Monday, June 18, 2007

tax liens.... huh?

Lots of stuff between the lines of this piece in the trib today on the repatriation of tax liens in the City.

First off, the title says "Pittsburgh development drought a thing of the past". That is quite a statement in and of itself. I am sure the average reader will think there is a building boom going on across the city. Yet, the title is immediately contradicted by the very first sentence which says merely "Hazelwood's decade-long development drought ended last week with a groundbreaking for duplexes and single-family homes on land once saddled with tax liens.". So maybe it is big news for Hazelwood but one neighborhood represents maybe 1% of the city, is it really fair to infer so much?

Much more important is something that article mentions almost in passing. I will be the first to say that the buyback of tax liens in the city may be the most important economic development news in the city over the last decade. The city and anyone involved deserves a lot of credit for making that happen. Yet when the news came out, it was pretty clear the city had entered into an agreement to buy back all the tax liens for a fixed price. Yet the Trib piece says that the "city has purchased liens only on those properties for which nonprofit groups have firm redevelopment plans. It has cleared 150 properties so far." That is 150 out of 11 thousand give or take. One of the the last news articles I saw on this said "When the city completes the lien buyback, mostly likely in March". That was a few months ago and there was no talk of only buying a few liens, but all of them. Things that really make you go 'hmm'.

Why such a big deal? Despite yeoman work by the city's many CDC's, there really is not much chance of turning around city population trends until there is an ample supply of private capital flowing into the city as well to leverage their efforts. I actually thought that was the goal. You could argue that the fundamental goal of a CDC is to be so successful at inducing investment into a neighborhood that it drives itself out of business. That argument is implicit in the appeals for using a tax abatement, whether limited or broad, toward the goal of inducing private investment.

Don't believe me. 150 liens does not make much of a dent when you look at the city as a whole. Take a look at the city's own map of lien impacted parcels in the city. That map tells the story. When Bloomberg first wrote about the tax liens in Pittsburgh it did so because of the clear impact the holding of tax liens was having on blight in the city. They were not talking about just a marginal impact, but the broad impact across huge chunks of the city. If those liens are still being held, either by MBIA in some form or even if held by the city, that impact continues.

I could speculate that an argument exists for walking before running. But if the city buys back the liens, it does not lose control of the development process. I still stay its better for the city to own the liens than MBIA or any of its surrogates or successors. (note I pointed out earlier that MBIA quickly sold off the unit holding the liens just after the proposed sale was announced. Actually I really wonder who technically owns the liens at this moment?

The city could be arguing poverty in not buying back the liens, but the city cash flow is better now than it will be at any foreseeable point in the future. If there is not the money to buy the liens back now, when will there be.

And what does this say for the abatements? I've rambled too far already, but look at the lien map and the neighborhoods getting the abatement. abatements are meant to induce private capital flowing in. If the city is not really looking to encourage that by only feeding out lien impacted parcels to CDC's, then it begs the question of what the abatements were all about.

4 Comments:

Anonymous Anonymous said...

I think what happened is that the city did buy all of the liens (11,000) but they have only moved 150 properties to treasurer's sale to gain clear title.

Monday, June 18, 2007 4:45:00 PM  
Blogger C. Briem said...

I suppose that may be the legal status although the article is pretty clear in its wording... "the city has purchased liens only on those properties for which nonprofit groups have firm redevelopment plans".. but would not be surpsised if that was incorrect.

and the quote about only transferring liens to CDC's and not 'speculators' was pretty clear in the article. Do you have to work with a CDC (it says 'nonprofit group' actually) on a project to not be labeled a speculator? That's quite a policy if true. I am not sure there is precedent for that in any other city, but I would have to look into that to be sure.

I've had a few people point out to me that they know of some recent tax liens being cleared outside of CDC/nonprofit involvement. Which really confuses the issue on how that article was written up.

Monday, June 18, 2007 5:17:00 PM  
Anonymous Anonymous said...

I'd be very interested in hearing from Pat Ford about about the development strategy for the neighborhoods, specifically about how private development is being faciltated and the role of CDCs in the development process.
The Tribune Review article is either inaccurate or they've hit upon a very big story without actually realizing it. Some clarifying statement from the City would be helpful.

Tuesday, June 19, 2007 1:16:00 PM  
Blogger C. Briem said...

that about sums it up... it's either a big story or simply incorrect.

Tuesday, June 19, 2007 7:09:00 PM  

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