Altoona City Council members say they need to study land value tax
A strategic planning meeting of City Council Monday to re-evaluate Altoona’s land value tax led to a consensus on the need to explore the topic more thoroughly – and on the difficulty of determining whether it has worked so far.
“We have a lot of homework to do,” said Councilman Bruce Kelley.
Council undertook the re-evaluation in keeping with a recommendation of the Act 47 distressed municipalities plan.
Adopted in phases over eight years, starting in 2003, the revenue-neutral policy shifted all property tax onto assessed value of land – while removing it from the assessed value of buildings – in order to discourage the speculative holding of vacant land, while eliminating the tax penalty for property improvements.
Josh Vincent, executive director of the Center for the Study of Economics in Philadelphia – the land value tax advocate who convinced council to adopt the policy 11 years ago – cited statistics to show how going back to a “flat” tax would affect tax payers.
Just as the move toward land value tax benefited more taxpayers, especially homeowners, moving back would tend to benefit commercial property owners, he said.
Julie Patosky, a member of the city Redevelopment Authority who did a recent master’s thesis on Altoona’s land value tax, cited statistics that seemed to indicate that land value tax hasn’t helped.
“It does not appear that the intended impact of land value taxation has occurred,” she wrote in her thesis. “Development has not increased since implementation of the land value tax, and blight still exists.”
Moreover, the very rarity of land value tax, and Altoona’s uniqueness as the only U.S. municipality that is into it 100 percent, is an argument against it, according to Patosky.
Likewise, former Mayor Bill Schirf said he doesn’t think the policy has worked.
Wayne Hippo, who was mayor when council adopted land value tax, remains an advocate.
Who’s to say it hasn’t helped put the brakes on further problems? he asked rhetorically.
It can be a deterrent to blight, he argued, saying that it removes a disincentive to let properties deteriorate.
Yet he and others conceded that it’s hard to isolate land value tax from among the variety of factors that can lead to development decisions, given the kind of general statistical analysis that has been done so far by Vincent’s group and Patosky.
Vincent himself conceded that it’s hard to tell how much the policy has helped encourage development or discourage the speculative holding of land.
But he said it’s clear at least that it has made the speculative holding of land more costly, which in itself benefits the city.
One problem with the policy is that it applies only to city taxes and by law at this point, cannot include similar policies for the Altoona Area School District or Blair County, the Act 47 team, Vincent and others said.
That diminishes the effectiveness of the incentives and disincentives, they noted.
Another problem has been the city’s own failure to promote the policy as a development aid, according to Councilman Erik Cagle and Hippo.
Potential developers may look at a list of millages in the county and see that the city’s assessment on land is more than 300 mills, which can be shocking, Kelley said.
There have been complaints, but those have mainly come from people with odd-shaped lots not suitable for development, which is “regrettable,” and from with large pieces of property and “famous last names,” Hippo said.
City council should make decisions regarding such policies based on how they affect the overall welfare of the city, “rather than the noise,” he said.
Still, the coming of reassessment could mean all bets are off, according to Vincent.
At that time, the city would probably need to re-evaluate land value tax in the new context to see whether it’s worthwhile, he said.