January 16, 2014
It is anticipated that the
consolidation will streamline property sales, significantly lowering the
burdens for prospective purchasers.
On January 13, 2014,
Philadelphia Mayor Michael Nutter signed into law Bill No. 130156-A, creating
a municipal land bank for the city. With this law, Philadelphia became the
largest U.S. city to adopt a land bank and joins more than 75 cities and towns
nationwide that have established land bank programs to manage vacant
properties.
Philadelphia's land bank
legislation is authorized by Pennsylvania's Land Bank Act, P.L. 1239, No. 153,
which allows local governments to establish public authorities to manage the
purchase and sale of vacant municipally owned property. The goal of both the
state and city laws is to decrease the number of vacant properties in order to
reduce the detrimental social and economic impacts associated with vacant
properties. Currently, around 40,000 parcels of land are vacant in Philadelphia,
with the city owning close to 10,000 of those vacant properties.
The city's previous system of
managing vacant properties was disjointed, creating burdens for prospective
purchasers. Three separate city agencies owned and managed vacant city property,
and each of these agencies had different rules for property sales.
The new law consolidates
ownership and management of vacant properties into one authority—the land
bank—and the same rules for sales will apply to all property. It is anticipated
that the consolidation will streamline property sales, significantly lowering
the burdens for prospective purchasers. Additionally, the land bank will be
able to acquire tax-delinquent privately owned property more easily, which
could increase the number of properties managed by the city. Currently,
approximately 17,000 of the 30,000 privately owned vacant lots are tax
delinquent.
Although management of vacant
property will be consolidated under the new law, land sales will still involve
a multi-step process. Before land can be sold, the land bank's Board of
Directors must approve the sale; the City Council must approve a resolution;
and the Vacant Property Review Committee, an interagency advisory panel, must
also give its approval.
Mayor Nutter envisions the
program to be fully operational by the end of this year. Before it goes into
full effect, the land bank must be incorporated by the state, and the city must
provide a budget appropriation for the land bank, appoint permanent members to
the Board of Directors and transfer property to the land bank. The Board of
Directors will have 11 members, and at least 4 of its members are required to
be involved with nonprofit or advocacy organizations that deal with housing and
community development issues.
The city anticipates that
developers and other prospective purchasers will have a much easier time
navigating the administrative process and acquiring city-owned property.
Further, because the land bank will be able to acquire tax-delinquent property
more easily, purchasers may have the opportunity to acquire larger blocks of
land all at once without having to track down private owners or purchase at tax
sales.
As for other benefits, the
city also anticipates an increase in its tax revenue as formerly vacant land is
developed, and city residents can look forward to enhanced safety as formerly
vacant properties are developed.
For Further Information
If you have any questions
about this Alert, please contact George J. Kroculick, David R. Augustin, any member of the Real Estate Practice Group or the attorney in the
firm with whom you are regularly in contact.
Disclaimer: This Alert has
been prepared and published for informational purposes only and is not offered,
nor should be construed, as legal advice. For more information, please see the
firm's full disclaimer.
Source: Duane Morris
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