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Nearly 100,000 properties in Philadelphia are encumbered with debt for failure to pay the city’s real estate tax. In all, the city is owed over half a billion dollars in unpaid real estate taxes alone.
These properties represent one of the city’s biggest challenges. But, thanks in part to new city laws, they also represent one of its biggest opportunities.
Recently, Philadelphia’s City Council has been holding hearings around one part of the proposed solution to the city’s tax-debt problem: the city’s renewed effort to collect the taxes it’s owed.
At the same time, our map, “Landscape of Possibility,” shows why collection will have to be just one part of the solution to the problem of putting abandoned and debt-ridden property back into productive, tax-paying use.
The city’s struggle with collections, chronicled in a series by PlanPhilly and the Inquirer, is formidable: a 2011 report by the latter cited Philadelphia as having the “least-effective delinquent property tax collection system of the nation’s biggest cities.”
Last June, shortly following a special report for the Inquirer by Patrick Kerkstra tying much of the debt to absentee landlords and shell companies, Philadelphia’s City Council approved an ordinance requiring the city to pursue debt more aggressively, while formalizing a way for homeowners who owed back taxes to enter into payment plans. Tax delinquency has declined—but only by about $18 million over the last year.
But the focus on collection leaves out another part of the overall problem: the properties for which back taxes will never realistically be paid.
A 2013 study by the Pew Charitable Trust concluded that while properties with less than five years’ delinquency are a good target for collection enforcement, properties that have been delinquent 10 years or more are far less likely to ever be collected upon.
Our own analysis found that of the roughly 96,000 tax-delinquent properties in Philadelphia:
- About 58,000, or 60 percent, have been tax-delinquent five years or less.
- Another roughly 25,000, or 26 percent, have been delinquent more than 10 years.
- 15 percent of tax-delinquent properties currently are “underwater,” meaning they owe more in taxes than they are worth.
This interactive map shows how properties have been tax delinquent for more than ten years, as well as how many now owe more in taxes than they are worth. Properties marked in blue, of which there are many, were encumbered with 10 or more years of tax liens, according to the most recent data available. Properties that are “underwater,” in debt at a sum more than their market value, are marked in red.
If part of the city’s solution to tackling its delinquency problem is better collections, another enormous part of its strategy will be finding a way to let go of debts it will never collect.
That’s one big reason many advocates of reform supported the creation last fall of a “land bank,” an entity made up of administration and Council representatives and community members, which has the power not only to acquire tax-delinquent properties and effectively circumvent the sheriff sale process, but also to wipe properties clean of city debt—and then, ideally, resell them to be put back into productive use.
The Land Bank bill passed Council and was signed by Mayor Nutter last year. If successful, it would become a central clearing house for acquisition of tax delinquent properties and land.
Our project, “Landscape of Possibility,” is a map not just of the city’s tax-delinquency problem, but also of the incredible opportunity for the re-use of abandoned land and property that problem presents.