PHILADELPHIA- The 40,000 vacant parcels in Philadelphia cause $3.6 billion in reduced property values, cost more than $20 million per year in city maintenance and nets the city  $70 million less in property taxes, according to a report on the vacant land management system in Philadelphia released this month by the Redevelopment Authority of the City of Philadelphia.

The report, “No More Vacancy: A Look at the Costs Vacant Land Imposes on the City of Philadelphia and its Residents, and the Benefits from Reforming the Way It Is Managed,” is co-authored by the Penn Institute for Urban Research at the University of Pennsylvania, along with the Econsult Corporation and May 8 Consulting.

“These findings are of great importance for pointing to specific steps that could be taken to strengthen Philadelphia’s tax base and to build family friendly neighborhoods in Philadelphia,” says Penn IUR Co-director Susan Wachter.  “It illustrates the extensive costs of the current system and the immense benefits that reform will bring.”

In addition, the report recommends characteristics for a reformed system that would streamline the redevelopment process, make the city a good faith partner when dealing with for-profit and non-profit developers, and take advantage of legislation to allow for land banking in Philadelphia, based on the model of the Genesee County, Mich.

Only one-quarter of the vacant parcels are publicly owned, and the vast majority of all vacant parcels are concentrated in North and West Philadelphia.  Parcels come in all shapes, but small, 1/10-acre former rowhouse sites are predominate.

The report concludes that a strategic and coordinated response by the city could substantially reduce the negative effect of vacant parcels and transform them from liabilities to assets through redevelopment, with significant gains in neighborhood stability, job creation and tax revenue generation.  It estimated that reformed vacant land management would activate new construction in neighborhoods in which there exists some potential for development (as defined as prices exceeding costs by 10 percent or more), which would lead to the addition of about 3,400 new housing units within Philadelphia within the next five years. 

The result would be $180 million in economic impact each year from construction, including 800 jobs, $30 million in earnings and $1.9 million in local taxes.  Units sold would generate $2.5 million in real estate transfer tax revenues annually and add $27 million in property tax base (i.e. assessed value) and $2.2 million in property tax revenues to the city and School District per year; it would also add about 800 new residents and 340 new wage earners, translating into $500,000 in wage tax revenues and $25,000 in sales tax revenues per year.  Ultimately, Philadelphia could gain $30 million in tax revenue within five years, in addition to recovering the losses from the strain that the current system puts on city finances.

This study built on a June 2010 collaborative report about urban agriculture, “Redevelopment Authority of the City of Philadelphia: Land Use and Policy Study,” co-authored by Penn IUR, Econsult Corporation and Fairmount Capital. The RDA had requested the research team’s input on the feasibility of urban agriculture on RDA vacant land holdings as a method of removing the deleterious effects of vacant land in a temporary fashion that could be repurposed for development when market conditions permitted.

The research team conducted initial analysis of the real estate value of RDA’s land holdings, a process that was refined in “No More Vacancy.”  The team also looked at best practices in urban agriculture from strong and weak market cities across the country, a methodology also applied in the vacancy study.  The report’s conclusions were that the RDA should focus on temporary arrangements with a framework for matching parcels, users and uses that operates under a clear, agreed upon lease.  These recommendations foreshadowed the main thrust of “No More Vacancy” that the process for managing vacant land be streamlined, regularized, and transparent between the City and potential users.

About Penn IUR

The Penn Institute for Urban Research is dedicated to fostering increased understanding of cities and developing new knowledge bases that will be vital in charting the course of local, national and international urbanization.  As a university-wide entity, Penn IUR has developed programs in research, instruction and civic engagement that are in alignment with the University of Pennsylvania’s strategic plan, the Penn Compact. The Compact has two articulated goals that undergird Penn IUR work:  Integrating Knowledge and Engaging – Locally and Globally.

Penn IUR supports the growth of urban-focused knowledge through cross-disciplinary scholarship, instruction and civic engagement that informs decision-making and public policy.  It does so by advancing research in two critical areas: building the 21st century city and exploring anchor institutions and urban development.

The institute encourages collaborations among academic researchers and urban practitioners to initiate and develop research questions, execute the research and disseminate the findings widely in publications, public programs and educational outlets broadly defined.  Through public events, Penn IUR also fosters civic dialogue on urban issues among multiple audiences: the university community, including students and faculty; decision-makers; and the knowledgeable public.

Additional information is available at www.upenn.edu/penniur/.