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