county land utilization corporations, aka land banks ildi pallos piqua, ohio october 20, 2015

County Land Utilization Corporations, aka Land Banks

Ildi PallosPiqua, Ohio

October 20, 2015

What is a Land Bank?

• Land banks are community improvement corporations created specifically to acquire, manage, maintain, and repurpose vacant, abandoned, and foreclosed properties.

• Created to provide alternative to local governments selling their interest in tax-delinquent property to speculators, often for pennies on the dollar.

Changes to Statute

• July 7, 2010 – Ohio’s 43 most populous counties (60,000 or more residents) received statutory authority to organize county land banks.

• June 30, 2015 – Legislation amended to allow all counties to create land banks!

Formation – ORC Chapter 1724• One of two types of community improvement

corporations (CICs) that may be organized under ORC 1724.01(A)(1)

– Economic development corporations–County land reutilization corporations

Tax Status

• Land banks can file for an Internal Revenue Code (IRC) Section 501(c)(3) tax status, but IRC Section 115 is preferable.

• IRC Section 115 organizations are commonly referred to as “instrumentalities of government” and do not have to file federal tax returns as do “C-3” organizations.

Purpose - ORC Chapter 5722• Facilitate the reuse of vacant, abandoned, and tax‐

foreclosed real property• Efficiently hold and manage vacant, abandoned, or

tax foreclosed real property pending its reutilization

• Assist entities to clear the title of property and assist with coordinating and assembling properties

• Promote economic and housing development in the county or region

How to Form a Land Bank

• Board of county commissioners passes a resolution authorizing the formation of a land bank.

• County treasurer files articles of incorporation with the Ohio Secretary of State.

• After incorporation, county commissioners approve the corporation's operating documents.

Board of Directors ORC 1724.03(B)

• Five, seven, or nine members• County treasurer• At least two county commissioners• Representative from county’s largest

municipal corporation

Board of Directors (cont.)• Representative from township with population

of at least 10,000, if at least two such townships exist in the county

• Any remaining members selected by the treasurer and the board member county commissioners

• At least one board member shall have private sector or nonprofit experience in rehabilitation or real estate acquisitions.

How Land Banks Acquire Properties

• Tax foreclosure process – allows for direct transfer of property to a county land bank if the impositions, including taxes, penalties, special assessments and costs, are greater than the value of the property.

• Property forfeited to the state – written request to the county auditor and paying for the cost of an “auditor’s deed” for the property.

Acquiring Properties (cont.)• Transfer of property from private

individuals and probate estates when owner no longer desires the burden of owning worthless property – must be approved by county auditor.

• Fannie Mae and HUD- may provide demolition funds.

• Donation of non-delinquent properties.

Ideal Properties

• Already vacant (i.e., no building)– no demolition costs – Less environmental assessment costs– No building maintenance costs

• Tax foreclosure – no liens• Demolition costs included• End user in place

Uses for Properties

• Transfer the properties to adjoining property owners – aka “side-lot programs.”

• Transfer the property to private sector for productive reuse – land bank is able to hold on to properties and transfer in bulk for redevelopment.

Uses for Properties (cont.)

• Convert property to public uses such as parks, playgrounds, urban agriculture or community gardening and beautification projects.

• Transfer the property to non-profits, like community development corporations (CDCs), which may be assembling land for new development and/or maintain the property for community beautification goals

Primary Funding Source

• 5% of the biannual delinquent property tax receipts, aka “DTAC” (Delinquent Tax and Assessment Collection)

• County Commissioners may vote to allocate up to 5% of all DTAC receipts to the county land bank for unrestricted use.

• Ohio is only state to provide consistent funding to land banks.

Greater Ohio Policy Center “Taking Stock of Ohio County Land Banks: Current Practices and Promising Strategies” (May, 2015), page 10

Government Funding

• Township trustees can contribute general fund monies and other services to a land bank to defray administrative expenses.

• Land bank can contract with the county commissioners, county auditor, or county treasurer to provide staff instead of, or in addition to, land bank staff.

Other funding

• Loans• Land Sales• Charge fees and costs when disposing of

property• Grant applications• Foundation funding

Resources• Alexander, Frank S. “Land Banks and Land

Banking, 2nd Ed.” (2015)http://action.communityprogress.net/p/salsa/web/common/public/signup?signup_page_KEY=8679• County Commissioners Association of Ohio

“Handbook Ohio County Commissioners – Chapter 81” (July, 2015)

http://www.ccao.org/userfiles/HBKCHAP081%207-16-15.pdf

Resources (cont.)• Fitzpatrick, Thomas J. IV “Understanding

Ohio’s Land Bank Legislation” (2009)http://www.ohioenvironmentallawblog.com/uploads/file/Policy%20Analysis%20of%20new%20land%20bank%20law.pdf• Greater Ohio Policy Center “Taking Stock of

Ohio County Land Banks: Current Practices and Promising Strategies” (May, 2015)

http://greaterohio.org/files/policy-research/greaterohiolandbankreport5-15-15.pdf

Western Reserve Land Conservancy-Land Bank Playbookhttp://www.wrlandconservancy.org/county-land-banks/playbook_home