Land Recycling Task Force June 3, 2011

City of Pittsburgh – Department of City Planning Agenda City of Pittsburgh – Department of Neighborhood InitiativesCity of Pittsburgh – Office of the Mayor  Welcome, Introduction & Updates Kyra Straussman, Urban Redevelopment Authority  Committee Initial Summary Recommendations Jason Wrona, Buchanan Ingersoll & Rooney Kendall Pelling, East Liberty Development, Inc. Kirk Burkley, Bernstein Law Firm Bethany Davidson, Pittsburgh Community Reinvestment Group State Legislation Update and Mayor’s Support Kendall 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 entity  Existing expertise & structure  Lender and funder of development  Tax collection is not a permitted function  Social/political baggage  Strings attached: layers of regulations and funder restrictions  Land Bank Authority – under new state law  Designed to be the ideal structure for land banking  Designed to engage in tax collection  Few strings attached – few funder restrictions & requirements  Entrepreneurial entity  Costly 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  Pros  Designed to be the ideal structure for land banking  Designed to engage in tax collection  Few strings attached – few funder restrictions & requirements  Entrepreneurial entity  Exempt from property taxes  Transfer Tax Exempt (between City & URA)  Cons  Costly and time consuming to create a new authority  Not yet adopted!

Urban Redevelopment Authority  Pros  Already land banking  Existing expertise & infrastructure  Transfer Tax Exempt (between City & URA)  Lender and funder of development  Cons  Lack of funding  Subject to property taxes  Tax collection is not a permitted function  Social/political baggage  Disposition Policy Practice

Finance Committee Preliminary Recommendations

Financing a Land Bank: Costs  Start-Up Costs:  $16m – to clear the backlog of liened properties  Annual Operations  $3.7m – to Acquire new delinquent parcels, maintain the portfolio and fund disposition  Cost Components  Acquisition  Maintenance  Disposition  Operations

Financing a Land Bank: Costs  Start-Up Costs:  $16m – to clear the backlog of liened properties  Annual Operations  $3.7m – to Acquire new delinquent parcels, maintain the portfolio and fund disposition  Cost Components  Acquisition  Maintenance  Disposition  Operations

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-introduction Sponsor-Rep. John Taylor House Urban Affairs Committee  Real estate tax sales bill Comprehensive reform of PA’s 5 tax sale laws Draft bill is almost ready for circulation Sponsor-Rep. Chris Ross (Chair, House Urban Affairs Committee)  State Authorization for City & Pittsburgh School District to Increase interest rate equal County interest rate Charge interest upon delinquency (not upon lien filing) Charge penalty

Leadership Needed  Support for State Legislation  Lead a group of mayors in supporting the bill  Meet with legislative leaders and the Allegheny County delegation to secure their support  Reps: 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 Authority  Pros  Single Purpose Entity – limits City’s liability  Exempt from transfer tax  Statutorily exempt from property taxes  Financing guarantee by City is possible (under MAA)  Broad ability to acquire/sell/lease real property  Broad ability to finance  Can be somewhat entrepreneurial  Cons  Practice of land banking is subject to challenge  Requires action by sponsoring municipality  Start-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  Cons  Costly and time consuming to create a new authority  Ability to directly engage in T-sale may require additional legislation  Not 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

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 ( )  350: rough number of parcels put through tax sales for development purposes  461: annual average of tax sale parcels taken by City ( )  225: annual average of tax sale parcels taken and resold by City ( )  : 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