How Land Banks Can Help Stabilize Neighborhoods With Vacancy Problems
September 9, 2020
Land banks can be a powerful tool to help areas struggling with problem vacancies shift those vacancies to new, responsible owners, said Liz Kozub, associate director of national leadership and education for the Center for Community Progress, a national nonprofit dedicated to the issue of property revitalization.
Kozub spoke on Sept. 8 at the National Association of REALTORS®’ webinar, “Land Banking—Returning Properties to Productive Use,” the fourth and final installment in NAR’s “Stabilizing and Revitalizing Neighborhoods in the COVID-19 Era” webinar series. The webinar offered insight into the ways in which land banks can be employed to stabilize neighborhoods under economic pressure due to the pandemic. It also showcased how REALTORS® are using land banks right now to assist their communities.
Land banks can often be more nimble than local governments, Kozub said, as they can offer greater flexibility in collecting and generating revenue and in disposing of properties in line with community goals. Such entities, she explained, can be public authorities or nonprofits, and they work through the tax delinquency system to channel vacant and abandoned residential and commercial properties back to the market, making them available for purchase by responsible owners. Land banks can also strengthen the community tax base as a whole, she said.
“There is a clear relationship between tax delinquency and neighborhood harm,” Kozub stated. “Land banks can enable municipalities to shepherd vacant properties back into circulation and stabilize both housing stock and the tax base.”
Kozub outlined several key powers of land banks:
• They can acquire tax foreclosed properties cost-effectively.
• They can extinguish liens and establish clear title.
• They can allow properties to be held tax-exempt.
• They can generate revenue through delinquent tax fees or tax recapture.
Land banks can also work effectively with entities that have similar goals, Kozub said, such as community land trusts and redevelopment authorities.
Kozub also listed the community factors that might make a land bank the right option for a municipality:
• Population loss and high rates of vacancy and abandonment
• Weak economic conditions and properties with little market value
• Inequitable and inefficient tax foreclosure or code lien enforcement systems
• Sudden shocks, such as the Great Recession or Hurricane Katrina.
The last factor, Kozub argued, makes land banks particularly useful in the COVID-19 era, as the pandemic has created sudden economic disruption in many communities. Land banks can support recovery across the country, she said, allowing communities to
• Acquire, manage, and steward problem properties and distressed real estate
• Provide public accountability and efficiency
• Support local community development and redevelopment goals.
REALTORS® in Action
Laura Lafayette, CEO of the Richmond Association of REALTORS® and the Central Virginia Regional Multiple Listing Service, spoke about her experience successfully using a land bank under the auspices of a land trust.
Lafayette is also the chair of the Maggie Walker Community Land Trust, a 501(c)(3) nonprofit organization.
According to Lafayette, currently there are approximately 2,470 properties with more than five years of back taxes owed in Richmond, and over 1,000 of these are vacant single-family lots or homes. She estimated those properties are costing the city $19.7 million in delinquent taxes.
Lafayette saw in the city‘s vacancy problem an opportunity to create affordable housing. Under the Maggie Walker CLT model, the homeowner can purchase and own a house that was developed by the land trust, but the land trust itself owns the land. When the homeowner eventually goes to sell, there is an equity split. The seller can gain equity through the sale of the home, but since ownership of the land remains with the land trust, the trust can control the price of the land, ensuring the lot is permanently affordable.
“Once we build a house,” Lafayette said, “we want to make sure that it’s affordable for the next homeowner.”
A recording of this webinar and all previous webinars in the “Stabilizing and Revitalizing Neighborhoods in the COVID-19 Era” series is available on the Transforming Neighborhoods website.
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Updated: September 18, 2020