Mayor Luke Ravenstahl announced today that the City of Pittsburgh is buying back tax-liens on 11,000 parcels of property as part of his plan to encourage economic development in the City’s neighborhoods.
“Our neighborhoods can no longer be neglected,” said Mayor Luke Ravenstahl. “We are taking the initiative and buying back these ‘lienfields.’ Now, properties in our City’s neighborhoods, previously unavailable for re-development because of their high tax-liens, can finally be developed.”
“We’ve successfully encouraged economic growth by reclaiming industrial sites that have sat unused and called them ‘Brownfield’s’; now we’re reclaiming tax-liens on residential properties for neighborhood economic development, and calling them ‘Lienfields.’”
The deal was negotiated by the City of Pittsburgh – in partnership with Pittsburgh Public Schools (PPS) and the Pittsburgh Water and Sewer Authority (PWSA) - with Capital Asset, a subsidiary of MBIA Inc., the Armonk, New York-based bond insurer.
In the years 1996-99, the City of Pittsburgh sold tax-liens on approximately 14,000 parcels to Capital Asset Research Corporation (CARC) for $64 million. Over time, these blighted properties sat unoccupied, undeveloped and off the tax rolls; they became a burden for the builders and developers of the City and have inhibited its neighborhoods from rebuilding themselves.
In an effort to revitalize the neighborhoods, the City of Pittsburgh is buying back the liens on these 11,000 properties for $6.5 million, approximately one-tenth of the original cost.
PPS and PWSA have joined the City in paying for this cost, understanding the need to invest in Pittsburgh’s future. “Although $6.5 million sounds like a large number, the City avidly negotiated with Capital Asset to receive ‘pennies on the dollar’ for the tax -liened properties,” said Scott Kunka, Director of Finance for the City of Pittsburgh.
“We appreciated the cooperative spirit that MBIA’s management brought to the negotiations, which made this transaction possible,” said Mayor Ravenstahl.
MBIA Managing Director and Head of Insured Portfolio Management, Mitchell Sonkin said, “We were pleased to work with Mayor Ravenstahl and his staff to reach an agreement in principle to sell these tax liens back to the city furthering Pittsburgh’s plans for neighborhood redevelopment as well as our strategy to exit the tax lien business.”
The City will finance this deal through money from its general fund, which has been carefully earmarked due to the foresight of Mayor Ravenstahl.
“This plan reflects one of my top priorities for the New Year: the need to shift our mindset from one of managing decline to one of building a Pittsburgh for the future.”
The ‘lion-share’ of property tax-liens will be solidified and purchased in the 1st quarter of the New Year. The deal will be completed by the end of March 2007.
The Ravenstahl 2007 Budget allows for investment in economic revitalization and vitality by supporting strategies that encourage entrepreneurship and business growth and that promote economic and housing revitalization efforts throughout Pittsburgh and its neighborhoods.
Said Ravenstahl, “This historic deal made today will allow our community groups to take charge of the ‘lienfield’ properties that are inhibiting their neighborhoods from redevelopment, furthering everyone’s goal in making Pittsburgh the best place to live, work and play.”
Thursday, December 7, 2006
More Economic Development articles
Office of Mayor Luke Ravenstahl
512 City County Building | 414 Grant Street
Pittsburgh, PA 15219
telephone: 412-255-2626 | facsimile: 412-255-2687