A proposed land bank in the city of Pittsburgh has been introduced by councilperson Deb Gross, and a couldn't come soon enough. Pittsburgh has an oversupply of city-owned blighted buildings and lots that suck up revenue, and produce none for the city. Once the land bank comes into operation, one existential question arises: what is the purpose of a bank?
If we take away the word "land", then we know the purpose of a bank is to dispense of assets in order to create a return for both the bank and – in this case – the community. The plan as proposed is solid; positive outcomes depend on another reform.
Currently, there are many distortions on the smooth disposal of land. Preeminently, but most fixable, is the fact that once land is back on the tax rolls and someone builds on it, the tax liability of a structure increases as a better building is constructed. That's a problem.
A Good Idea to the Rescue
Dr. Herbert Barry III, is a longtime Pittsburgher and professor-emeritus of the University of Pittsburgh. He is a long time committee-person in the Allegheny County Democratic Party, and has been a tireless researcher and policy advocate for land value taxation.
In response to the land bank announcement, Dr. Barry penned this suggestion to improve the process and make it more attractive for private entities to take hold of and then build upon the land. Writes Dr. Barry:
A land bank would improve property values January 24, 2014
Assessment exemptions to improvements would accomplish two things: it would lower the cost of building and lessen the risk of a new owner holding onto land waiting for a speculative gain. Currently, if a vacant parcel are released onto the market a landowner could hold onto the vacant lot for years with little tax burden in order to realize a speculative gain.