Green Bay's Vacancy Fee and the Case for a Land Value Tax

Green Bay property owners who leave commercial buildings empty could soon owe the city escalating fees under a draft ordinance that won the backing of the Protection and Policy Committee earlier this month, with council member Bill Morgan the lone dissenter. Owners would have to register a building no later than 60 days after it falls out of use and keep renewing that registration while it sits empty. Homes were dropped from the proposal after several months of negotiation involving the mayor's office and the Wisconsin REALTORS Association, according to the Green Bay Press-Gazette.

The fee is a narrow, local fix aimed at shuttered storefronts. It also descends from one of the oldest arguments in American tax policy: that the public, more than the person holding the deed, creates most of what a well-placed lot is worth, so taxes should fall on land instead of on the buildings people put there.

What Georgism Proposes

The journalist and economist Henry George made that case in Progress and Poverty, published in 1879. He proposed dropping taxes on labor, business and trade and funding government through a tax on land values alone, which he argued would also choke off speculation. George's followers call the value of a location socially created, the product of nearby schools, hospitals and businesses that the landowner didn't build.

The ordinary property tax every Wisconsin homeowner pays lumps land and buildings together. An owner who renovates a storefront or adds apartments upstairs gets a bigger bill, while an owner who lets a building decay or holds a surface parking lot pays less. A land value tax reverses that. Because no one can manufacture more land, taxing it doesn't shrink the supply, which is why Milton Friedman, who opposed most taxes, called a levy on unimproved land "the least bad tax".

Where It's Been Tried

Pennsylvania, which a Lincoln Institute paper calls the only state to let its local governments split property tax rates between land and buildings, supplies most of the American evidence. Pittsburgh sharply raised its land rate in 1979 and 1980, and economists Wallace Oates and Robert Schwab later found the real value of the city's building permits rose about 70% in the 1980s while most of 15 comparison cities stayed flat or fell. They credited the tax with a meaningful role, not the whole boom, since Pittsburgh was also pushing downtown redevelopment. Harrisburg adopted a split rate in 1975 and still uses one, and Allentown followed in the late 1990s.

For owners of storefronts and offices, the most relevant finding may be a 2021 Lincoln Institute working paper that found switching to a split rate raised total market values in Pennsylvania municipalities, with commercial properties gaining more than residential or industrial ones. The approach has limits. Pittsburgh repealed its split rate in 2001 after a fight over assessments, and separating a parcel's land value from its building value is only as good as the assessor doing it.

Detroit is the biggest test case still pending. Mayor Mike Duggan's plan would have cut property taxes an average of 17% for 97% of homeowners while raising the tax on land, including abandoned buildings, parking lots and scrapyards. The average vacant lot in Detroit pays about $30 a year, Duggan said.

Why Wisconsin Can't Go All the Way

Green Bay couldn't copy Pittsburgh if it wanted to. The state constitution's uniformity clause requires that the rule of taxation be uniform, and its annotations say property taxes are levied on the value of real property as a whole, not separately on land and improvements. A 1988 attorney general's opinion, citing the state Supreme Court, says both the valuation and the rate must be uniform. Under that reading, a split rate isn't available to Wisconsin cities without a constitutional change.

A vacancy charge doesn't touch the tax rate. It aims at the same behavior a land tax discourages, an owner holding useful space out of circulation, through a registration requirement and fee instead.

The Watered-Down Version

Other cities have gone further. Washington, D.C. taxes vacant property at $5 per $100 of assessed value and blighted property at $10, compared with $1.65 to $1.89 for standard commercial property. San Francisco voters in 2020 approved a tax on ground-floor storefronts left empty more than 182 days, starting at $250 per foot of frontage and rising to $1,000 a foot by the third year. Revenue goes to a small business assistance fund.

San Francisco's version also shows how easily such a tax gets hollowed out. A construction-related exemption cut the number of storefronts subject to it to 27 in 2025, down from 241 the year before, according to San Francisco Chronicle reporting summarized by the political group GrowSF, which argues city rules that mandate ground-floor retail and limit conversions cause many vacancies in the first place.

Wisconsin already has smaller versions. South Milwaukee's commercial-only program charges registration fees that start at $500 and reach $4,000 by the fourth renewal, with exemptions for owners actively trying to lease or sell. Kenosha charges commercial owners $360 a year once a building sits unused for 180 days, and Oshkosh and Menasha run registries of their own.

The case for acting rests on what empty buildings cost the people around them. The Wisconsin Economic Development Corp. estimates a vacant storefront costs a community an average of $133,200 in lost economic activity, counting worker, resident and local business spending plus about $9,900 in property and sales tax, based on an 1,800-square-foot shop with two apartments above it.

The Green Bay Proposal

Alder Joey Prestley started the push in June after complaints from constituents living near vacant buildings, telling WPR residents were "seeing the cost of having a vacant property spilling over." The council voted 6–5 then to send the idea to city staff. Alder Jennifer Grant opposed it, arguing owners already lose money on empty buildings and some are dealing with medical or financial hardship.

Critics have kept pressing. Jennifer Sunstrom of the Wisconsin REALTORS Association said the draft "essentially makes it illegal to own vacant property," according to the Press-Gazette, while Council President Alyssa Proffitt framed it as a way to fill commercial space and grow the tax base. The ordinance needs two readings before the full Common Council to become law.