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U.S. Department o Housing and Urban DevelopmentOce o Policy Development and Research

Revitalizing Foreclosed

Properties with Land Banks

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Visit PD&Rs website www..to nd this report and others sponsored by HUDs Oce o PolicyDevelopment and Research (PD&R). Other services o HUD USER, PD&Rs Research Inormation Service,include listservs; special interest reports, bimonthly publications (best practices, signicant studies rom othersources); access to public use databases; and hotline 1-800-245-2691 or help accessing the inormation you need.

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Prepared or:

U.S. Department o Housing and Urban Development

Oce o Policy Development and Research

Prepared by:

Sage Computing, Inc.

Reston, VA

August 2009

Revitalizing ForeclosedProperties with Land Banks

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Te contents o this report are the views o the contractor and do not necessarily reect the views orpolicies o the U.S. Department o Housing and Urban Development or the U.S. Government.

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able o Contents

Introduction ...........................................................................................................................1

What Are Land Banks? .................................................................................................. 1

History .............................................................................................................................. 2

What Do Land Banks Do? ...................................................................................................2

Benets o Land Banks.........................................................................................................3

Emerging rends ...................................................................................................................4

Land Bank Challenges .......................................................................................................... 6

Getting Started ......................................................................................................................6

Appendix A Genesee County Land Bank Authority .................................................. 9

Appendix B Baltimore City, Maryland .......................................................................... 12

Appendix C Te Fulton County/City o Atlanta Land Bank Authority .................16

Endnotes ................................................................................................................................19

List o Figures

Figure 1: Land Bank Functions ............................................................................................4

Figure 2: imeline or Mortgage Foreclosures ...................................................................6

Figure A1: Percentage o otal Vacant Housing Units

in the city o Flint and Genesee County, Michigan............................................................9

Figure B1: Baltimore City, Marylands Project 5000 Results ...........................................13

Figure C1: Fulton County/City o Atlanta Land Bank Authorityranser o Property Process ................................................................................................18

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When properties remain vacant or prolonged periods, they can all into disrepair,become neglected, and eventually be abandoned by their owners. Abandonedproperties pose signicant re and saety hazards, attractvandalism, and generate criminal activity.3 Tese properties createa ripple efect, lowering adjacent property values and contributing

to the decline o entire neighborhoods. A 2005 report preparedor the Homeownership Preservation Foundation notes that asingle oreclosed unit in a Chicago neighborhood reduced theproperty values o 13 homes located within 150 eet.4 In addition,communities with a large number o tax-delinquent properties loseconsiderable revenue and urther burden local governments withincreased maintenance and service costs. For instance, according toa National Vacant Properties Campaign report, Detroit, Michiganspends $800,000 a year on vacant lot cleanup alone.5

While its in a communitys best interests to promote theredevelopment o abandoned and tax-delinquent properties, there

are a number o barriers that inhibit progress, such as complicatedstate tax oreclosure processes and a lack o local governmentmechanisms to regain control o such properties. Some states allowtax liens to be sold at auctions, where buyers (usually speculators)have no immediate interest in returning the property to reuse. Inother instances, properties that remain unsold at auctions becomegovernment-owned through a lengthy oreclosure process, duringwhich time they decline in value and potential use.

o ameliorate the negative efects o oreclosures, some com-munities are creating public entities known as land banks toreturn these properties to productive reuse while simultaneouslyaddressing the need or afordable housing. Tis report examines

the concept o land banking and discusses barriers and solutionsto the successul implementation o land banks. Te report alsocontains case studies rom three local jurisdictions GeneseeCounty, Michigan; Atlanta, Georgia; and, Baltimore, Maryland that detail their experiences in land banking.

WHA ARE LAND BANKS?

Land banks are governmental or nonprot entities that acquire, hold, and manageoreclosed or abandoned properties. Enabled by state legislation and enacted by localordinances, these legal entities are typically governed by a board o directors that

Foreclosures are at the oreront o issues afecting todays housing market. Te volume o

oreclosures has become a signicant problem, not only to local economies, but also to the

aesthetics o neighborhoods and property values therein. At the same time, middle- to low-

income amilies continue to be priced out o the housing market while suitable housing units remain

vacant. In 2008, the mortgage oreclosure crisis gripping the nation added over 1.2 million oreclosed

homes, increasing the inventory o vacant housing units.1 According to the U.S. Census Bureau, there

were over 14 million vacant units (year-round housing units intended or occupancy at any time o

the year) in the nation during the rst quarter o 2009, up rom 12.6 million units in 2006. 2

A dilapidated doorway in Baltimore, Maryland.

INRODUCION

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adhere to bylaws and articles o incorporation specically tailored to meet the needso individual communities. Funded with local government allocations or revenuerom operations, they can be stafed by independent, ull-time employees or by localgovernment employees on a part-time basis.

HISORY

Contemporary urban land banks were created in response to a large number o tax-delinquent properties and widespread property abandonment in cities experiencinga loss o industrial jobs.6 One such land bank was established in St. Louis, Missouriin 1971 to acquire tax-oreclosed properties that remained unsold at sherif sales.7Operations under the St. Louis Land Reutilization Authority include acceptanceo donated property, assembly, and consequent maintenance o land to acilitateuture development. Five years later, the state o Ohio adopted land bank-enablinglegislation.8 Following passage o the legislation, the city o Cleveland established aland bank to acquire and dispose o tax-delinquent properties. Ohio subsequentlyadopted legislation in 1988 that urther strengthened the land bank statute byexpediting the tax oreclosure process and allowing tax abatements on land bankproperty.

In 2003, the state o Michigan adopted one o the most progressive land banking

legislations in the nation (urther discussed in Appendix A). In addition to grantingcity and county land bank authorities the power to assemble, sell, or redeveloplarge numbers o abandoned properties, Michigans legislation allows land bankauthorities to utilize tax-increment nancing or the redevelopment o vacant andabandoned properties.10 Other states that have adopted land bank legislation includeGeorgia, Indiana, exas, Kentucky, and Maryland.

W D L B D?Land banks acquire properties through tax oreclosure,intergovernmental transers, nonprot transers, and open-market purchases. ax oreclosures are the most common

method o acquisition. Tey allow state or local taxingauthorities to recoup delinquent back taxes by imposing alien on a property without the owners consent. Pursuantto state oreclosure laws, these properties are then sold at apublic auction; those properties remaining unsold are deededto land banks. While land banks have historically unctionedto acquire tax oreclosures, the passage o the Housing andEconomic Recovery Act (HERA) in 2008 allocates unds toprovide communities with the means to acquire mortgage-oreclosures.11 In comparison to tax oreclosures, a bank ormortgage oreclosure is pursued when a homeowner doesnot ulll mortgage payment requirements to the lender. Te

lender is then entitled to oreclose and, subsequently, assumeownership o the property.

Ater the acquisition process, land banks promote theredevelopment o blighted properties by exercising powersauthorized in state and local statutes, such as the ability towaive taxes and clear titles. Te Fulton County/Atlanta LandBank in Georgia (urther discussed in Appendix C) has thepower to abate delinquent taxes and can serve as a conduit orconveying property to community development corporations(CDCs) and other nonprot developers. Te Genesee

A home is abandoned whenmortgage or tax oreclosure

proceedings have been initiated orthat property, no mortgageor tax payments have been madeby the property owner or at least

90 days, AND the property hasbeen vacant or at least 90 days.9

Te Neighborhood Stabilization

Program denition o an

abandoned home.

An abandoned home in Baltimore, Maryland.

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County Land Bank Authority (GCLBA) in Michigan cannot extinguish delinquenttaxes, but it has complete discretion in setting prices, terms, and conditions (to anythird party) when disposing o a property. In addition, with its sale, rental, anddevelopment programs, the GCLBA unctions as a developer and property managerby renovating oreclosed homes and making them available to low-income amiliesat afordable prices.

Land banks also provide maintenance services or vacant lots andabandoned properties. Land banks oten acquire a large number oproperties that are not disposed o immediately, thus creating a need orupkeep. Maintenance activities can include the demolition o dilapidatedstructures that pose saety hazards and routine maintenance o vacantlots, such as landscaping. Te GCLBA demolishes between 100 and 200blighted structures per year and perorms maintenance-related activitiesor properties in its inventory.12

Benefts o Land BanksLand banks are an efective tool or stabilizing communities burdenedby a large number o vacant, abandoned, or oreclosed properties. Teyallow local governments to overcome barriers that inhibit theredevelopment o these properties. For example, the disposition otax-delinquent properties can be challenging when delinquent taxesexceed the propertys market value, or when there is no clear title tothe property. A land bank, such as the Fulton County/Atlanta LandBank having the power to waive back taxes and clear titles can acilitate transer o ownership in a tax-delinquent property orredevelopment purposes.

Some land banks, such as the GCLBA, operate side-lot programswherein ownership o vacant lots is transerred to adjacent propertyowners or a nominal ee. Programs like these ensure that abandonedproperties are back on the tax rolls, resulting in increased revenue andreduced maintenance cost burdens or local governments. Te GCLBAalso allows neighborhood residents to use vacant lots in its inventory tocreate community gardens. Such projects beautiy neighborhoods andhelp stabilize property values in declining areas.

Te afordable housing stock also benets rom land banks. In the eventthat vacant lots cannot be developed due to a lots irregular shape or small

A home rehabbed by the GCLBA in Flint, Michigan.

Beore and ater renovation pictures o a property in Flint, Michigan

B

A

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size, land banks can assemble adjoining parcels to create a larger, more marketableproperty. In so doing, these larger parcels can be sold to CDCs and other nonprotdevelopers, at below market rates, to support the creation o afordable housing.In addition, land banks can hold property or uture afordable housing development,thus enabling local governments to curb the negative efects o gentrication.Additionally, developers are able to save on holding costs by acquiring propertydirectly rom a land bank. Local governments can urther expand afordable housing

opportunities by using land banks to purchase mortgage-oreclosed homes and makethem available to low-income households at afordable rates.

Emerging rendsWithin the next two years, at least 47 states will be acing signicant budgetshortalls.13 Public resources are stretched thin and the gloomy economic orecastis compounding government challenges to recover rom the mortgage oreclosure

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crisis. o provide nancial relie during these unsettled times, Congress enactedthe Neighborhood Stabilization Program (NSP).14 Te program authorizedunder HERA provides emergency assistance to state and local governmentshardest hit by the oreclosure crisis. NSP unds are distributed to statesand communities presenting the greatest need based on the number and percentageo oreclosures, subprime mortgages, delinquencies, and deaults. Its purposeis to stabilize neighborhoods and encourage the reuse or redevelopment o

residential property.Te U.S. Department o Housing and Urban Development (HUD) allocated$3.92 billion o grant unds to all 50 states, 5 territories, and 254 local

jurisdictions. Grantees are required to use at least 25 percent o the unds to providehousing or individuals or amilies earning less than 50 percent o the area medianincome. In addition, all activities unded by NSP must benet low- and moderate-income households earning less than 120 percent o the area median income.

Under the NSP, grantees may establish a land bank to purchase oreclosed orabandoned properties. Te land bank cannot hold property or more than 10 years,but may maintain property that it does not own, provided that it charges the propertyowner the ull cost o maintenance, or places a lien on the property. In order to

receive NSP unds, grantees must rst establish an area that would be serviced bythe land bank, and while a number o land bank activities may be pursued, HERAonly allows NSP unds to be used or acquisition.

In 2009, the American Recovery and Reinvestment Act (the Recovery Act) waspassed into law, in part to urther assist state and local governments and nonprotorganizations in pursuing NSP activities. Te Recovery Act allocates $1.93 billion ingrants to be distributed on a competitive basis. Te objective o the program remainsunchanged, but some regulations have been modied. For example, NSP2 a termused to reerence unds authorized under the Recovery Act allows land banks toreceive unds or operational costs and expands the land bank target rom strictlyoreclosed homes to residential property in general. A number o communities haveincluded land banks as part o their NSP plans. According to HUDs analysis, 4.2

percent o NSP unds are being proposed or land banking activities.15

Columbus, Ohio

Te city o Columbus, Ohio plans to utilize approximately $22.8 million in NSPunds that it received to acquire, demolish, rehabilitate, and redevelop oreclosedand abandoned properties.16 Te city will carry out these activities through its landredevelopment oce, which unctions as the citys land bank. Te citys NSP planproposes to acquire 150 units 130 o these will be demolished and develop111 new units that will be made available to low- and moderate-income households.Te citys land redevelopment oce will coordinate the acquisition o these propertiesusing NSP unds.

Chattanooga, TennesseeTe city o Chattanooga, ennessee has set aside $250,000 in NSP unds to establisha land bank that will help convert abandoned properties into productive use. 17Te land bank will acquire oreclosed properties and assemble city-owned parcelsscattered throughout the city or uture development. Properties will be sold tohouseholds earning no more than 120 percent o the area median income. Te citywill place lien restrictions on such properties to ensure long-term afordability.

Genesee County, Michigan

Foreclosed homes purchased with NSP unds in Genesee County, Michigan willbe held by the Genesee County Land Bank Authority (GCLBA) until they are

Neighborhood StabilizationProgram

Te Housing and EconomicRecovery Act o 2008 (HERA)allocates $3.92 billion or theNeighborhood Stabilization Program(NSP) to provide assistanceto state and local governments

or community redevelopment.Te purpose o the NSP is tostabilize communities through the

progressive reuse o abandoned andoreclosed properties. According toHERA, unds may be used to:

A. Establish fnancing mechanismsor purchase and redevelopmento oreclosed upon homes and

residential properties, includingsuch mechanisms as sot-seconds, loan loss reserves, andshared-equity loans or low- andmoderate-income homebuyers;

B. Purchase and rehabilitate homesand residential properties that havebeen abandoned or oreclosed upon,in order to sell, rent, or redevelopsuch homes and properties;

C. Establish land banks or homes

that have been oreclosed upon;D. Demolish blighted structures; and

E. Redevelop demolished orvacant properties.

Under the NSP, land banks areunded or activities related tothe acquisition and disposition o

oreclosed properties. However,land banks may pursue otheractivities (i.e., fnancing mechanisms,rehabilitation, demolishing

blighted structures, or redevelopingdemolished or vacant properties)

provided they serve rehabilitativeuses and are pertinent to achievingthe goals set orth by the NSP.19

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disposed. Te GCLBA will help clear titles and assist in the demolition o blightedproperties.18 In addition, the land bank is seeking to partner with a real estatedevelopment rm in anticipation o being awarded NSP2 unds to nancially assistprospective homebuyers and to continue rehabilitation projects.

Land Bank ChallengesCommunities can ace a number o obstacles when executing land bank policies.

First, the process o acquiring oreclosures can be lengthy and cumbersome. axoreclosure proceedings vary rom state to state and oten require involvement on thepart o several jurisdictions to obtain clear title. A clear title is necessary to efectivelyredevelop oreclosures it guarantees that a property is clear o all liens and certiesthat a previous title holder cannot claim the property at a later date.

Depending on the state, there are two common types o oreclosure proceedings: thejudicial oreclosure and power o sale. In a judicial oreclosure, a delinquent propertyis sold at auction to the highest bidder. Te auction is carried out by a local courtor sherif s oce. A property oreclosed by a power o sale is auctioned of by themortgage company and may be subject to a judicial review.20 Te advantage o a

judicial oreclosure is that it includes obtaining a clear title prior to auction, thereby

shortening the oreclosure process in the long run. Reorming state legislation mayassist in expediting the oreclosure process, while introducing enough exibility tohelp homeowners save their homes.21

Second, municipalities oten lack experience in coordinating key stakeholdersto achieve successul outcomes. In many cases, municipalities have the capacityto administer a land bank, but intergovernmental dichotomies inhibit regionalgoals.22 o ensure that oreclosed, vacant, and abandoned properties are acquiredand disposed o eciently, state legislation should provide clear parameters andstatutory authority or interlocal agreements.23

Another critical challenge is nancing. Acquiring, renovating, and disposing o theseproperties can be costly. Diligent planning and proper unding mechanisms are

needed to ensure that oreclosures are not acquired by speculators, but are insteadput to productive use. Subsequently, operational land banks require a means ogenerating revenue. Adopting state legislation to grant municipalities the authorityto develop unding mechanisms that suit their individual needs can assist insuccessully implementing and executing a land bank.24

Getting StartedCommunities looking to create a land bank authority will nd a guidebook byEmory University proessor Frank Alexander, Land Bank Authorities: A Guide orthe Creation and Operation o Local Land Banks, helpul in identiying key actorsand outlining action steps or the implementation o a land bank.25 Alexanders workdetails important aspects o getting started, such as:

Laying the groundwork. o clearly identiy and prioritize community goals, one mustrst understand the problem. Gathering an inventory o existing abandoned, vacant,and oreclosed properties that identies their location, condition, and ownershipinormation will help determine the actual basis or establishing a land bank, andlay the groundwork or more supportive state and local policy-making.

Land bank-enabling legislation. In order or municipalities to take advantage othis tool, states must rst adopt land bank enabling legislation. State statutes playa signicant role in the creation o land bank authorities. Tey authorize localgovernments to establish land banks with powers designed to accomplish regional

F 2: M Fc*

Source: U.S. Department oHousing and UrbanDevelopment

* imelines vary by state.

Delinquent homeownerreceives a letter rom thelender documenting the

rst missed payment.

MONH 1

Delinquent homeownerreceives phone calls rom

the lender documenting thesecond missed payment.

MONH 2

Delinquent homeowner hasexceeded the 30 days allowed

under the previous noticeto pay outstanding balance.

MONH 4

Tis is the actual dateo oreclosure (when thehome is sold at auction).

Te sale occurs approximately2-3 months ater the date

o notice.

SALE

Following the sale,the homeowner is granteda redemption period where

a home can be reclaimedi all outstanding payments

are made.

R

Delinquent homeownerreceives a Demand Letteror Notice to Accelerate.

Foreclosure proceedings begin.

MONH 3

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and local community goals, such as blight removal, neighborhood redevelopment, andthe creation o afordable housing. Along with dening acquisition and dispositionpolicies, identiying revenue sources, and outlining the governing structure o aland bank, state enabling legislation can also acilitate the sale or redevelopment oabandoned properties by authorizing land banks to eliminate back taxes, clear titles,and set below-market sale prices. Ensuring that land banks have the authority tostreamline the acquisition and disposition o oreclosed and abandoned properties

allows local governments to urther the cause o afordable reuse.In addition to laying the groundwork and establishing enabling legislation, amunicipality must understand how to organize and implement a land bank. Teollowing section contains case studies rom three public land bank authorities inGenesee County, Fulton County, and Baltimore City. Each land bank is unique,with diverse policies and programs that vary depending on the long-term goals othe community they serve. Using these case studies as a template, communities cantailor land bank policies to address their individual needs.

A vacant and abandoned home in Baltimore, Maryland.

Te Regulatory BarriersClearinghouse

o nd more inormation aboutLand Banks and other strategiesthat help support afordable

housing, please visit HUDsRegulatory Barriers Clearinghouseat www...

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For over our decades, the city o Flint, Michigan and other communities located inGenesee County have struggled with high population loss and increasing propertyabandonment (see Figure A1). At its peak in the 1960s, Flint birthplace oGeneral Motors had a population o almost 200,000.26 With the auto industrys

declining ortunes and concomitant loss o manuacturing jobs, the citys populationbegan steadily decreasing as people let in search o jobs and better prospects, leavingbehind vacant and abandoned houses. Tis abandonment has led to mountingtax-delinquencies, and in tandem with a weak real estate market, contributed towidespread neighborhood decline in Flint and the surrounding areas.

Michigans ormer tax oreclosure laws compounded the problem o neighborhooddecline. Tere was no mechanism in place to allow local governments to take controlo tax-delinquent properties. Instead, the state allowed private speculators to purchasetax liens on these properties. Te properties that remained unsold became state-ownedthrough a lengthy oreclosure process, lasting anywhere rom our to seven years.27

S -Fc R

o mitigate this problem, Michigan adopted legislation reorming the tax-oreclosureprocess and enabling the creation o local land bank authorities. Te state passedthe Delinquent Property ax Foreclosure Act o 1999 (Public Act 123), whichauthorized counties to oreclose on tax-delinquent properties.28 Counties were giventhe choice o unctioning as local governmental oreclosing units or letting the statehandle oreclosures.29 Counties that chose to participate could use revenue generatedrom the sale o oreclosed properties to create a land reutilization und withwhich to manage their inventory. Te legislation also streamlined the oreclosureprocess, reducing the time property owners had to pay back taxes and allowing localauthorities to reclaim declining tax-delinquent properties in less than three years.

Appendix AGenesee County Land Bank Authority

Pc Vc H U25

20

15

10

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01980 1990 2000 2007*

F A1: Pc Vc H U c F G C, Mc

Source: U.S. Census*Census estimate based on data collected between January 2005 and December 2007

City o Flint

Genesee County

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In 2003, Michigan adopted another key piece o legislation known as the Land BankFast rack Act (Public Act 258). Considered the most progressive land bankinglegislation in the nation, Public Act 258 allows county governments that opted inunder Public Act 123 to create city and county land bank authorities with powers toassemble, sell, or redevelop a large number o tax-oreclosed properties in an expeditedmanner. Te law also allows counties to adopt a browneld redevelopment plan ortax-oreclosed properties, thereby acilitating the use o tax-increment nancing or

redevelopment.E L B

Genesee County chose to act as the local governmental oreclosing unit underPublic Act 123 and created the Genesee County Land Reutilization Council(GCLRC) in 2002. wo years later, enabled by the Land Bank Fast rack Act andan intergovernmental agreement between the states land bank authority and the

reasurer o Genesee County,GCLRC evolved as the GeneseeCounty Land Bank Authority(GCLBA). Tat present-day publicentity is independently governed

by a board o directors consisting othe County reasurer and residentso Flint and Genesee County.30 Withits own set o by-laws and a ull-time staf, the land bank acquirestax oreclosures and determines thebest use or these properties, inkeeping with the long-term vision orthe community. Over the past veyears, the land bank has returned1,500 properties to some orm oproductive reuse.

P Acq

Te GCLBA acquires property primarily through tax oreclosure. When propertiesenter oreclosure ater two years o unpaid property taxes, they are deeded to theCounty reasurer. Each year, oreclosed properties are ofered or sale by publicauction to recoup back taxes. Working in conjunction with the reasurers oce,land bank staf identies oreclosed properties on which to bid at these auctions.At the end o the year, oreclosed properties that remain unsold by public auctionare automatically deeded to the land bank. Other land acquisition methods usedby the land bank include property transers rom private, nonprot, or governmentalentities, and purchase on the open market.

L B P

Te GCLBA operates 10 diferent programs designed to ensure productive reuse otax-oreclosed properties through oreclosure prevention, housing renovation, sidelot transer, clean and green (vacant lots are converted into gardens and green space),planning and outreach, demolition, property maintenance, sales, development, andbrowneld redevelopment. Since most o the properties acquired by the land bankare either vacant lots or homes in severe disrepair, the GCLBA categorizes them ordemolition, rehabilitation, or or rent or sale to interested parties.31 Neighborhoodrevitalization, homeownership, and increasing housing opportunities or low-income amilies are top priorities at the GCLBA. As o February 2009, the land

Vacant lot acquired by adjacent homeowner as part o the GCLBAs side lot transer program.Photo Credit: GCLBA

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bank held 4,200 properties in its inventory, o which close to 3,400 are vacant lots;nearly 88 percent are located within the Flint city limits.

Te land bank renovates 25 to 50 abandoned and dilapidated houses annually, andthen sells or rents them at afordable rates to qualied tenants with an option toown. Monthly rent or many o these homes is kept under $400. Te side-lot andadopt-a-lot programs give homeowners the option to lease/purchase adjacent vacantlots rom the land bank. Other vacant lots are transerred to nonprot entities or

development, operation, or maintenance o afordable housing.

Back taxes, taxes generated rom redevelopment, and revenue rom its sales and rentalprograms nance GCLBA operations. It also receives 50 percent o property taxescollected on transerred properties or the rst 5 years, while tax-increment nancingpays or clean-up and demolition o properties.

Te GCLBA has succeeded in transorming neglected tax-delinquent propertiesinto productive, tax revenue-generating properties, while achieving the long-termcommunity goals o afordable housing and neighborhood stabilization. A recipiento the 2007 Innovations in American Government Award, the GCLBA is nowa model or public land banks across the nation. Dan Kildee, County reasurerand board member o GCLBA, emphasizes that exibility is the key or successul

implementation o a land bank. Kildee advises communities to create realisticexpectations and to adopt a exible working plan or land banks.32

Te land bank has madeit possible or me to beindependent. I always reermy riends to the land bank.

ynisha Howell, a Flint resident

who is renting a GCLBA-rehabbedhome with an option to buy.

A view o a residential property in Flint, Michigan, beore and ater renovation.

B

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Baltimore is the largest city in the state o Maryland. Dubbed Charm City, it wasestablished in 1729 and thrived as a seaport community until the latter hal o the20th century, when actories closed and manuacturing jobs were lost. oday, thecitys Inner Harbor is a popular tourist destination with ample entertainment and

retail venues, but bustling tourism alone cannot bolster thecitys signicant economic decline and resulting housingcrisis. According to the U.S. Census Bureau, BaltimoreCity has undergone signicant population changes sincethe 1950s. Having lost nearly 33 percent o its residents,the city struggles to address the growing blight and crimeoccasioned in part by over 37,000 vacant and abandonedhousing units.33

Pjc 5000

In 2002, then Baltimore City Mayor Martin OMalleyset out on an ambitious two-year plan to acquire 5,000vacant and abandoned properties and put them back intoproductive use. Instead o using our resources and powersto put properties back on the market, weve been spendingit on the maintenance o divestment. Its time to wakethe dead potential o these lots and buildings. Its time to

return value to our citys land and make that value work or us, OMalley observed.34Baltimores aggressive approach to take ownership o blighted properties was intendedto rally public support or Project 5000 an initiative managed by the citys LandResources Division and its objective to mitigate the growing vacancy problemthat has plagued Baltimore City or decades.

When OMalley rst sought to implement the program, the city had a vacancyrate o 14.1 percent the ourth highest in the nation. Vacant houses breed

crime, they breed trash, and they diminish the value o homes that represent theliesavings o hardworking citizens, said OMalley. Te plan was to acquire vacantand abandoned properties through tax oreclosures, quick-sales, eminent domain, and

Appendix BBaltimore City, Maryland

A blighted residential structure in Baltimore, Maryland.

Blighted row houses in Baltimore, Maryland.

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traditional acquisitions (and to transer surplus city-owned property previously heldby the Housing Authority o Baltimore City). Te strategy was implemented incre-mentally; the rst step was to identiy properties or acquisition.

Trough a collaborative efort between city agencies and community partners, aproperty selection process was developed, with a housing database established tohelp staf determine which properties to choose or acquisition. Te result is a web-based tool, HousingView, eaturing geographic inormation and property data where

decisionmakers review aerial photographs in search o vacant buildings and lots.Te majority o properties targeted or acquisition were located in the Sandtown-Winchester, Middle East, and Central Park Heights neighborhoods o BaltimoreCity. Te city targeted properties or acquisition when avorable developmentopportunities existed.

Te second stage o the initiative established partnerships to minimize operatingcosts. Project 5000 received ree and discounted services valued at upwards o$5 million rom attorneys, newspapers, and other legal entities. During the thirdstage, the city streamlined and improved the acquisition and legal processes to grapplewith large-scale oreclosure proceedings, and a web-based tracking tool the Cityo Baltimore Land Asset Manager (CoBLAM) was developed to track the ow

o legal work. Te last stage dealt with the disposition o all acquired propertiesby various methods: Selling City-Owned Property Eciently (SCOPE) partneredwith local realtors to sell higher-priced homes on the open market; rolling bidswere administered or properties o lesser value; and Request or Proposals (RFPs)were used or multiple properties with specic development goals.

Prior to the launch o Project 5000, the Land Resources Division acquired only 200properties annually. Te project not only met, but substantially exceeded its goals.Over 6,000 properties were acquired during its 3-year run, and a number o cityinnovations were developed as a result o the program. Although successul on manycounts, the project was not without its challenges. Baltimore City currently ownsover 10,000 vacant and abandoned properties, making it one o the largest holderso blighted city-owned parcels in the nation.35 Managing a large inventory o real

estate has resulted in several challenges or the city. Seeking reorm, Mayor SheilaDixon requested that the Department o Housing and Community Development(HCD) generate a plan to implement a land bank.

Pjc 5000 R

Operating Costs $7,418,238

Capital Costs $14,626,248

Average Expenditure per Acquisition $12,606 (eminent domain)

Average Expenditure per Acquisition $1,600 (tax oreclosures)

otal Properties Acquired 6,000 (approximate)

Properties Returned to Private Ownership 1,000 (approximate)

Sales Revenue $4,500,000

axes and Fees Collected $1,800,000

F B1: B C, M Pjc 5000 RSource: U.S. Conerence o Mayors

A vacant home in Baltimore.

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B C L B A P

Public ocials have requently discussed the creation o a land bank to reduce thehigh number o vacant and abandoned homes throughout Baltimore City. Althoughthere has been much interest in the issue, the sizable scope o the project hasdeterred any action until now. At the request o Mayor Sheila Dixon, the HCDgenerated the report A Plan to Create the Baltimore City Land Bank. oo manyBaltimore neighborhoods are plagued by problems associated with vacant, boarded-

up properties. Abandoned properties drain value rom the homes o innocentneighbors. Tey undermine the quality o lie in our neighborhoods. And theycost the city money, said Mayor Dixon. Released in 2007, the report identies

problems with the existing property acquisitionand disposition processes and lays out animplementation plan or the creation o theBaltimore City Land Bank.

Te existing process to sell city-owned propertyis complex and requires duplicative eforts bya number o city agencies, including the HCD,the Comptrollers Real Estate Oce, the Space

Utilization Committee, the Department oFinance, the Law Department, the City Council,and the Board o Estimates. Given these andother signicant barriers, the acquisition anddisposition o a single property can take up to threeyears to complete, only adding to the citysstruggle to eciently dispose o units in a waythat ensures rehabilitation, and ultimately, animproved quality o lie. Moreover, the salesprocess targets buyers that are amiliar with the

system and seeks maximum prots over development outcomes placingcommunity development corporations, neighborhood groups, and local afordable

housing developers at a competitive disadvantage. o resolve these problems, thereport recommends a three-step implementation strategy to:

1. Amend the city code to grant HCD the authority to sell abandoned property;

2. Place property suitable or redevelopment under the management o a centralagency; and

3. Create a nonprot entity to acquire, maintain, and sell abandoned property onthe citys behal.

Te Baltimore City Code requires that the Board o Estimates certiy the legaland nancial capacity o contracting parties prior to the sale o a property. Tisprocess stipulates that the sale price must meet or exceed the appraised value

ocusing on prot, not development outcome. Te approval process can add severalmonths to disposition proceedings. Amending the city code to grant HCDauthority to sell abandoned property can streamline the process, while still beingsubject to accountability.

City-owned property is divided between HCD, Recreation and Parks, and theReal Estate Oce o the Comptroller. In some cases, HCD and the Comptrollerhold property within the same city block. Both departments have ailed to agree ona marketing strategy to dispose o these units. As a result, when developers attemptto acquire multiple listings within a city block, they must conduct separatenegotiations with each city oce. In adopting new guidelines designating HCD

A renovated home in Baltimore, Maryland.

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the central agency, the city could eliminate duplicative negotiations and reviews thatadd expense and occasion delay or developers.

Another policy that prolongs disposition is the method by which services areprocured. Te management o city-owned property is ragmented; each stage oa real estate transaction rom acquisition to disposition requires a variety o services,ranging rom maintenance and repair to obtaining appraisals. Te citys rulesregarding the hiring and retention o staf to provide these services have hindered

progress on all ronts. Creating a nonprot entity to acquire, maintain, and sellabandoned property on the citys behal will streamline the process or sellingproperties, allow greater exibility in recruiting necessary services, and establishclearly dened policies or property disposition.

M E L

During the 2008 Legislative Session, the Maryland General Assembly passedSenate Bill 911, which empowers Baltimore City to create a Land Bank Authority(LBA). Te enabling legislation creates an 11-member board o directors consistingo six city ocials and ve city council appointees to govern the nonprot agency.

Te LBA is charged with adopting bylaws, rules, and regulations to return vacantproperties to productive use. Tis quasi-governmental organization can acquire,manage, and sell city-owned property and procure services rom other public orprivate entities in order to efectively manage operations. Additionally, the LBA maylease, transer, demolish, repair, and dispose o property it holds or owns and take allother actions necessary to preserve its value.

Te authority is exempt rom paying state or local taxes, but the property thatthe authority sells or leases to a private party is subject to state and local propertytaxes rom the time o sale or lease. Unlike Project 5000, the LBA does not havethe power o eminent domain and cannot levy any tax or special assessment.

Troughout the summer o 2008, a task orce created by Mayor Dixon met withgovernment ocials to drat city legislation that will allow the implementation othe Land Bank Authority. According to the Mayor, even in a down economy,developers continue to express interest in the vacant and abandoned properties. Bystreamlining the process or selling city property, adopting policies rom variousstakeholders, and consolidating development parcels, our neighborhoods will attractnew investment, said Dixon. Te proposed legislation was presented to the citycouncil in January 2009 and is currently awaiting approval.

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Te Atlanta, Georgia metropolitan area is one o the astest growing regions

in the United States. However, the city o Atlantas population growth has beendisproportionate compared to the growth o surrounding suburban areas. In the1970s, Atlanta the state capital and Fulton County seat experienced a signicantpopulation decline. During this time, housing vacancy rates increased rom 5 to

almost 15 percent.36 Te population loss did not subside untilater 1990, when expanding employment opportunities inparts o the city attracted new residents. From 1990 to 2007,Atlantas population grew by over 30 percent.37 Demographicprojections indicate that the citys population will continueto increase, but a large number o workers will live outsideo the job-rich region, due to a lack o afordable housing. 38Meanwhile, gentrication o the citys older and more

afordable neighborhoods is resulting in the displacemento existing low-income households, exacerbating the needor afordable housing.39

For the past 18 years, the Fulton County/City o AtlantaLand Bank Authority (LBA) has been instrumental inredeveloping declining neighborhoods and increasingthe citys afordable housing supply. Te LBA enablescommunity development corporations (CDCs) to acquire

tax-delinquent properties with insurable titles at below market prices or afordabledevelopment. Since its inception, the LBA has acilitated the transer o 50100properties per year. As a result o the current mortgage oreclosure crisis, there are

a vast number o homes in the city that are standing vacant and abandoned. Withpowers granted by state legislation, the LBA is in a unique position to stabilizedeclining neighborhoods with high oreclosure rates.

S E L

Georgia is one o the ew states in the nation to have adopted legislation expeditingthe tax oreclosure process and enabling the creation o public land bank authorities.In 1990, the state adopted legislation allowing one or more cities and countiesto enter into an interlocal cooperation agreement to create a land bank authority withthe power to acquire, clear title, and dispose o tax delinquent properties.40Te legislation also granted land bank authorities the power to orgive delinquentcounty and city taxes, including school district taxes (with the consent o the

school board) on acquired properties. In addition, Georgia enacted the judicial taxoreclosure system in 1995, making it easier to obtain clear and insurable titles totax-oreclosed properties. Te law expedited the tax-oreclosure process by reducingthe redemption period rom 12 to 2 months.

T L B A

Following the adoption o state-enabling legislation, the Fulton County/City o Atlanta Land Bank Authority (LBA) was created in 1991 as a joint quasi-governmental authority with an independent board o directors consisting o cityand county ocials. Te LBA is aided by our taxing jurisdictions Fulton County,the city o Atlanta, the Atlanta Public School System, and the Fulton County Board o

Appendix Che Fulton County/City o AtlantaLand Bank Authority

A view o downtown Atlanta, Georgia.

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Education in its mission to revert nontax-generating properties to productive use,primarily or afordable housing purposes.41 With day-to-day operations overseen byull-time staf members, various other city and county departments provide supportservices to the LBA. For example, the Fulton County Department o Buildings &Grounds and city o Atlantas Department o Public Works provide maintenanceservices or land banked properties. Te LBA is also authorized to retain outsideconsultants to carry out its duties.40

Ec Af Dv

Te LBA can bid or tax-oreclosed properties or notiy the county axCommissioner o its intent to acquire tax-delinquent properties scheduled ororeclosure. However, the main mechanism by which the LBA acquires propertiesis through governmental and nonprot/developer transers. Te land bankencourages CDCs and other afordable housing developers to acquire tax-delinquent properties rom current owners prior to the start o oreclosureproceedings (Fulton County maintains a searchabledatabase that housing developers can use to locatetax-delinquent properties or acquisition). Developers pur-chase or negotiate an option to purchase tax-delinquent

property rom the owner and transer the acquired propertytitle to the LBA. Te LBA then clears the title and waives allback taxes on the property beore conveying the title back tothe developer (see Figure C1).

LBA prioritizes conveyance o property to local nonprotagencies that will utilize the property or afordablehousing purposes. Conditions imposed by the LBA requiredevelopers to create new afordable housing on transerredproperty within three years, or title to the property revertsback to the LBA and delinquent taxes are reinstated. Anew policy introduced in 2008 allows the LBA to holdproperties purchased by CDCs or three years and city-

or county-owned properties or up to ve years. Teproperties are not taxed during the period in which theyare held by the land bank, thereby reducing holding costs, which in turn translateto lower development costs or the CDCs and other non-prot developers.43

Te LBA has ull discretion in setting sale prices or acquired properties, butany proceeds resulting rom property sales are transerred to participating taxing

jurisdictions beore being distributed to the LBA. Without signicant revenuerom its operations, the LBA utilizes annual appropriations rom participating localgovernments to und its activities.

Acc

A recipient o the U.S. Department o Housing and Urban DevelopmentsBest Practices Award, the LBA has been instrumental in revitalizing blightedneighborhoods in the city o Atlanta. Te LBA has acilitated redevelopment omixed-income subdivisions, such as Te Orchard, Ware Estates, and AdamsvillePlace.44 With the adoption o the new land bank holding policy, afordable housinggroups have identied more than 140 parcels to bank or uture development.Following the passage o the Housing and Economic Recovery Act, the city o Atlantaand Fulton County are planning to partner with the LBA to acquire additionalproperties with unds rom the Neighborhood Stabilization Program.

Renovated single-amily home in Atlanta, Georgia.Photo Credit: Fulton County/Atlanta Land Bank Authority

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F C1: F C/C A L B A P PcSource: Fulton County/City o Atlanta Land Bank Authority

Dv I Dq P

Dv Pc N O Pc P

Sf Rvw B Rq Pc

Sf Rc P

LBA B Dc

Dv Cv P LBA S Cc

LBA I Cv P Bc

Dv Fv

LBA Cc C IOw P R

LBA R

Dv Sc C CcDv D N Sc

C Cc

B Av Dv Rq B Rjc Dv Rq

Dv S B Rq Pc

ACompletedLBAApplicationForm

ALetterfromtheNeighborhoodP U

15PhotographsoftheProperty ATitleReportandPurchaseContract

VericationofProjectFunding

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ENDNOES1 Alan Mallach, Foreclosures and Stimulus: Whats At Stake or Americas Neighborhoods, Brookings Institution,

http://www.brookings.edu/opinions/2009/0209_stimulus_berube.aspx (accessed March 2, 2009).2 United States Census Bureau, U.S. Census Bureau News, 27 April 2009, http://www.census.gov/hhes/www/

housing/hvs/qtr109/les/q109press.pd (accessed March 2, 2009).3 National Vacant Properties Campaign, Vacant Properties: Te rue Cost to Communities, August 2005,

http://www.vacantproperties.org/latestreports/rue%20Costs_Aug05.pd (accessed March 3, 2009).4 William C. Apgar and Mark Duda, Collateral Damage: Te Municipal Impact o odays Mortgage Foreclosure

Boom, Homeownership Preservation Foundation, 11 May 2005, http://www.995hope.org/content/pd/Apgar_Duda_Study_Short_Version.pd (accessed March 3, 2009).

5 National Vacant Properties Campaign, Vacant Properties: Te rue Cost to Communities.6 Frank S. Alexander, Land Bank Authorities: A Guide or the Creation and Operation o Local Land Banks (New York:

Local Initiatives Support Corporation, 2005), p. 7, http://www.lisc.org/content/publications/detail/793/ (accessedNovember 3, 2008).

7 Missouri General Assembly, Missouri Revised Statutes: Chapter 92, 28 August 2008,http://www.moga.mo.gov/statutes/C000-099/0920000875.HM (accessed November 3, 2008).

8

Tomas J. Fitzpatrick IV, Understanding Ohios Land Bank Legislation, Federal Reserve Bank o Cleveland, 30January 2009, http://www.clevelanded.org/Research/PolicyDis/pdp25.pd (accessed March 3, 2009).9 United States Department o Housing and Urban Development, Neighborhood Stabilization Program,

http://www.hud.gov/oces/cpd/communitydevelopment/programs/neighborhoodspg/pd/nsp_terminology.pd(accessed March 16, 2009).

10 eresa Gillotti and Daniel Kildee, Land Banks as Revitalization ools: Te Example o Genesee County and the Cityo Flint, Michigan, Genesee Institute, http://www.geneseeinstitute.org/downloads/Revitalization_ools.pd (accessedNovember 20, 2008).

11 United States Department o Housing and Urban Development, Neighborhood Stabilization Program,http://www.hud.gov/oces/cpd/communitydevelopment/programs/neighborhoodspg/ (accessed February 9, 2009).

12 Genesee County Land Bank Authority, Genesee County Land Bank Programs,

http://www.thelandbank.org/downloads/LB_Brochure.pd (accessed January 12, 2009).13 Iris J. Lav and Elizabeth McNichol, State Budget roubles Worsen, Center on Budget and Policy Priorities, 18 May

2009, http://www.cbpp.org/cms/?a=view&id=711 (accessed May 28, 2009).14 United States Department o Housing and Urban Development, Neighborhood Stabilization Program,

http://www.hud.gov/oces/cpd/communitydevelopment/programs/neighborhoodspg/.15 Amanda Sheldon, Phillip Bush, Aaron Kearsley, and Ann Gass, Te Challenge o Foreclosed Properties: An Analysis

o State and Local Plans to Use the Neighborhood Stabilization Program, Enterprise Community Partners, 2009,http://www.practitionerresources.org/cache/documents/672/67247.pd (accessed April 14, 2009).

16 City o Columbus, Ohio, Neighborhood Stabilization Program Application, http://wbt1.nance.ci.columbus.oh.us/uploadedFiles/Finance_and_Management/FinanFina_Management_Division/Grants_Management/City%20o%20Columbus%20NSP%22Application.pd (accessed April 14, 2009).

17 City o Chattanooga, ennessee, Te NSP Substantial Amendment, http://www.chattanooga.gov/NSP_Drat.pd(accessed April 14, 2009).

18 Genesee County, Michigan, Genesee County Neighborhood Stabilization Program,http://www.co.genesee.mi.us/gcmpc-plan/Files/Docs/Neighborhood%20Stabilization/NSP%20Changes%20-%20February%206.pd (accessed April 14, 2009).

19United States Department o Housing and Urban Development, Housing and Economic Recovery Act o 2008,http://www.hud.gov/oces/cpd/communitydevelopment/programs/neighborhoodspg/hera2008.pd(accessed February 9, 2009).

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20 United States Department o Housing and Urban Development, Foreclosure Process,http://www.hud.gov/oreclosure/oreclosureprocess.cm (accessed April 23, 2009).

21 Center or Housing Policy, Reorm the ax Foreclosure Process, http://www.housingpolicy.org/toolbox/strategy/policies/abandoned_properties.html?tierit=150#t (accessed April 23, 2009).

22 Center or Housing Policy, Bring Foreclosed Properties Back Into Use,http://www.oreclosure-response.org/policy_guide/bring_back.html?tierid=251 (accessed April 15, 2009).

23

Jennier S. Vey, Restoring Prosperity: Te State Role in Revitalizing Americas Older Industrial Cities, Te BrookingsInstitution, May 2007, http://www.brookings.edu/reports/2007/05metropolitanpolicy_vey.aspx (accessed May 20,2009).

24 Ibid.25 Alexander, Land Bank Authorities, ch. 4.26 Flints Future Now, Flints Future: A Forgotten Success or a 21st Century riumph?

http://www.intsuturenow.org/docs/FFNBrie.pd (accessed February 24, 2009).27 Gillotti and Kildee, Land Banks as Revitalization ools: Te Example o Genesee County and the City o Flint,

Michigan.28 Michigan Legislature, Public Act No. 123,

http://www.legislature.mi.gov/documents/1999-2000/publicact/pd/1999-PA-0123.pd (accessed February 4, 2009).29 Ellen M. Bassett, John Schweitzer, and Sarah Panken, Understanding Housing Abandonment and Owner Decision-

Making in Flint, Michigan: An Exploratory Analysis, Genesee Institute, 2006, http://www.geneseeinstitute.org/downloads/Bassett_Understanding_Owner_Decision.pd (accessed February 2, 2009).

30 Alexander, Land Bank Authorities, appendix C-3.31 Genesee County Land Bank Authority, Genesee County Land Bank Programs.32 Daniel Kildee, interview by Kanthi Karipineni, 18 February 2009.33 United States Census Bureau, American FactFinder, http://actnder.census.gov/home/saf/main.html?_lang=en

(accessed March 2, 2009).34 Martin OMalley, Baltimore: State o the City Address, 28 January 2002,

http://www.dlc.org/ndol_ci.cm?contentid=250208&kaid=104&subid=117 (accessed March 2, 2009).35 John Fritze, Land Bank Against Blight, Baltimore Housing,

http://www.baltimorehousing.org/pressroom_detail.asp?id=117 (accessed May 2, 2009).36 United States Census Bureau, Housing Vacancies and Homeownership,

http://www.census.gov/hhes/www/housing/hvs/hvs.html> (accessed February 25, 2009).37 United States Census Bureau, Population Finder, http://actnder.census.gov/servlet/SAFFPopulation?_

submenuId=population_0&_sse=on (accessed February 25, 2009).38 City o Atlanta, Georgia, Community Assessment, http://www.atlantaga.gov/client_resources/government/planning/

asap/asap_096_171.ppp (accessed February 25, 2009).39 Georgia Institute o echnology, Current Gentrication in Atlanta Contrasts Sharply to Previous Waves o Urban

Restoration, 5 September 2003, http://www.gatech.edu/newsroom/release.html?id=331 (accessed February 3, 2009).

40 Georgia General Assembly, Georgia Code: Section 48-4-61, LexisNexis,http://www.lexis-nexis.com/hottopics/gacode/deault.asp (accessed February 23, 2009).

41 Ibid.42 Alexander, Land Bank Authorities, appendix C-1.43 Kevin Dufy, New Policy or Land Banks Will Benet Nonprots, Te Atlanta Journal Constitution, 21 August 2008,

http://www.ajc.com/metro/content/business/stories/2008/08/21/atlanta_land_bank.html (accessed on March 2,2009).

44 Inormation provided by Fulton County/City o Atlanta Land Bank Authority, 8 January 2009.

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