
Start-Up Capital Pursue large private foundation seed monies
Sustained Revenue Annual Bond Issuance: Taxing bodies made
whole; Bond paid off with, and additional revenue from, late tax payers’ penalty & interest
Operate Land Bank for 1-2 years to demonstrate performance prior to bond issuance
Public Sources: Dedicated Funding Delinquent Tax Collection additional interest and
penalty revenue
State Legislation and Mayor’s Support
Mayor Ravenstahl’s Practices & Initiatives
CARC Buy Back Mayor’s Green Up Pittsburgh
Program Demolition Budget Increases Community Land Reform
Initiative Online Permitting City’s First Comprehensive
Plan Land Reserve efficiencies
State Legislative Opportunities
Land banks bill‘House bill 712’ (revised) ready for re-introductionSponsor-Rep. John Taylor
House Urban Affairs Committee
Real estate tax sales billComprehensive reform of PA’s 5 tax sale laws
Draft bill is almost ready for circulationSponsor-Rep. Chris Ross (Chair, House Urban Affairs
Committee)
State Authorization for City & Pittsburgh School District to
Increase interest rate equal County interest rateCharge interest upon delinquency (not upon lien filing)Charge penalty
Leadership NeededSupport for State Legislation
Lead a group of mayors in supporting the bill Meet with legislative leaders and the Allegheny County
delegation to secure their supportReps: Turzai (Majority leader) and Dermody (Minority
leader)Rep Paul Costa: Chair, Allegheny County Democratic
Delegation
Support from administration staff in further analysis and developing the business plan for land recycling
Advocacy with local and national foundations
Discussion of Findings
Land Bank Committee
Discussion
New Municipal AuthorityPros
Single Purpose Entity – limits City’s liabilityExempt from transfer tax Statutorily exempt from property taxesFinancing guarantee by City is possible (under
MAA)Broad ability to acquire/sell/lease real propertyBroad ability to financeCan be somewhat entrepreneurial
ConsPractice of land banking is subject to challenge Requires action by sponsoring municipalityStart-up time & costs
Non-Profit Land Bank Corporation
Pros Single Purpose Entity – limits City’s liability Availability of private financing Entrepreneurial Reduced red tape as a private entity Private actor in real estate market
Cons Potential lack of transparency Subject to transfer tax & property tax Tension between public and private purposes Financing guarantee from City is very unusual Start-up time & costs No operating history / assets Link non-profit to tax collection funding? – Possible URA
loan
Land Bank Authority – HB 712 Pros
Designed to be the ideal structure for land banking Single Purpose Entity – limits City’s liability Exempt from transfer tax (City to Authority) Statutorily exempt from property taxes Financing guarantee by City is possible Broad ability to acquire/sell/lease real property Broad ability to finance Intended to be able to apply T-sale procedures Blank slate / no funder restrictions & requirements Entrepreneurial entity
ConsCostly and time consuming to create a new authorityAbility to directly engage in T-sale may require additional legislationNot yet adopted!
Urban Redevelopment Authority Pros
Already land banking (albeit on a smaller scale) Existing expertise & infrastructure Exempt from transfer tax Lender and funder of development Authorized to engage in blight reduction Property tax exempt as URA Single purpose entity – limit’s City’s liability
Cons Lack of available funding Web of restrictions Tax collection is not a statutorily permitted function Social/political baggage Disposition Policy Practice
Finance Committee
Discussion
2005-2009 Tax Delinquent Parcel Analysis 17,780 parcels tax delinquent in 2009/14% of all taxable parcels (tax-
exempts excluded) 4085 parcels 2008 tax delinquent only 8690 parcels more than 5 years delinquent 7932 (6% of all taxable parcels) considered abandoned (See Kennedy
Report for redemption assumptions) Abandoned properties are highly concentrated in weak markets areas Four (4) tax sales annually, each sale initiated by roughly 800 pre-sale
notices to property owners only; each sale exposing roughly 300 parcels for sale
62% of parcels redeemed between 2005 and 2009 45: annual average of parcels purchased at tax sale (2005-2009) 350: rough number of parcels put through tax sales for development
purposes 461: annual average of tax sale parcels taken by City (2005-2009) 225: annual average of tax sale parcels taken and resold by City (2005-
2009) 230-250: titles quieted annually
Location of Tax Delinquent Parcels
Revenue Options and Analysis
Revenue Options and Analysis
Next Steps
Next Land Recycling Taskforce Meeting:
Wednesday, September 7, 2011
(URA Wherrett Room 10-12)
Goal: Draft Business Plan Review