# Methods

*The Waiting Lots: land, tax and time in Philadelphia.* Pilot study, AIA Philadelphia Housing Committee. Draft for peer review, October 2026.

This appendix describes every data source, filter, formula and assumption behind the published page, so that any reader can check the work, rerun it and propose changes. Code and data are in the accompanying repository. Where a choice follows prior research, the source is named.

## 1. Questions and scope

The study asks three questions:

1. **Where is land waiting?** How much privately held vacant and parking land sits in Philadelphia's commercial mixed-use (CMX) zoning districts, where is it, how is it assessed, and how long has it been held?
2. **What does the tax system ask of it?** What does that land pay under today's uniform property tax, and what would it pay under a revenue-neutral split-rate (land value) tax?
3. **What would it take to build?** For a mid-sized apartment building on a typical lot, how do the 10-year abatement, a proposed 20-year abatement and a split-rate tax compare for the developer, the landowner, and the City and School District?

The study is a set of transparent calculations, not an econometric forecast. Behavioral claims (that a split-rate tax increases construction) rest on the published research in section 9, not on new estimation here.

## 2. Data

**Parcels.** Office of Property Assessment (OPA) records, table `opa_properties_public`, queried from the City's public Carto SQL API on 2026-10-28. The queries are in `queries/` with their exact download URLs.

- `cmx_lots.csv`: every parcel zoned CMX-1 through CMX-5 whose category is vacant land or whose building description is a parking lot, with lot area over 4,000 sf (787 parcels). Fields: parcel number, address, zoning, OPA category and building descriptions, lot area, market value, taxable and exempt land and building values, last recorded sale date and price, year built, and coordinates.
- `citywide_totals.csv`: citywide sums of taxable and exempt land and building value (583,718 parcels).

**Council districts.** The 2022 redistricting assigns whole wards and listed divisions of split wards to each district; the ward and division lists were taken from the Committee of Seventy's published summary. Division boundaries are the 2019 election divisions from Azavea's open geo-data repository (Abaca Labs, CC BY 4.0). `src/build_districts.py` unions them into ten districts. Every 2019 division was assigned. Divisions have been redrawn since 2019, so parcels within a block or two of a district line may be misassigned. The City's official council district layer should replace this reconstruction.

**Neighborhood outlines** for the base map: Abaca Labs, CC BY 4.0, via Azavea.

**Market inputs.** Rents, retail rents, cap rates and land prices come from published listings and market reports cited in section 6. Construction costs are placeholders pending project bids.

## 3. Study population

From `cmx_lots.csv`, `src/assign_lots.py` keeps parcels that are:

- zoned CMX-3, CMX-4 or CMX-5 (OPA writes these without a hyphen, e.g. `CMX3`);
- classed as vacant land or as a parking lot (building descriptions `NON PD PKG LOT COMMERCIAL`, `PD PKG LOT COMMERCIAL`, `PKG LOT NON COMMERCIAL`);
- privately held, meaning no exempt land or building value; and
- at least 4,000 sf.

Duplicate parcel numbers are removed. Each parcel is placed in a district by point-in-polygon on its OPA coordinates.

Result: 196 parcels, 203 acres, $695.8 million in assessed value, $9.74 million a year in tax at 1.3998%. Of these, 120 are CMX-3; 63 of those are "mid-sized" (8,000 to 60,000 sf), the population used for the apartment estimate.

**Known limitations of OPA records.** OPA's "vacant" category includes some parcels whose building description is not vacant (for example a shopping center recorded as vacant land); these were kept because OPA classifies them as vacant, and a reviewer may reasonably drop them. Recorded sale prices under $100 are transfers between related parties, not market sales (`nominal_sale = true`). One recorded price can cover several parcels sold together, so sale-to-assessment comparisons for individual parcels are indicative only.

## 4. Revenue-neutral split rates

Philadelphia taxes assessed land and buildings at one rate, *t* = 1.3998% (School District 0.7839%, City 0.6159%; the School District receives 56% of collections). A split-rate tax sets a land rate *r*<sub>L</sub> and a building rate *r*<sub>B</sub> with *r*<sub>L</sub> = *k*·*r*<sub>B</sub>, where *k* is the ratio. Holding citywide revenue constant:

*r*<sub>B</sub>·(1 − *s*) + *r*<sub>L</sub>·*s* = *t*, so *r*<sub>B</sub> = *t* ÷ ((1 − *s*) + *k*·*s*)

where *s* is land's share of taxable value. From the October 2026 records, taxable land is $44.50 billion and taxable buildings $121.30 billion, so *s* = 26.84%. (The 2020 Tax Shift Explorer used 24%.)

| Ratio *k* | Building rate | Land rate |
|---|---|---|
| 2 : 1 | 1.104% | 2.207% |
| 4 : 1 | 0.775% | 3.102% |
| 6 : 1 | 0.598% | 3.586% |
| Land only | 0 | 5.215% |

This is the same revenue-neutral construction used in Pennsylvania's split-rate cities and in the Lincoln Institute's Detroit study (Anderson et al., 2022), which modeled land taxed at five times the building rate.

**Caution on *s*.** The land share is only as good as OPA's land values. OPA's tax year 2025 methodology states that it usually allocates 20% of a property's value to land and 80% to the structure. The City Controller's 2019 review found that about half of single-family land values were set at a fixed 15% or 30% of total value, and that land values on the same block varied by as much as $22 per square foot. The split rates above should therefore be treated as provisional until land is valued directly (section 8).

## 5. Parcel-level tax under split rates

For each parcel, `src/assign_lots.py` computes tax today, (land + building) × *t*, and under each split rate, land × *r*<sub>L</sub> + building × *r*<sub>B</sub>, using current assessed values. For the 196 study parcels at 4 : 1, tax would rise from $9.74 million to $21.40 million a year. This is a static first-round calculation: it ignores the fall in land prices that a land tax would cause (section 7.3) and any change in use.

## 6. The prototype building

A mid-sized building allowed by right in CMX-3: a ground floor of retail and lobby covering 75% of the lot (the CMX-3 maximum occupied area for an interior lot), and five residential floors above. That is a floor area ratio of 4.5, under the 500% base allowed in CMX-3, so no mixed-income bonus payment is needed. A building of this height is typically built as wood frame over a concrete podium.

| Parameter | Value | Basis |
|---|---|---|
| Upper-floor efficiency | 82% | Typical double-loaded corridor; placeholder |
| Average apartment | 665 sf | 80% one-bedrooms at 650 sf, 10% studios, 10% two-bedrooms |
| Retail share of ground floor | 60% | Remainder lobby and services |
| Construction cost | $300 per gross sf | **Placeholder**, hard and soft, excluding land; to be replaced with bids |
| Residential vacancy | 5% | Metro vacancy 4.6% in Q2 2026 (Northmarq) |
| Operating costs | 30% of income | Before property tax; placeholder |
| Retail rent | $18–$28 per sf per year, net | Fishtown average about $27 (TenantBase); metro in-line $19.98 NNN (CBRE Q2 2026) |
| Retail vacancy | 10% | Metro retail availability 8.1% (CBRE Q2 2026) |
| Market rent | $2.20–$3.20 per rentable sf per month | Fishtown 23 West one-bedroom $1,895 for 646 sf (Inquirer, 2025); Rittenhouse one-bedroom average $2,329 (RentDataNow, Mar 2026); Class A metro asking $2,214 (Northmarq Q2 2026) |
| Exit cap rate | 5.5% | Philadelphia deals averaged mid-5% (Northmarq Q2 2026); 6.08% (Matthews Q2 2026) |
| Developer's required return | 10% profit on total cost | Common feasibility threshold; tested at 15% |
| Developer's discount rate | 8% | For valuing abatement savings |
| City's discount rate | 4% | Roughly a municipal borrowing rate |
| Construction period | 2 years | Land tax only during construction |
| Assessment level | 75% of market value | Simplification for new buildings and land; tested at 100% |

On the Laurel Street lot (21,858 sf, modeled as 22,000 sf) this gives 99,000 gross sf, 101 apartments and about 9,900 sf of retail.

## 7. The pro forma model

All equations are implemented in `src/model.js` and tested in `tests/test_model.js`.

### 7.1 Income and value

Stabilized net operating income before property tax:

NOI₀ = units × rent × 12 × (1 − vacancy) × (1 − operating ratio) + retail sf × retail rent × (1 − retail vacancy)

For each policy, NOI after full tax is NOI₀ − land tax − building tax. Value at stabilization is NOI ÷ cap rate, plus, for an abatement, the present value at the developer's discount rate of the building tax forgiven over its schedule. This follows the Controller's 2018 abatement analysis in treating the abatement as a capitalized benefit to the developer.

### 7.2 Feasibility and rent needed

Return on cost = (value − land price − development cost) ÷ (land price + development cost). The **rent needed** is the rent per rentable square foot at which the return equals the required 10%, solved in closed form:

NOI needed = cap rate × ((1 + required return) × total cost − abatement value)

rent needed = (NOI needed + land tax + building tax − retail NOI) ÷ ((1 − operating ratio) × (1 − vacancy) × 12 × rentable sf)

The test suite confirms that plugging the rent needed back into the model returns exactly the required return.

### 7.3 Land price under a land tax

A higher tax on land is capitalized into a lower land price, the standard result in the property tax literature and the reason a land tax is thought to have little deadweight loss. The model applies a one-time adjustment:

land price under the land tax = land price today × (land yield + *t* × assessment level) ÷ (land yield + *r*<sub>L</sub> × assessment level)

with a land yield (the pre-tax return buyers require on land) of 5%, tested from 4% to 7%. Yang and Hawley (2021) found that Pennsylvania's split rates lowered land values but not drastically, consistent with this adjustment.

### 7.4 Abatement schedules

- 10-year (current law for new residential construction): 100% of the building's tax forgiven in the first year, falling 10 points a year.
- 20-year phased (proposed; terms not yet published): 100% in year one, falling 5 points a year.
- 20-year full (upper bound): 100% for 20 years.

Land is taxed in full under every abatement.

### 7.5 Public revenue

Tax from the site for 30 years under each policy, in constant dollars, discounted at 4%. The School District share is 56%. Two holding cases are included: the lot stays parking under today's tax, and under the land tax.

### 7.6 Holding return

The landowner's yearly return from waiting = (parking income − property tax) ÷ land price + expected appreciation. It is compared with the developer's 8% discount rate as a benchmark for the return from building.

## 8. Validation and what a reviewer should check first

**Built-in checks (tests/test_model.js).** Split rates are revenue-neutral for every ratio and land share; a 1 : 1 ratio reproduces today's tax; abatement schedules match their definitions; the rent-needed solution returns the target return; the prototype envelope gives 6 stories, 99,000 sf and 101 apartments.

**Sensitivity (src/sensitivity.js, data/derived/sensitivity.csv).** Each main assumption was varied one at a time. In every case tested, a 4 : 1 land tax needs slightly less rent than the phased 20-year abatement and leaves the public more revenue from the site over 30 years. Construction cost moves the rent needed most: ±15% in cost moves it by about ±$390 a month, far more than any tax setting.

**Recommended next validation steps.**

1. **Land value audit.** Compare OPA land values for vacant and parking parcels with arm's-length land sales, following the IAAO ratio study standard (median ratio, coefficient of dispersion, price-related differential), as the Controller did for homes in 2019. Lars Doucet and Greg Miller's work on vacant land in Baltimore, and their open-source OpenAVMKit, offer a method for valuing land separately from buildings.
2. **Official district boundaries.** Replace the reconstruction in section 2.
3. **Project costs and rents.** Replace placeholders with recent bids and lease-ups for comparable mid-rise buildings.
4. **Citywide incidence.** Extend section 5 to every parcel, by district and property type, including homestead and senior protections, following the Tax Shift Explorer's approach.

## 9. Relation to prior research

- **Pennsylvania split-rate evidence.** Oates and Schwab (1997, *National Tax Journal* 50(1)) found Pittsburgh's building activity rose sharply after its 1979–80 shift toward land, relative to 15 comparison cities, while cautioning that other factors contributed. Banzhaf and Lavery (2010, *Journal of Urban Economics*) found split rates in Pennsylvania raised the number of housing units per acre. Yang and Hawley (2021, Lincoln Institute) found positive effects on market value, largest for commercial property, with modest declines in land value. Hanson (2021, Lincoln Institute) found adoption associated with an immediate gain of 60 to 107 business establishments per municipality. A Lincoln Institute working paper traces 33 Pennsylvania municipalities that adopted, rescinded or debated split rates.
- **Detroit.** Anderson et al. (2022, Lincoln Institute) estimated that taxing land at five times the building rate would cut taxes for about 96% of Detroit homeowners, by about 18% on average.
- **Philadelphia abatements.** The City Controller (2018) counted 14,345 actively abated properties with $6.67 billion in abated value, about $93.4 million a year in forgone revenue, and found preliminary evidence that some abated development would have occurred anyway, using ZIP-level feasibility built from Zillow values and rents, RSMeans costs and OPA land sales. This study's feasibility method is a site-level version of that approach.
- **Philadelphia assessments.** The Controller's 2019 review and OPA's own ratio studies (tax year 2025: overall median ratio 0.992, COD 10.8%, PRD 1.013 for single-family homes) establish how assessment accuracy is measured. Neither covers vacant land or parking. The Pew Charitable Trusts (2016) examined how changes in OPA's land values raised taxes on abated properties, and in 2025 reported that residential building permits fell to an 11-year low in 2024.
- **Philadelphia land value tax.** The Center for Property Tax Reform's Tax Shift Explorer (2020) mapped a revenue-neutral shift by district and parcel; Faass (WHYY, 2020) summarized it. A Council hearing explored the idea; a deputy city solicitor testified that Philadelphia would need state authorization.

## 10. What this study does not do

It does not estimate how much new construction a land tax would cause citywide; it relies on the research above for that. It does not yet model homeowner protections, phase-in, or the effect of lower land prices on the tax base over time. It treats each site in isolation and holds rents and costs constant. Its district boundaries are approximate. Its land values are OPA's, which section 4 shows are partly rule-based.

## 11. Reproducing the study

Requirements: Python 3.10+ with `shapely`, `pyproj` and `pyshp`; Node.js 18+.

```
git clone --depth 1 https://github.com/azavea/geo-data vendor/geo-data
python3 src/build_districts.py      # geo/council_districts_approx.geojson
python3 src/assign_lots.py          # data/derived/*.csv
node src/sensitivity.js             # data/derived/sensitivity.csv
node tests/test_model.js            # model checks
```

To refresh the data, open the URLs in `queries/README.md` and save the CSVs to `data/raw/`.

## References

- Anderson, J., et al. (2022). *Split Rate Property Taxation in Detroit*. Lincoln Institute of Land Policy.
- Banzhaf, H. S., and Lavery, N. (2010). Can the land tax help curb urban sprawl? Evidence from growth patterns in Pennsylvania. *Journal of Urban Economics* 67(2).
- City of Philadelphia, Office of Property Assessment (2024). *Tax Year 2025 Mass Appraisal Valuation Methodology Summary*; *Tax Year 2025 Residential Ratio Study*.
- City of Philadelphia, Office of the Controller (2018). *An Analysis of Tax Abatements in Philadelphia*.
- City of Philadelphia, Office of the Controller (2019). *The Accuracy and Fairness of Philadelphia's Property Assessments*.
- City of Philadelphia, Office of the Controller (2025). *Municipal Money Matters*, August 2025.
- Committee of Seventy. *City Council Districts* (2022 map, wards and divisions).
- Faass, J. (2020). How a land value tax could make Philadelphia a more equitable city. WHYY.
- Hanson, A. (2021). Split-Rate Taxation and Business Establishment Location. Lincoln Institute Working Paper WP21AH1.
- International Association of Assessing Officers. *Standard on Ratio Studies*.
- Oates, W. E., and Schwab, R. M. (1997). The Impact of Urban Land Taxation: The Pittsburgh Experience. *National Tax Journal* 50(1): 1–21.
- The Pew Charitable Trusts (2016). Change in Philadelphia land tax value raises taxes for many properties with 10-year abatements.
- Yang, Z., and Hawley, Z. (2021). Split-Rate Taxation: Impacts on Tax Base. Lincoln Institute Working Paper.
- Market sources: Northmarq and Matthews Philadelphia multifamily reports (Q2 2026); CBRE Philadelphia retail figures (Q2 2026); TenantBase; RentDataNow (March 2026); The Philadelphia Inquirer (2025–2026).