# Carrots over sticks

By [Brandon Donnelly](https://brandondonnelly.com) · 2026-04-12

philadelphia, philly, development, vacant-land, surface-parking, philadelphia-inquirer, inga-saffron, real-estate, housing

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[This recent article](https://www.inquirer.com/columnists/center-city-surface-parking-lots-housing-transit-oriented-development-mayor-parker-affordable-20260406.html) by Inga Saffron in the Philadelphia Inquirer is behind a paywall and so I, admittedly, haven't read it. But it seems to cover a common urban dilemma: Center City Philadelphia has too many surface parking lots while simultaneously having a need for more housing. The problem, as the argument goes, is that the city's tax system is under-assessing vacant land, creating an incentive to sit on it, and a disincentive to develop new housing. The solution: tax land more; tax improvements less.

(Forgive me if this isn't entirely accurate with Saffron's position.)

It's a classic "stick versus carrot" approach. Let's beat landowners and developers into building more housing. Now, in some situations, I can see the allure of this line of thinking. If we're talking about someone who has owned a surface parking lot for many decades and it's generating a nice stream of cash, there might be little incentive to develop it or sell the land to someone who will develop it. But as a general rule, I believe that carrots are far more productive than sticks.

I have at least two concerns with trying to tax landowners into compliance. One, you have to be careful not to create a double-edged sword. Taxing based on the "highest and best use" can work to suppress some of the small businesses that make cities great. For example, should a site with a local bookstore in a small heritage building, or a mom-and-pop restaurant in a single-storey building, be forced into higher-density housing? I don't think so.

Two, blaming low taxes for the lack of housing can distract from the more fundamental question: Why aren't more developers building housing if there's a need and an availability of land? When I lived in Philadelphia during grad school, I remember developers telling me the following: "The thing about Philly is that the build-costs are the same as New York (Philly is a strong labour union city), but the rents you can command are obviously nowhere near the same." Sticks don't work if the math doesn't math!

I don't know how the market has evolved since the late 2000s, but I do know that developers want to develop. And they will do so if the economics make sense and the right carrots exist.

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_Cover photo by_ [_G Visuals_](https://unsplash.com/@g_visuals_?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText) _on_ [_Unsplash_](https://unsplash.com/photos/a-city-with-many-buildings-9lByHhrcTJg?utm_source=unsplash&utm_medium=referral&utm_content=creditCopyText)

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*Originally published on [Brandon Donnelly](https://brandondonnelly.com/carrots-over-sticks)*