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Land Recycling Task Force

Land Recycling Task Force. June 3, 2011. Agenda. Welcome, Introduction & Updates Kyra Straussman, Urban Redevelopment Authority Committee Initial Summary Recommendations Jason Wrona, Buchanan Ingersoll & Rooney Kendall Pelling, East Liberty Development, Inc.

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Land Recycling Task Force

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  1. Land Recycling Task Force June 3, 2011

  2. Agenda • 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 – Department of City Planning City of Pittsburgh – Office of the Mayor City of Pittsburgh – Office of the Mayor City of Pittsburgh – Department of Neighborhood Initiatives

  3. Land Bank Committee Preliminary Findings

  4. Land Bank Structure Options • 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 – Office of the Mayor City of Pittsburgh – Department of Neighborhood Initiatives City of Pittsburgh – Bureau of Police

  5. Land Bank Structure – Best 2 Options • 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 – Office of the Mayor City of Pittsburgh – Department of Neighborhood Initiatives City of Pittsburgh – Bureau of Police

  6. Land Bank Authority – HB 712 • 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! City of Pittsburgh – Office of the Mayor City of Pittsburgh – Department of Neighborhood Initiatives City of Pittsburgh – Bureau of Police

  7. 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

  8. Finance Committee Preliminary Recommendations

  9. 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

  10. 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

  11. 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

  12. State Legislation and Mayor’s Support

  13. 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

  14. 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

  15. 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

  16. Discussion of Findings

  17. Land Bank Committee Discussion

  18. 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

  19. 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

  20. 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!

  21. 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

  22. Finance Committee Discussion

  23. 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

  24. Location of Tax Delinquent Parcels

  25. Revenue Options and Analysis Revenue Options and Analysis

  26. Next Steps Next Land Recycling Taskforce Meeting: Wednesday, September 7, 2011 (URA Wherrett Room 10-12) Goal: Draft Business Plan Review

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