To: HCI Leadership Team for Brown County

Memorandum

To: HCI Leadership Team for Brown County

Claudia Hohnbaum - HKC; Ron Alexandar - CCSR

From: Mary Marrow, Public Health Law Center

Re: Land Bank Policy Options for Brown County

Date: August 19, 2013

The HCI Leadership Team for Brown County, Kansas identified a land bank policy as its policy priority for the Healthy Communities Initiative. The Public Health Law Center researched and identified pertinent information about successful land banks in Kansas and elsewhere in the U.S., summarized here.

Please let us know if you have any questions or need any additional information.

Land Bank Overview

A land bank is an entity established to manage and dispose of vacant land for the purpose of stabilizing neighborhoods and to encourage the reuse or redevelopment of property. It purchases or obtains properties that have been abandoned or foreclosed upon, and maintains and facilitates the redevelopment, marketing, and/or disposal of the properties. Land banks can be either governmental or nongovernmental; governmental land banks may also take control of property that it does not own as long as the owner is compensated or a lien is placed on the property. Land banks can be enabled by statewide legislation, and can exist as independent public legal entities if created as such. They can also be nongovernmental nonprofit organizations.[1]

Land Banks – 1971 - 1991

The first land banks were created between 1971 and 1991 in St. Louis, Cleveland, Louisville, and Atlanta. These authorities served primarily to convert blighted and tax-delinquent properties to productive use. Each followed a different foreclosure procedure and had its own operating principles and policies. These land banks had several problems that hindered their effectiveness. For instance, none of the land banks had dedicated or internally generated funding, and therefore relied on local governments for general operating support. In addition, foreclosure laws were archaic and created lengthy waiting and redemption periods, forcing the land banks to wait significant periods of time before they could obtain property. These laws also prevented land banks from acquiring the marketable and insurable titles of foreclosed properties. Finally, the land banks’ powers and authority were not well-grounded in intergovernmental collaboration, leaving them vulnerable to other political priorities.[2]

Definitions in Kansas Law
Blighted Property- an area (other than a slum area) which by reason of the presence of a substantial number of slum, deteriorated or deteriorating structures, predominance of defective or inadequate street layout, faulty lot layout in relation to size, adequacy, accessibility or usefulness, insanitary or unsafe conditions, deterioration of site or other improvements, diversity of ownership, tax or special assessment delinquency exceeding the fair value of the land, defective or unusual conditions of title, improper subdivision or obsolete platting, or the existence of conditions which endanger life or property by fire and other causes, or any combination of such factors, substantially impairs or arrests the sound growth of a municipality, retards the provision of housing accommodations or constitutes an economic or social liability and is a menace to the public health, safety, morals, or welfare in its present condition and use.[3]

Land Banks – 1999 - 2010

The second generation of land banks emerged between 1999 and 2010. Major legislative reforms made these institutions much more effective than the first generation of banks; the Genesee County and other Michigan land banks in particular are good examples.

Land Banks – 2011 - Present

The third generation is beginning to occur, and will be based largely on models from Michigan and Ohio; this generation will be similar in substance to the successful Michigan and Ohio models but will likely vary in form.[4]

Current land banks most frequently acquire properties through tax foreclosure, although some also acquire them through intergovernmental transfers, nonprofit transfers, and open-market purchases. Tax foreclosures are most common because they allow state or local taxing authorities to recoup delinquent back taxes through imposing liens on the properties without the owners’ consent. Tax foreclosed properties are then sold at public auction; the ones that do not sell are deeded to land banks.[5]

The Housing and Economic Recovery Act (HERA)[6] was passed in 2008, allocating funds for communities to acquire mortgage foreclosure (pursued when a homeowner ceases to make timely mortgage payments to the lender). The lender can then foreclose on the property and assume ownership over it.[7] State and local governments can use HERA Neighborhood Stabilization Program (NSP) funding to acquire and rehabilitate properties if enabled by state legislation. All such activities must benefit low- and moderate-income persons. For the purposes of the NSP, a home is considered abandoned and therefore eligible for foreclosure once foreclosure proceedings have been initiated and the home has stood vacant for more than 90 days.[8]

Once the property has been deeded to the land bank, the bank can promote redevelopment of derelict property through powers authorized in state and/or local statute, such as the abilities to clear titles and waive taxes. For example, the Fulton County/Atlanta Land Bank (in Georgia) can abate delinquent taxes and convey property to community development corporations. Similarly, the Genesee County land bank can set prices, terms, and conditions when selling a property to a third party, and can renovate properties and make them available to low-income buyers for low prices. In addition to providing homes to low-income residents, land banks can maintain properties that are not desirable for sale, such as demolition of unsafe structures and landscaping of vacant lots to further improve the neighborhood.[9]

[10]

Specific Examples of Land Banks

Wyandotte County, KS

The Wyandotte County Land Bank is a government unit that acquires properties through a judicial tax foreclosure process and donation and oversees approximately 2,000 vacant lots. The Bank gives priority to projects that improve neighborhoods, support home ownership, and advance the social and economic interests of the county and its residents. The Bank is required to put the properties back on the tax roll in a way that benefits the community, such as by removing prior taxes, researching neighborhoods that have tax-delinquent properties, and accepting properties as donations. The Bank also collaborates with a wide range of unified government entities, such as the Economic Development Council, Urban Planning and Land Use Department, and Parks and Recreation Department. The Bank is operated by the Land Bank Manager, who serves at the direction of the Land Bank Board of Trustees. The board has the power to hold and administer property it acquires.[11]

There are several enabling statutes under Kansas state law supporting the Wyandotte County Land Bank, including:

19-26,103. Wyandotte county land bank; definitions. As used in K.S.A. 19-26,103 through 19-26,113:

(a) "County" means any county.

(b) "Board" means the board of trustees of the county land bank.

19-26,104. Same; establishment; governance; authorities and duties of county commissioners.

(a) The board of county commissioners may establish a county land bank by adoption of a resolution.

(b) The bank shall be governed by a board of trustees. The board of county commissioners may appoint the board. Commissioners may serve on or as the board of trustees. Vacancies on the board shall be filled by appointment for the unexpired term.

(c) The board of county commissioners may advance operating funds to the bank to pay expenses of the board of trustees and the bank. Members of the board of trustees shall receive no compensation, but shall be paid their actual and necessary expenses in attending meetings and in carrying out their duties as members of the board.

(d) The bank may be dissolved by resolution of the board of county commissioners. In such case, all property of the bank shall be transferred to and held by the board of county commissioners of the county and may be disposed of as otherwise provided by law.

19-26,109. Same; administration of property, duties of board. The board shall assume possession and control of any property acquired by it under this act and shall hold and administer such property. In the administration of property, the board shall:

(a) Manage, maintain and protect or temporarily use for a public purpose such property in the manner the board deems appropriate;

(b) compile and maintain a written inventory of all such property. The inventory shall be available for public inspection and distribution at all times;

(c) study, analyze and evaluate potential, present and future uses for such property which would provide for the effective reutilization of such property;

(d) plan for and use the board's best efforts to consummate the sale or other disposition of such property at such times and upon such terms and conditions deemed appropriate;

(e) establish and maintain records and accounts reflecting all transactions, expenditures and revenues relating to the bank's activities, including separate itemizations of all transactions, expenditures and revenues concerning each individual parcel of property acquired; and

(f) thirty days prior to the sale of any property owned by the bank, publish a notice in the official county newspaper announcing such sale.

Overland Park, KS

The Overland Park Land Bank was created under the power, granted through Kansas statute, of a city to establish or dissolve a land bank by adopting an ordinance (several relevant statutes are described below). The bank was created to eliminate blight, create opportunities for affordable and mixed income home rental and ownership, encourage economic development, and enhance neighborhood stability and viability.[12] Overland Park refers to the Board of Trustees of the land bank as a “quasi-governmental entity,” although all members of the board are employees of the city government.[13] The Bank’s main actions have consisted of renovating and reselling foreclosed homes.[14]

The relevant enabling statutes in Kansas law include:

12-5901. City land banks; definitions. As used in this act:

(a) "City" means any city.

(b) "Board" means the board of trustees of the city land bank.

(d) "Governing body" means the governing body of the city.

(e) "Municipality" means any city, county or other political or taxing subdivision which has the power to levy special assessments.

12-5902. Same; city governing body; establishment, dissolution; board of trustees.

(a) The governing body may establish a city land bank by adoption of an ordinance.

(b) The bank shall be governed by a board of trustees. The governing body may appoint the board. City governing body members may serve on or as the board of trustees. Vacancies on the board shall be filled by appointment for the unexpired term.

(c) The governing body may advance operating funds to the bank to pay expenses of the board of trustees and the bank. Members of the board of trustees shall receive no compensation, but shall be paid their actual and necessary expenses in attending meetings and in carrying out their duties as members of the board.

(d) The bank may be dissolved by ordinance of the governing body. In such case, all property of the bank shall be transferred to and held by the city and may be disposed of as otherwise provided by law.

12-5905. Same; powers of board. The board may:

(a) Sue and be sued;

(b) enter into contracts;

(d) acquire, by purchase, gift or devise, and convey any real property, including easements and reversionary interests, and personal property subject to the provisions of this act;

(e) rebate all, or any portion thereof, the taxes on any property sold or conveyed by the bank;

(f) exercise any other power which may be delegated to the land bank by the governing body; and

(g) exercise any other incidental power which is necessary to carry out the purposes of the land bank and this act.

12-5908. Same; sale of property; conditions.

(a) The board, without competitive bidding, may sell any property acquired by the board at such times, to such persons, and upon such terms and conditions, and subject to such restrictions and covenants deemed necessary or appropriate to assure the property's effective reutilization. The sale of any real property by the board under the provisions of this act on which there are delinquent special assessments to finance public improvements shall be conditioned upon the approval of the governing body of the municipality which levied the special assessments.

(b) The board, for purposes of land disposition, may consolidate, assemble or subdivide individual parcels of property acquired by the bank.

12-5910. Same; use of money received from sale of property.

(a) Except as provided in paragraph (b), any moneys derived from the sale of property by the bank shall be retained by the bank for the purposes and operations thereof.

(b) The board may use all or any part of the proceeds from the sale described in paragraph (a) to reimburse any municipality for delinquent special assessments due on such property.

Kansas City, KS

The Kansas City Land Bank was created in 2012 for the purpose of creating:

1. Opportunities for revitalization of deteriorating residential, retail, and commercial neighborhoods;

2. Safe, decent, and affordable housing for existing and future residents;

3. Retail and commercial areas on vacant or deteriorated properties within neighborhoods;

4. The assemblage of property for future development in a manner consistent with the purposes of the city’s consolidated plans, particularly in low to moderate income areas designated by the city as target areas for revitalization;

5. Creation or expansion of side yards with unimproved vacant lots in neighborhoods densely constructed for the benefit of abutting residences;

6. Space for use as urban agriculture, community gardens, or other similar uses consistent with healthy eating by residents, including restoring ground through alternative vegetative cover to build back the soil for future use for food production;

7. Public spaces and places for parks, green spaces, and other public purposes; and

8. Use as wildlife conservation areas.[15]

The Bank receives all tax foreclosed properties that do not sell at public auction and can also obtain properties in targeted areas by bidding at the public auctions.[16] It currently has over 3,000 properties under its ownership, including over 2,700 vacant lots.[17] The bank receives most of the real estate taxes that a property generates for the first three years after it sells, and can issue bonds to cover the cost of rehabilitating sold homes.[18]