Recipe for Muting the Economic Crisis: Announce a Fire Sale for City Land

What can Philadelphia do to make itself stand out in hard times, when “race to the bottom” desperation causes cities to outbid each other for the right to get a corporation to relocate into their city? What can Philadelphia offer firms and families aside from tax breaks? How can Philadelphia increase revenue without slicing and dicing community infrastructure like libraries and firehouses?

The City of Philadelphia has a bank of assets that few cities possess: around 11,000 parcels of land with about $166 million market value (actually far below what the land is actually worth).

Why do we write “around” and “about"? Because the data is at best hazy and vague. The Foundation and Our Common Wealth pulled together all our information from available city sources, such as the BRT database. When we paid a visit to the RDA offices, for example, our staffer was told there is no list of properties “publicly provided.” Well.

We know that inventories exist, and we are confident that various city departments and elected officials have this list of what is essentially public property and information. Citizens, the media and researchers should have access to this information as well.

Over the decades, Philadelphia, with agencies like the Redevelopment Authority (RDA) and the Philadelphia Industrial Development Corporation (PIDC), and the City itself has amassed these parcels of land due to the collapse of the manufacturing age, and high taxes.

Today, these parcels sit, with no real strategic plan to get the land back onto the tax rolls. The city has invested millions in cleaning, bulldozing and scraping these parcels. They are ready to go, after one has jumped through a series of hoops that would discourage all but the hardiest of interested buyers.

The withdrawal of so much physical space from the tax rolls keeps the tax base artificially low, and makes private market land values artificially high, even in the most capital-averse parts of the city.

Restrictions are placed on the process of acquiring property that do not exist in the private real estate and land markets. Especially egregious are the vacant residential parcels that the city took for back taxes. They should be sold or consolidated ASAP.

Our Plan: Move That Land

In a recession, markets get tight. In this meltdown, they become locked. Considering the restrictions of suburban land in our region, and other cities sitting on land also doing nothing, a bold move to have a fire sale on that land makes sense.

There are few sparks of market and private economic activity sputtering up and down the I-95 corridor. From DC to Boston, not much is happening. A tool to help Philadelphia suck in that market activity is to make land available now. By so doing, land prices will drop. The availability of land will leverage the speculative owners of other, privately held vacant or blighted land parcels into selling their land, at long last.

If this downturn lasts for years as the Mayor and others say, then selling the land can bring in needed revenue through sales, and then property taxes on the land. To further the effect, even in a recession, the Henry George Foundation would suggest that any new improvement on that land be permanently abated, and the tax rate on land be raised. Making Philadelphia a unique and inexpensive city for employers and homeowners to buy land, can help suck up what little economic activity is left into our city. Our location, infrastructure and connections to the world make that heavy lifting a little lighter.

As always, we’d suggest that all taxable buildings be abated, and all taxable land becomes the preferred source of revenue for the city. This proposal, coupled with a land value tax would generate at least $7 or $8 million each year in added tax revenue, which could be used for community purposes. Why cut, when there is so much that can be added?