March 13, 2023 – Green open spaces, like community gardens and urban farms, are critical neighborhood anchors across Philadelphia. Since its inception, one goal of the Land Bank has been to protect and preserve these resources for Philadelphians. But since 2020, a routine Land Bank practice has worked at cross-purposes to this goal: attaching 30-year self-amortizing mortgages and notes to City land conveyed to community gardens.
In a letter sent today to the Land Bank Board of Directors, 30 organizations—gardens, other nonprofits, and allies—detail the unnecessary barriers created by these mortgages and notes. These mortgages, though they do not require monthly payments, are listed as liabilities on organizational balance sheets, contain ambiguous terms, put nonprofit organizations at significant risk in the event of a default, and fail to permanently protect community gardens and open spaces.
“The use of a 30-year mortgage and note jeopardizes the ability of nonprofit organizations to preserve community gardens and open spaces,” the letter reads. “Indeed, the 30-year mortgage has a significant adverse impact on the financial health of the nonprofit organizations best suited to acquire and preserve these properties.”
Gardens and nonprofits plan to provide public comment at the Land Bank Board of Directors’ March meeting, held via Zoom Tuesday, March 14 at 10 a.m. They will discuss the unnecessary barriers these mortgages create for land preservation and organizational stability and alternative ways for the Land Bank to ensure that open space remains open space. The virtual board meeting is open to the public; register here.
“As a land trust with a 35-year track record preserving community gardens across Philadelphia, and working in partnership with the city, Neighborhood Gardens Trust’s progress is currently being thwarted by a bad policy that threatens the sustainability of critical green spaces which make our city’s neighborhoods safer, healthier, and more environmentally just,” said Jenny Greenberg, executive director of Neighborhood Gardens Trust.
“The use of a 30-year mortgage and note jeopardizes the ability of nonprofit organizations to preserve community gardens and open spaces”
The terms for default on the mortgages, which would result in the loss of the land and broader risk to organizations stewarding it, are not clear. For example, a garden could be foreclosed upon if it is not “clean and free of debris.” Debris, a possible issue in productive green spaces in the middle of an urban environment, is not defined.
“These restrictions are being put in place to address numerous abuses of the system,” said Adam Butler of Iglesias Gardens. “But the most obvious abuses of the Land Bank policies have been by developers and politicians, not by community gardens or neighborhood organizations. These provisions will put us at substantial future risk and may impact our ability to fundraise and continue our work organizing in North Philly. We are asking for the Board to reverse this decision, and to ask the Land Bank management to properly engage with community stakeholders to fix this problem.”
Though the use of the mortgaged land is restricted to open space, the mortgages are set to the full market value of the property. This puts nonprofits in a difficult financial position of having their mortgages exceed the value of their underlying land collateral. This creates significant liability on organizational balance sheets that could make them ineligible for grants and other funding opportunities. This financial liability, combined with mortgage terms allowing the City to collect the entire mortgage amount in the event of a default, creates other major risks.
“The Land Bank’s insistence of saddling us with a $1.5 million mortgage is preposterous,” said Josh Warner of Urban Creators. “We, the farmers, educators, healers, and organizers that have built Life Do Grow Farm and served community in North Philadelphia for over a decade are the reason why this land is precious, and undoubtedly worth preserving. Our farm is a neighborhood anchor that provides fresh food, outdoor education, beautiful art, work opportunities for Black youth, and more, yet the Land Bank wants us to hold their “debt” after selling us the land. The Urban Creators, after having worked this land into its beauty and full power, will not become indentured servants due to a failed Land Bank policy.”
The letter notes that there are several alternatives available to the Land Bank to ensure that land distributed to community gardens remains open green space, and is not later sold for private development. In particular, the Land Bank had previously drafted deed restrictions stipulating that land can only be used as open space and cannot be developed, with a clause ensuring that the land reverts to City ownership if this restriction is violated.
“This 30-year mortgage requirement is having the opposite of its intended effect—it makes community gardens less stable, not more,” said Mimi McKenzie, legal director of the Public Interest Law Center. “The Land Bank has picked the wrong tool for the job and should engage with the community to ensure that our vital community gardens and open spaces are preserved.”