Philly tax sales resumed nearly a year ago. The land bank still hasn’t bid on any properties

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Last July, following a long hiatus, the Philadelphia Sheriff’s Office quietly resumed selling off tax-delinquent properties across the city.

Since then, the office has held nearly three dozen tax sales using a real estate auction website Bid4Assets. Well over 1,000 properties were auctioned at those sales.

And yet the Philadelphia Land Bank, the quasi-governmental agency charged with putting vacant parcels into productive use, did not place a bid during any of them despite having the funds.

That’s because the land bank is still unable to acquire properties through its priority bid — a power granted by state law that effectively ensures the agency is the sole bidder. Typically, tax-delinquent properties are sold to the highest bidder, an arrangement housing advocates argue invites speculation in lower-income neighborhoods.

Tax sales are the primary way the land bank adds parcels to its inventory of vacant properties, the vast majority of which are used to increase the city’s supply of affordable housing. A smaller percentage of parcels are used to establish community gardens and other open spaces designed to serve the community.

“This is a really important tool in the larger tool belt of the city to advance its housing goals. And so we need to make it a priority to get it resolved so we can move forward with other key programming and reuse the vacant land,” said Rick Sauer, executive director of the Philadelphia Association of Community Development Corporations.

Mayor Cherelle Parker, for example, wants to create or preserve 30,000 units of housing during her first term. That includes homes built as part of the city’s Turn the Key program, which uses land bank properties to offer workforce housing to middle-income residents who would otherwise struggle to become homeowners.

It’s unclear why the land bank has yet to reclaim its priority bid status.

City spokesperson Jamila Davis, in a statement, said the “Land Bank and the Sheriff’s Office are currently working out operational details for the Land Bank to exercise its priority bid on the new online platform. We are optimistic that the Land Bank will be able to exercise its priority bid before the close of this fiscal year.”

Citing attorney-client privilege, Davis declined to provide further details.

Philadelphia Sheriff Rochelle Bilal said Thursday that negotiations over the land bank’s priority bid status began around October, and that her office is “trying to figure out how to do it fairly and legally” in light of a U.S. Supreme Court ruling from 2022 rooted in local government’s power to seize and sell tax-delinquent properties.

“Right now, it’s in their hands as to the last negotiation that we sent over,” said Bilal, referring to the land bank. She added that her office is not setting aside any properties for the land bank in the interim.

A spokesperson for Parker, who appointed five members of the land bank’s board of directors, did not respond to a request for comment.

One sticking point is connected to the fact that Bid4Assets typically charges a $35 processing fee on deposits it requires bidders to make before the start of each auction, according to a City Hall source not authorized to discuss the negotiations.

But there are likely other issues that need to be ironed out before the land bank starts bidding on tax-delinquent properties again.

Jesse Loomis, CEO of Bid4Assets, also did not respond to a request for comment.

City Councilmember Jamie Gauthier, one of the body’s fiercest affordable housing advocates, said she hopes the negotiations wrap up “as soon as possible.”

“City Council gave the Land Bank the power to cast priority bids, and a budget to buy land, because we understand how important it is to protect community spaces like urban farms, as well as create land assemblages for affordable housing. We know cleaning and greening vacant land reduces violent crime and improves mental and physical health, which is why I consider getting the Land Bank priority bid up and running a safety issue,” Gauthier said in a statement.

Councilmember Kendra Brooks is equally frustrated with the delay.

“Community groups have been fighting to secure these gardens for years, and they deserve more transparency about why the land is still stuck in limbo. City Council took action on this almost a year ago, and we don’t have any clear answers about why the process isn’t moving forward,” Brooks said.

The current budget includes $3.5 million for the land bank to acquire new parcels. To date, that funding has gone unspent, making it unclear if more is on its way.

Parker is set to deliver her second budget proposal to City Council next Thursday.

Nearly a year ago, while delivering her first budget proposal, the mayor noted that the tax sale hiatus had cost the city and its school district an estimated $35 million — “dollars that could have been invested in classrooms and rec centers or on building affordable homes.”

And she announced that the sheriff’s office was working with the Law Department to resume tax sales, with the goal of having the first one before July 1, 2024.

The sheriff’s office initially stopped holding tax sales in March 2020 due to the COVID-19 pandemic. They resumed in April 2021 but were quickly shut down again after the office moved the sales online without approval from the city’s Law Department, violating Philadelphia’s Home Rule Charter.

The six-year contract with Bid4Assets, a Maryland-based company municipalities across the country use to outsource property sales, was also considered problematic because it was awarded without going out to other bidders. The city typically issues a public request for proposals that gives multiple companies an opportunity to be selected.

More than three years later, the contract was replaced with a new one and the sheriff’s office started holding tax sales again.