As the City of South Bend’s Vacant and Abandoned Properties Task Force puts the finishing touches on its report outlining the strategy for our community to collectively address the problem of vacant and abandoned housing in our neighborhoods, we would like to voice our early support for an important piece of legislation before the General Assembly that would greatly enhance our local efforts.
State Rep. Ed Clere, R-New Albany, is taking the lead in the Indiana House of Representatives by carrying a bill that would help communities across Indiana deal with the thousands of properties that drain city resources and diminish property values. The major goal of this legislation would be to give municipalities and nonprofit corporations the authority to create land banks, which could acquire, manage and sell surplus property for redevelopment.
The variety and scope of land banking programs make them an effective tool to expedite the return of vacant and abandoned properties to productive use and to help revitalize communities. While counties and cities generally do not have the resources or legal tools to acquire tax-delinquent vacant and abandoned real estate, a land bank can streamline the title transfer process and make properties available for redevelopment on a much larger scale.
The idea of land banking as a tool to combat the problem of vacant and abandoned properties was developed in the 1960s and the city of St. Louis established the nation’s first land bank in 1971. In the following decades, Cleveland, Louisville, Atlanta and other cities followed suit. In 2002, Genesee County, Michigan established a land bank that was significantly more effective than its predecessors.
Through the Genesee County Land Bank Authority, in which the primary city is Flint, more than 1,700 buildings have been demolished, 8,000 properties are in inventory and over 5,000 properties have been redeveloped for productive use in nine years. The land bank increased property values by 10.7 percent in Flint in its first three years and overall has generated more than $12.8 million in tax revenue.
The legislation in the Indiana General Assembly, which we are urging our area representatives and senators to support, has three major features. First, it would give local governments and nonprofit corporations the ability to legally establish more effective land banks.
Second, it would push toward specific methods of funding for land banks, not dependent on allocations from annual county or municipal budgets. Rather, funds would come from fees and interest on delinquent taxes, property taxes on properties sold by the land bank for the first three years after the sale and all profits from the sale of properties. These funding streams could be a sticking point in legislative negotiations, but would provide a stable annual budget for land banks to make impactful change in our neighborhoods.
Third, the legislation would overhaul the confusing and opaque tax sale process. As it operates now, the tax sale process sells tax liens, not deeds, giving millions of dollars to out-of-state investors for collecting late tax payments. It also fails to put abandoned properties into the hands of owners that will return them to productive use. As a result, the houses fall into disrepair and local municipalities are left mowing the lawn and boarding up the windows. Through this legislation, the government would keep the fees gained from late tax payments and sell the properties only after the tax liens had been foreclosed. A land bank would be first in line to acquire these problem properties, and private investors would enter the sale afterward, acquiring the actual properties instead of the tax liens.
These changes would dramatically change and accelerate South Bend’s ability to combat vacant and abandoned housing. Land banks would manage the general processes of demolition and renovation, including hazardous material checks, contract bidding, and contractor management. Once a decision has been made on a property’s condition, land banks can also oversee maintenance duties — like a municipality — from boarding up the windows, removing trash, and cutting the grass. Many land banks also encourage community involvement through an application process. If a private citizen or community group wanted to plant a garden, cut the grass, or create a play area for kids, a land bank could give them responsibility for a once-vacant lot.
Due to the fact that land banks are developed in communities where real estate demand has declined, land banks also structure programs to encourage potential buyers, including first-time homeowners, neighbors and commercial developers. Rent-to-own programs and land contracts are two mechanisms that would bring lower-income families closer to full homeownership. Neighbors who would like to take over the vacant lot adjacent to their property would be able to purchase empty lots at lower-than-market prices in a “side lot transfer” exchange. Commercial developers would benefit as well. Instead of chasing individual tracts of real estate, land banks would be able to bundle larger sections of urban land and sell it to developers at market price. These strategies would put more properties in responsible hands and increase the overall tax base and financial health of South Bend and St. Joseph County.
State Rep. Clere has stepped up to the plate to help Indiana communities that are struggling with blight in their neighborhoods and a decrease in property values. The passage of this land banking bill would help to visibly change the look and feel of our neighborhoods and show our residents and businesses that these properties can be put to better use and improve our local economy. We encourage the residents of South Bend to urge state lawmakers to pass this vital legislation.