Land banks are public or community-owned entities created for a single purpose: to acquire, manage, maintain, and repurpose vacant, abandoned, and foreclosed properties –the worst abandoned houses, forgotten buildings, and empty lots.
Land banks replace those “liquidation” based systems generally comprised of the sale of tax liens (the uncollected tax receivables of a given municipality).
Those systems place a higher premium on the modest collections derived from such transactions as housing auctions, with no consideration for the impact such a transaction will have on surrounding properties. That impact, in cities across America, is devastating to a neighborhood struggling to hold its own in an already weakened market. Those local governments sell interest in properties to investors who view property not as real estate, but as an investment on paper to be sold to another investor or simply represent a loss in the larger pool of properties or tax liens they may have acquired. A land bank is the alternative to such systems, as they give communities the opportunity to repurpose abandoned properties in a manner consistent with the communities’ values and needs – demolishing unsalvageable homes and creating open green space or a community garden, restoring interesting buildings, or simply holding land in careful stewardship until a new purpose can be determined.
There are four critical elements of successful land bank initiatives:
- Connect the Land Bank to the tax collection and foreclosure system.
This ‘improved’ system simply places that process and the earnings derived from the collection process under the control of the community, not out-of-state speculators. It is imperative that any such public system include a strong foreclosure prevention effort.
- Scale the land bank at the metropolitan level, or around the most diverse real estate market possible.
- Ensure a Land Bank is policy driven – and transparent in policies and transactions. The public –for good reason – is often suspicious of any government role in the real estate market
- Emphasize community engagement and participation. The land held by Land Banks is typically scattered among neighborhoods throughout the community. So, the Land Bank has neighbors, sometimes thousands of them. The most successful Land Banks engage those neighbors on the policies and practices that determine the outcomes for those neighborhoods. Public acceptance of the hard choices that will inevitably need to
be made regarding property held by a Land Bank is much more likely when those neighbors have a voice – a formal voice – in policy and operations.
U.S. Department of Housing and Urban Development|Neighborhood Stabilization Program, Land Banking 101: What is a Land Bank?, retrieved 24/08/2016