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Control Issues: Will council oversight of the city's land bank cause more problems than it solves? 

In a compromise that seemed unlikely just a few weeks ago, Pittsburgh City Council overwhelmingly passed land-bank legislation that could change the way the city deals with thousands of troubled properties. But the concessions that made an 8-1 final vote on April 14 possible could stall the land bank for years, and jeopardize the startup funding stream its supporters were banking on.

The compromise — partly hashed out in a recent Tuesday meeting that went well into the night — guarantees that city council will have final approval over who gets to buy property from the land bank for at least two years, and for as many as four.

"I do not believe it's a best practice," says Deb Gross, the city councilor who introduced the land-bank bill in January. "I was weighing the [council-control] amendment that would make them comfortable against the possibility of not having a land bank."

Mayor Bill Peduto's policy manager Matt Barron makes the case that getting the land bank up and running would have taken a couple years anyway, so there was little downside in trying to build a broader political coalition. "We didn't want this to be a 5-4 vote," he says.

The concession undoubtedly represents significant compromise on both sides. Councilors Daniel Lavelle and Ricky Burgess, who were vocal about decisions needing to pass through a political weigh-station, secured that protection for at least the near future, but will ultimately give it up. And councilors Corey O'Connor and Gross conceded their ability to give control to independent expert appointees outside the political process in the short-term.

And while the compromise may ultimately ensure an effective land bank, experts say council control could push that functionality years down the road.

Frank Alexander, an Emory University law professor who helped write Pennsylvania's authorizing land-bank legislation, says Cleveland's original land bank fell apart largely because of city-council control.

Cleveland's land bank required approval for disposition of each parcel which "meant that the city-council person whose ward the property was located in essentially gave city council a veto," Alexander says. "When you had micromanaging by the local governing entity, it was not able to be successful."

A better practice, Alexander says, would be if city council were involved in setting the land bank's priorities, but left decisions about what to do with individual parcels up to board members who have their finger on the pulse of community interests.

Some observers also warn that the council-control provision won't just push the land bank's ability to turn communities around into the future; it could also jeopardize the foundation-based funding stream the bill's supporters seem to be relying on.

"Now that they've amended the bill to allow council to have final say over the sales, they have a tougher sell to the foundations," says City Controller Michael Lamb, who says he's generally supportive of land-banking.

The upshot, Lamb says, is that foundations may be wary of a process that could be overly politicized, and adds that other funding streams need to be discussed.

"We have understated the real cost of doing this kind of work and someone's got to pay for that. Foundations aren't going to pay for it all."

Lamb points out that everything from staff (whose numbers were scaled back in the amendments) to maintenance costs of property in the land bank's inventory and legal costs associated with clearing up potentially conflicting claims of ownership can cost thousands of dollars.

Gross has been tight-lipped about exactly which foundations are being pursued and what aspects of the land bank's operations they're interested in funding.

"I think we'll cross that bridge when we come to it," Gross says, noting that it will be the yet-to-be-seated land-bank board's responsibility to figure out how to get funding. (For his part, Barron says the startup costs could be around $3 million to $5 million, and the Richard King Mellon Foundation and Heinz Endowments have asked the city to submit funding proposals for the land bank.)

But foundations are "not a significant source of funding for land banks nationally," Emory's Alexander says. However, he continues, "There are examples where a philanthropic community has played a role in initial start-up costs for personnel [...] more often, a philanthropic community has made a grant to deal with a specific piece of property."

Kim Graziani, a vice president at the Washington, D.C.-based Center for Community Progress, agrees that foundation funding is often not a primary revenue stream. But she used to be the director of neighborhood initiatives in Pittsburgh, and says the financial power of the foundation community here shouldn't be underestimated.

"There's no other city that I've been working in that has the level of philanthropic support Pittsburgh does," she says.

Asked whether reliance on foundation funding might create conflicts to the extent that foundations have interests that might not always align with the public, Graziani says: "I don't want to say that that's not an issue, but there's nothing unique about this situation," adding, that organizations that receive third-party funding always have to evaluate the interests of their donors.

It isn't just city or foundation money that the land bank can use, though. Under state law, the land bank can take advantage of a tax-recapture system that allows it to recoup half of the tax revenue from properties it helps add to the tax rolls for a limited time. Additionally, there are grants from other government agencies and the revenue the land bank gets from selling property in its inventory — which, in theory, can make land banks self-sustaining.

Gus Frangos, the president and general counsel of the Cuyahoga Land Bank (which includes Cleveland), stressed the importance of having a consistent funding stream that can't be pulled.  (The Cuyahoga model helps sustain itself through millions of dollars in added penalties on delinquent real-estate taxes).

"It's like any business," Frangos says. "If you have a steady identifiable stream, whatever it might be, you can at least plan into the future. [...] Who would take a job here if I said, ‘This year I have funding; next year I don't know'?"

And perhaps foreseeing the complicated process of turning policy into change on the ground, Lavelle (once a vocal critic of the bill) took a moment before casting a vote in favor of the land bank: "It has great intent. What our job will be is to move past intent — this is where I see government often stumble."

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