Heart States,” Tobias Higbie

June 15, 2020; CityLab

As Kriston Capps writes for CityLab, the dislocation stemming from the COVID-19 economic downturn will likely be immense. As she notes, even last decade’s less severe Great Recession “tore through small towns and industrial cities, leaving lasting damage throughout the Great Lakes region and other legacy cities. The devastation of the foreclosure crisis can still be felt in the form of hyper-vacancy and underwater mortgages.”

One strategy that gained prominence during the Great Recession was the land bank. As NPQ noted in 2017, before the Great Recession, “fewer than a dozen land banks existed in the United States. Now, there are well over 100, with land banks especially prevalent in the states of Michigan, Ohio, Pennsylvania, and New York.”

According to Capps, at present there are roughly 200 land banks in 15 states. Land banks, she adds, “are quasi-public agencies that are entitled to acquire and maintain distressed properties and return them to productive use.”

Before land banks, many cities would find foreclosed properties advertised for sale on infomercials, often at “low, low prices”—a nightmare scenario where land-use decisions often remained outside any form of public process or control.

By contrast, as Capp explains, “Land banks acquire abandoned properties with cloudy titles or steep back taxes and hold them tax-free; then they can then lease or sell these properties, usually with an eye toward what a community needs rather than what the market will bear.”

Many have benefitted from land banks. For instance, NPQ covered Columbus, Ohio, where the land bank “helped reduce the city’s number of vacant and abandoned properties by 40 percent in five years, while generating $180 million in economic value.”

But in many states, land banks remain scarce. Now, amid our pandemic-induced economic crisis, some lawmakers are looking to see if “one of the tools that took off in the wake of the foreclosure crisis can be expanded to protect towns and cities from the havoc that the pandemic-fueled economic downtown stands to wreak,” writes Capps.

A new bill before Congress, the National Land Bank Network Act, authored by US Representative Dan Kildee (D-MI), who helped start the national land banking movement more than a decade ago, would both expand and fortify the nation’s network of land banks to help solidify some infrastructure for dealing with the pandemic’s economic fallout.

Capp adds that, “Supporters of the concept say that land banking could be an answer to two major crises playing out right now. Cities and counties that can marshal their vacant properties stand to avoid the permanent scars of the recession. They can also rebuild their communities fairly to benefit disadvantaged groups—and prevent the pandemic from exacerbating the social inequalities that helped set off the current wave of nationwide protests for racial justice.”

For his part, Kildee, who introduced the legislation on June 4th, notes, “If you can’t control your landscape, you can’t control your future.”

“This isn’t just going to be for the Ohios and Michigans and Illinoises of the world,” says Akilah Watkins-Butler, CEO of the Center for Community Progress, a nonprofit devoted to property revitalization. “We may start to see land banking pop up in places like Miami or Houston.”

Compared to many bills this year, Kildee’s is modest, authorizing $10 million to build out national infrastructure (to be administered by a nonprofit group) and to fund grants for existing land banks. The bill also includes $5 million in annual funding to support the network.

The idea is to build out the network now, before a vacancy wave hits with full force.

“We can’t forget that in light of what’s happening with COVID and what’s happening with the uprisings in American cities, we are also entering hurricane season, too,” Watkins-Butler says. “Another way that cities get inundated with vacant and dilapidated properties is through natural disasters. We’re on target to face one of our most turbulent hurricane seasons.”

The proposed legislation has already won the endorsement of a number of organizations, including the National Association of Real Estate Brokers, Habitat for Humanity International, and all four state-level land bank authorities.—Steve Dubb