land bank strategies alexander

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Citation: 14 J. Affordable Hous. & Cmty. Dev. L. 140 2004-2005

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A rticle.s

Land Bank Strategies forRenewing Urban Land

Frank S. Alexander

Abstract

Major urban areas are often hampered in their ability to deal with va-cant, abandoned, and tax-delinquent properties. They encounter obstacleswith inefficient tax foreclosure procedures and ineffective nuisance abate-ment codes. They face reluctance to add to public inventories the title todeteriorated properties and face restrictions upon the manner in whichsuch properties can be transferred to private third parties.

Land banks have emerged as effective tools for the renewal of urbanland. With a perspective that vacant, abandoned, and tax-delinquent prop-erties can become assets instead of liabilities, land banks serve to break thebarriers to renewal of inner-city properties. Five land banks-beginning inSt. Louis and then emerging in Cleveland, Louisville, Atlanta, and Flint-demonstrate how a land bank can operate as a local government authorityto transcend the legal and structural impediments to conversion of theseliabilities into assets.

Introduction

Land banking is the story of attention to vacant, abandoned, and usuallytax-delinquent parcels of land in the inner cities of our metropolitan areas.It is the story of the relatively recent development (over the past thirtyyears) of a new program of local governments designed to break the bar-riers that create and are created by vacant and abandoned properties. Landbanks are based on the premise that properties at the heart of "urbanblight" can and should be viewed as assets for community developmentand redevelopment. They are designed to target the structural and systemic

Frank S. Alexander is Professor of Law, Emory Law School, and Director of theProject on Affordable Housing & Community Development. Research for this articlewas made possible by grants from the Fannie Mae Foundation and the Local InitiativesSupport Corporation. Portions of this article appear in expanded form together withextensive appendices in FRANK S. ALEXANDER, LAND BANK AUTHORITIES: TOOLSFOR COMMUNITY DEVELOPMENT (forthcoming,2005, the Local Initiatives SupportCorporation and the Fannie Mae Foundation). The views expressed herein are solelythe views of the author. I am indebted to Brian Moore (J.D., Emory, 2004) for hisexcellent assistance in the research and preparation of this article.

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Land Bank Strategies for Renewing Urban Land

obstacles that encourage abandonment and that stand in the way of thereturn of the properties to productive use. Serving a variety of functionsdepending upon the needs and concerns of a particular community, a landbank's driving purpose is to convert the vacant and abandoned land of ourcentral cities to assets contributing to the health and vitality of a community.

The growth-and decline-of urban communities in the latter portionof the twentieth century is the context in which proposals for land banksfirst emerged. Although initially proposed as far-reaching land use plan-ning techniques, when they were actually authorized at the state level andimplemented at the local level, land banks were designed to address amuch more immediate and specific purpose-the prevalence of these va-cant and abandoned properties.

The Context for Land Bank Strategies

In the 1960s, sociologists and urban planners viewed urban sprawl asan ever-expanding and haphazard growth of a metropolitan area with de-velopment of most distant areas followed by infill development of areascloser to the core city.' The geographic growth of metropolitan areas waslargely unregulated, and, to the extent that it was regulated, it was gov-erned by zoning laws that reflected a premise of exclusionary land uses,with the preferred use being the single-family residence. The premise of

this sprawl was preference for low-density land use, and the initial re-sponse to urban sprawl was primarily to increase the ability of local gov-ernments to control and plan ever-expanding areas. One of the proposedresponses was a recommendation for large-scale assembly of lands by pub-lic entities-the creation of municipal "land reserve" programs in whichland could be acquired and held for long-term control of the location andforms of future development. The earliest discussions of "land banks" asurban planning tools of local governments arose in this context. 2 At thesame time that urban sprawl was occurring and gaining increased atten-tion, the decline of the inner-city neighborhoods was the focus of massivepublic initiatives in the various programs of the Great Society-urban re-newal and model cities. The urban renewal and model cities programs ofthe 1950s and 1960s were simply inadequate to deal with the social pref-erences for the seemingly infinite expanse of open land.

The close ties between urban sprawl and inner-city redevelopment be-came evident a generation later as planners began to focus on "smartgrowth" techniques-city planning measures designed to break the pat-terns created by decades of exclusionary residential zoning. The focus bythe late 1990s became a "new urbanism" based on the possibility of infilldevelopment permitting multiple uses in a given area (mixed use devel-opment) and higher population densities per acre. 3 The existence of vacant,abandoned, and tax-delinquent properties in the central cities of metro-politan areas became a key component of smart growth initiatives shortlyafter the turn of the century.

4



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Land Bank Authorities

Land banks have existed for only thirty years, and have played a keyrole in five major urban areas. In those cities land banks have served uniqueand unprecedented functions in the conversion of such properties into pro-ductive assets for community redevelopment. The first substantial land bankwas created in the early 1970s in St. Louis, Missouri-the St. Louis LandReutilization Authority-and the newest one created is in Flint, Michigan-the Genesee Land Bank. Between these two points land banks were createdin Cleveland, Louisville, and Atlanta.

Although they share common historical and doctrinal origins, landbanks are not the same as redevelopment authorities. Industrial develop-

ment authorities initially and urban redevelopment authorities subsequentlyusually have had as their dominant characteristics a specific and targetedgeographic focus, the power to issue tax-exempt financing, and the powerof eminent domain. They are designed to use these most significant ofgovernmental powers in the development or redevelopment of a particularlocation for a particular purpose. In contrast, land banks arose from therecognition that an increasing number of parcels of land, whether privatelyowned or held by the local government as a result of foreclosure proce-dures, were not being reclaimed or redeveloped by market forces. Struc-tural, legal, and financial barriers existed, and still exist, that inhibit theaccess of private markets and public entities to these stagnant properties.These vacant, abandoned, and tax-delinquent properties may be concen-trated in certain areas bu t they are also scattered across neighborhoods andcities in random patterns simply as isolated parcels.

There is no single form or function to land banks. Some land banks areactually separate legal entities that are independent authorities, while oth-ers exist as programs of municipal departments. Each land bank possessesa slightly different range of powers, and is based on differing legal anddepartmental structures. Each land bank has a different set of policies andpriorities, and each focuses on different strategies for land use and reuse.Such variation is not problematic; it is essential. No two urban areas possessthe same social and economic characteristics, and no two jurisdictions pos-sess the same form of allocation of powers between state and local govern-ments. A land bank is a governmental entity that focuses on the conversionof vacant, abandoned, and tax-delinquent properties into productive use.

A land bank has two key terms and both give rise to potential confusion.With the exception of those who work within them, and those who workin conjunction with them, land banks are not often understood accurately.The two entities most commonly confused with land banks are Federal

Land Banks5

and various forms of land trusts.6

Land banks as we knowthem today, however, bear no correlation to Federal Land Banks, and pos-sess only distant connections to land trusts.

When the term "land bank" is viewed as a reference to an entity thatassembles and "banks" land for short- or long-term strategic purposes, the

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understanding is a bit more accurate. The earliest proposals for land banksemphasized as a primary function the assemblage of large amounts of landas a form of local land use planning, and several of the key land bankstoday ac t as the owner of large volumes of publicly acquired tax-delinquentproperties.

Land Banks for Land Assembly

In the midst of studies and proposals in the late 1960s for federal, state,and local legislative reforms, the concept of a "land bank" began to emerge.

7

These early proposals suggested a wide range of purposes and functionsfor a public land bank, all of which had as their core concept a public entitythat would acquire large inventories of land to be held fo r future controland planning. During this period from roughly 1968 to 1974, land banksbecame synonymous with proposals for significant public "land reserve"programs.

One perspective in the initial proposals argued for the large-scale as-sembly of public land on the peripheries of central cities as a method ofcontrolling urban sprawl." A land bank would permit the "arrest and erad-ication of urban sprawl" by preempting the haphazard conversion of ag-ricultural land into subdivisions. 9 Another advocate suggested quite sim-ply and directly that a "municipal land-reserve policy may be defined asa deliberate policy to acquire, hold, and dispose of land, where the prin-cipal motive of the policy is to provide for or regulate the future growthof the municipality. ' 10 Others asserted that land banks are "public bodieswhich, by acquiring land in the path of anticipated urban expansion andkeeping it free from premature development, can effectively control thepace and direction of growth."" Tied to the proposal of using a land bankfor land use control was the argument that the land inventory could beused to impact directly the costs of land for private and public develop-ment.' 2 The range of social and cultural problems to be solved by the earlyvisions of land banks was limited only by the creative imagination of thesocial and urban planners.

In 1971, Charles Haar, Professor of Law at Harvard Law School andformerly Assistant Secretary for Housing and Urban Development, testi-fied before a congressional committee and presented a broad proposal forthe creation of a land bank.' 3 Set within the context of creating new toolsfo r urban growth and planning, Haar proposed the enactment at the fed-eral level of a metropolitan land bank ac t that would serve to facilitate andsupport local authorities in the management, control, and disposition ofparcels of land. He envisioned public authorities that, by the acquisition ofboth strategically located parcels and key areas of undeveloped land,would directly impact the fluctuation of land values and enhance the abil-ity of local governments to engage in land use planning and control.

By acquiring such land, and making it available in a planned pattern thatimparted more order to the whole process of urban growth, the bank wouldreduce uncertainty and confusion in the land market. This would be a sta-



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bilization of the market for land-much in the same way as a central bank,such as the Federal Reserve Bank, stabilizes the money market.

4

These ambitious proposals for public control of land as a method of

market stabilization and urban planning were picked up by other propo-nents of the creation of land banks,'- but also were criticized as being overlyambitious and unworkable.',

In the context of this tumultuous and creative period of reform lie theseeds for the connection between land banks and vacant and abandonedinner-city properties. In 1967, John Sanger argued that a land reserve policy,in the operational form of a land bank, should be viewed as "a tool forexpediting urban redevelopment in declining areas of the city."

1 7With ex-

plicit reference to the efforts of the Model Cities Program in the Roxbury-North Dorchester area of Boston, he suggested that "public ownership ofpresently vacant land and abandoned buildings could provide greater totalreturns than were being obtained because, in addition to eliminating theirblighting influence, the city could pu t them to use for various purposes in

connection with other programs."8

William Letwin echoed this point twoyears later in concluding that "Municipal Land Banks could be very effec-tive instruments for regenerating such decayed land near the center ofcities. This land is already 'reserved' by its owners, bu t it is being reservedin a wrong and costly way."'

9Charles Haar's own ambitious proposals

recognized that one of the pressures for reform was the "inadequacy ofnuisance law, zoning and urban renewal to deal with urban problems."

2

Project Land Banking

With these broad-ranging proposals for multifunction land banks, theconcept of advance land acquisition by public entities for specified strategicpurposes began to take hold. The earliest variation on this theme was thecreation of a specific limited-purpose public entity the function of whichwas to acquire and assemble tracts of land for a targeted purpose. Thecreation in 1957 of the Philadelphia Industrial Development Corporation

2'

and the work of the Milwaukee Land Bank Program from 1964 to 197122

are but two examples of public entities that served as land banks in thesense of targeting, acquiring, assembling, and conveying land for a specificpublic purpose. Parallel functions can be found in the rapid growth overthe course of the last third of the twentieth century in industrial develop-ment authorities, urban redevelopment authorities, recreational authori-ties, and similar local government agencies. In 1968, the Advisory Com-mission on Intergovernmental Relations identified as a key function offuture land banks their role in advance land acquisition for specific projects

such as industrial development.23

The advance acquisition of land for purposes of the development ofaffordable housing has occurred in two very different contexts. The firstwas the creation of public housing authorities in the 1930s that have hadas their mission throughout the remainder of the twentieth century the

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development and operation of housing facilities for individuals and fam-ilies of low to moderate income. The dominant model from 1935 to 1985was the creation of large facilities in a single location, and as such theoperational approach for land acquisition and assembly did not differ fromthe strategies and functions of industrial development authorities. A sec-ond and substantially different approach to land acquisition for affordablehousing was the creation, beginning roughly in the early 1970s, of nonprofithousing development corporations. In contrast to the public-sector housingauthorities, these corporations focused primarily on the acquisition anddevelopment of single, often geographically dispersed, tracts of land forsingle-unit or small-scale multifamily affordable housing. In the context ofthese nonprofit housing development corporations, the role of advance ac-quisition of parcels of land for future development of affordable housingis a form of land banking that combines elements of both the expansiveproposals for land banking and the project-specific approach to land bank-ing. In 1972, the Low Income Housing Development Corporation in NorthCarolina indicated that "[1hand banking, as a general concept, is not new.Basically, it is acquisition of land to be held for future use... [Wand bankingby housing development corporations for the purpose of providing sitesfor homes for low and moderate income families is, however, a relativelyrecent concept."

24

Land banking in the context of a specific project or targeted initiativediffers in several critical and fundamental respects from the contemporaryrole of land bank authorities as tools to address vacant, abandoned, andtax-delinquent land in the inner cities of metropolitan areas. First, projectland banking is usually tied to a single public purpose or goal, such as thedevelopment of an industrial facility, a recreational facility, or a transpor-tation facility. Second, because it is targeted toward a single use, the effortsof project land banking tend to be focused on a single geographic area forthe purpose of acquiring and assembling a sufficient tract of land for thedesired activity. Third, adequate land assemblage in a single area is com-monly not available through open-market acquisitions, so the power ofeminent domain is delegated to or exercised on behalf of the project au-thority. Fourth, as inducements for the development of the desired activity,the project land bank or project authority provides public financial subsidiesin the form of tax-exempt financing, low-interest loans, or tax abatements.

The origins of contemporary land banks lie in part, but only in part, inthese proposals and programs of the transformative era of the 1960s and1970s. These initiatives provided a key conceptual foundation for the roleof a public authority in land acquisition and assemblage. This role, how-ever, has two different expressions that were new to this era. One is therole of public acquisition and holding of land as a form of land use planningand control. A second is the public acquisition of land for transfer to privatethird parties for use and development. Both of these expressions of rolesbecame elements of land banks in subsequent decades.



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146 Journal of Affordable Housing

What was largely overlooked in the initial proposals for public landbanking during this period of time was the growing inventory of vacant,abandoned, and tax-delinquent land in the inner cities. Hundreds andthousands of such parcels of land were not viewed as assets for a "bank,"but as liabilities to the community. There are several reasons why the earlyproponents of land banking did not focus on these properties as resources.The geographical dispersion throughout a neighborhood or community ofabandoned, tax-delinquent parcels rarely provides the opportunity for easyassemblage of sufficiently large sites for redevelopment. Such propertiesalso tend to be characterized by numerous title defects that inhibit or im-pair the marketability of the property. The title defects are magnified byinadequate and inefficient legal enforcement proceedings to address codeviolations and tax delinquency. Finally, only the most romantic, idealistic,or naive of urban planners looks at abandoned structures as assets for thecommunity.

Emergence of Contemporary Land Banks

Awareness of a significant and rapidly increasing number of abandoned,tax-delinquent properties in inner cities has led to the creation of landbanks in five metropolitan areas: St. Louis, Cleveland, Louisville, Atlanta,and Flint. The earliest program, the St. Louis Land Reutilization Authority(the St. Louis Land Bank), emerged in 1971 precisely in the midst of thebroad proposals around the use of land banks as tools for urban planningand community development. The distinctive feature behind the St. Louisprogram and its successors, however, was not as much a desire for long-term metropolitan planning through large-scale land assembly as it wassimply a response to a crisis in property tax delinquency and abandonment.Each of these five cities confronted a large inventory of privately ownedtax-delinquent properties, or properties acquired as a result of tax foreclo-sures, and searched for a proactive mechanism that would facilitate theconversion of these properties from neighborhood and community liabil-ities to long-term assets.

The "lineage" of these five land bank authorities is relatively clear anddirect? 5 Following the formation and implementation of the St. Louis LandBank during 1971 to 1973, enabling state legislation was approved in Ohioin 1976 that permitted the creation of the Cleveland Land Bank. A littlemore than a decade later, both Louisville (1989) and Atlanta (1991) createdparallel land bank authorities with the approval of intergovernmentalagreements. After fifteen years of economic decline triggered by industrialclosings, the City of Flint and Genesee County, Michigan, created their ownland reutilization council in 2002. In each succeeding instance the local

governments examined the programs, priorities, structures, and policies ofthe preceding land bank authorities and then proceeded to adopt and toadapt a program designed to fit the particular needs of each community.Other cities across the United States have created variations of these landbanks (such as Macon, Savannah, and Valdosta, Georgia, and Dallas, Texas)

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Land Bank Strategies for Renewing Urban Land 147

or created other structures designed to address similar issues (such asOmaha, Nebraska, and Kansas City, Missouri).

These five major land banks have a common focus in addressing aban-doned, tax-delinquent properties, and each serves primarily to foster theconversion of tax delinquent properties to productive use. No two of theseland banks are identical, however. Because of wide variances in state con-stitutional law, and state and local allocations of authority, each local landbank is based upon a different underlying legal structure. Each jurisdictionfollows a different property tax foreclosure procedure, and each land bankhas adopted its own set of operating policies and priorities. While there is

substantial overlap among the five major land banks, there are also sub-stantial differences. The majority of the differences reflects the importantadaptation of the concept of a land bank authority to fit the particularneeds, requirements, and priorities of a given jurisdiction.

In a pattern experienced in other metropolitan areas across the country,the City of St. Louis experienced a sharp population decline between 1950and 1970; over 27 percent of its population moved out.

26 By 1972, therewere over 2,600 abandoned buildings within the city, with approximately9 percent (over 12,000) of all parcels being tax delinquent. Because of se-rious constitutional and procedural defects in the tax foreclosure laws, a

property tax foreclosure sale had not been conducted for twenty years. In

the face of these problems the Missouri legislature enacted the MunicipalLand Reutilization Law in 1971 .27 Building upon the success of a revisedland tax collection law applicable to other parts of the state

28 the newstatute authorized the use of the revised procedures in St. Louis and cou-pled it with the creation of the St. Louis Land Reutilization Authority. Theconcept of such an authority derived from the creation, as early as 1945, ofa public entity in Jackson County (Kansas City), Missouri, that was des-ignated to receive title to all properties not sold at public tax foreclosures.

29

The Jackson County Land Trust has, since its creation, acquired and sub-sequently sold tax-delinquent parcels.

30 With this precedent, the St. LouisLand Bank began with the enactment of the local enabling ordinance onDecember 20, 1971. 31 Over the past thirty years of operations, the primaryfunction of the St. Louis Land Bank has been to receive title to all propertiesthat are not sold when a tax foreclosure sale is conducted and to propertiesthat may be donated to the city. It presently functions as one of sevendifferent operating subsidiaries of the St. Louis Development Corporation,and works in tandem with its sister real estate agencies-the Land Clear-ance for Redevelopment Authority and the Planned Industrial ExpansionAuthority.

32At the end of 2001, the St. Louis Land Bank held title to almost

10,000 parcels of land, or 3 percent of the entire land area of the City of St.Louis.

33

By 1974, the City of Cleveland, Ohio, found itself in a similar situationto that of St. Louis. It had lost over 18 percent of its population during thepreceding two decades and was faced with over 11,000 tax-delinquentparcels as well as ineffective and inefficient tax foreclosure laws.

34A com-



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prehensive study published in 1976 examined the prevalence of tax delin-quency in Cleveland and the underlying causes and consequences of de-

linquency. It reported in detail on the Missouri reforms that had resultedin the creation of the St. Louis Land Bank 3 Partially as a result of thisstudy, legislation was enacted in Ohio in October 1976 to reform the taxforeclosure laws and to authorize local governments to create a land re-utilization program. 36 The Ohio legislation, based in large part on the Mis-souri legislation of 1971, was designed to serve several key goals. First, itmodified the tax foreclosure procedure to provide that the foreclosure wasan action against the property rather than a personal lawsuit against theowner (an in rem action as opposed to an in personam action). Second, itshortened the length of time required to initiate and complete a tax fore-closure. Third, it provided that properties that remained unsold at a taxforeclosure would be transferred to the land reutilization program. Fourth,it authorized land utilization programs to hold and manage the propertiesand to convey them to private third parties. 37 As is true of each of the fivemajor land banks, the creation of a land bank was not a solution, in and ofitself, to the rate of property abandonment or tax delinquency. In Cleve-land, there was a 58 percent increase in vacant parcels between 1977 and1987 and a 37 percent increase in residential tax delinquency. 38 The statu-tory authority of the Cleveland Land Bank was enhanced by subsequentstate legislation in 1988 that permitted the abatement of property taxes heldby the land bank, the creation of a dedicated fund for the prosecution ofdelinquent taxes, and the revision of notice requirements in tax foreclosureproceedings.

39

In 1988, the Commonwealth of Kentucky enacted legislation authorizinglocal governments to create a land bank authority. 40 In contrast to the ap-proaches taken in Missouri and Ohio, the Kentucky legislation did notcontemplate the creation of a land bank as an agency or authority withinthe structure of an existing local government. Instead, the legislation au-thorized the creation of new independent public corporations that wouldbe created pursuant to interlocal agreements among key governmental en-tities. The primary reason for this approach is that in Kentucky as in manyjurisdictions throughout the United States, property taxes are levied by aseries of separate entities-the city, the county, and the school board. Anyaction to address outstanding property taxes, whether by tax foreclosureor waiver of delinquent taxes, directly impacts each of these governmentalentities. The efforts of a land bank to acquire and convey clear title toabandoned, tax-delinquent properties would be severely impaired withoutthe intergovernmental participation of each taxing entity. A second featureof the approach taken in the Kentucky legislation was that the land bankauthority would be created

asan independent public corporation, gov-

erned by its own board of directors pursuant to articles of incorporationand bylaws. The legal authority of a land bank in Kentucky thus derivesfrom four sources: state land bank enabling legislation, the interlocal agree-ment, the land bank articles of incorporation, and the bylaws of the land




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bank authority. The Louisville Land Bank Intergovernmental Agreementwas signed on February 14, 1989.

41The local government consolidation of

the City of Louisville and Jefferson County in 2002 triggered a technicalamendment to the state enabling statute in 2003 to make clear that consol-idation would not affect the underlying legal structure of the land bankitself.

42

Just two years after the Kentucky legislative initiative, the Georgia Gen-eral Assembly in 1990 passed enabling legislation for local governmentalland bank authorities.

43 Prompted by the growing inventory of aban-doned, tax-delinquent properties in the inner city of Atlanta, this statutewas based in large measure on the form and substance of the Kentuckylegislation. With a structure of local governments and taxing authoritiessimilar to Kentucky's, the Georgia approach contemplates the execution ofan interlocal cooperation agreement and the creation of an independentlegal corporation. The Atlanta Land Bank Interlocal Cooperation Agree-ment was signed on June 12 , 1991.44 One of the most significant features ofthe Atlanta Land Bank is that it possesses the power to waive and extin-guish all delinquent property taxes on parcels of land that it acquires andconveys.

45In contrast to the St. Louis and Cleveland Land Banks, the At-

lanta Land Bank does not automatically receive title to properties that arenot successfully sold at a tax foreclosure sale. It has the option to bid atsuch foreclosure sales but in practice the land bank exercises that optiononly when it anticipates an immediate reconveyance of the property to adeveloper."

The fifth and most recently created major urban land bank in the UnitedStates was established in August 2002 by Genesee County, Michigan, andthe Charter Township of Flint, Michigan. Unlike its four predecessor juris-dictions, Genesee County was initially not able to take advantage of statelegislation expressly authorizing the creation of a land bank authority. Suchlegislation was under consideration in 2002, bu t was not signed into lawuntil January 2004.

47In the absence of express statutory authority in 2002,

the Michigan Urban Cooperation Act provided an adequate legal basis for

creation of a new corporation pursuant to an interlocal agreement thatwould acquire, manage, and convey tax-delinquent properties." An UrbanCooperation Agreement was executed on August 29, 2002.

49Unlike Lou-

isville's and Atlanta's, this interlocal agreement expressly contemplated theaddition of other cities and townships within the county as parties. In 2003the City of Flint joined Flint Township and Genesee County in becominga party to the agreement, and other local governments subsequently joinedas parties. The impetus behind the creation of the Genesee Land Bank wasthe enactment in 1999 of a comprehensive reform of the property tax fore-closure laws. One immediate consequence of this reform statute is that a

large number of tax delinquent properties can be foreclosed in a singlejudicial proceeding following numerous and extensive steps of notificationto all interested parties.5 In the event that the property is not redeemed byan owner as part of the foreclosure proceedings, title to the property vests



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as a result of the tax foreclosure proceeding.5 5

Part of the reason for thisdifference is that under Michigan law the tax foreclosure proceedings cul-

minate in forfeiture of the property to the foreclosing governmental unitand not a tax sale as is the case in the other jurisdictions. Also under Michi-gan law all local governments are given the right to acquire the tax-forfeited property prior to its conveyance to a land bank.9 The GeneseeLand Bank in Michigan receives roughly 800 to 1,000 parcels of propertyeach year. In contrast to each of these four land banks, the Atlanta LandBank does not au tomatically receive title to any property as a result of taxforeclosures. The Atlanta Land Bank possesses the authority (but not theobligation) to tender the minimum bid at a tax foreclosure sale (by agreeingto assume responsibility for the amount of taxes that it subsequently extin-guishes), and acquires the property only if there is no higher bid. 57 TheAtlanta Land Bank does possess the authority to direct the tax commissionerto initiate tax foreclosure proceedings on specific parcels of property.M

Four of the five major land banks can receive title through tax foreclo-sure sales to any kind of property, whether vacant or improved, residentialor commercial. The Cleveland Land Bank, however, is largely restricted toreceiving title to either unimproved land or land with structures againstwhich the local government has commenced demolition proceedings. It doespossess authority to acquire improved properties through the foreclosureprocess if the local government first determines

thatthe property is "nec-

essary for implementation of an effective land reutilization program."59

Although the bulk of the properties that are brought within the opera-tions of land banks are properties resulting from tax foreclosures, it is keyto a land bank's operations that it have the authority to acquire propertiesfrom three other possible sources. First, a land bank should have the abilityto acquire from local governments other publicly owned properties, whetheracquired years earlier as a result of foreclosure proceedings or propertiesthat have become surplus properties.

60 The St. Louis Land Bank and theLouisville Land Bank appear to have adequate authority to receive from

the local governments title to properties other than as a result of tax fore-closures,

61bu t elect to focus on the tax-foreclosed properties since they are

required to receive all such properties. The Atlanta Land Bank has author-ity to receive properties from the local governments acquired as the resultof drug forfeitures.

62In addition to tax-foreclosed properties, both the At-

lanta Land Bank and the Genesee Land Bank are expressly authorized toreceive from the participating local governments any and all properties thatthe local governments may elect to convey.

63Second, a land bank should

have the discretion to acquire properties as a result of voluntary donationsand transfers from private owners. For example, the Cleveland Land Bankhas the ability to receive properties through a deed in lieu of tax foreclo-sure, and donative transfers are expressly authorized for the Atlanta LandBank and the Genesee Land Bank.M The Genesee Land Bank is not requiredto accept all properties proceeding through the tax foreclosure process, and



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and professional service agreements as it deems necessary.71 A second con-cern that led some proponents of early land banks to be cautious about

automatically accepting all tax-foreclosed properties or accepting proper-ties with improvements on them is fear of potential liability under federalor state law for the costs of environmental remediation. Governmental en-tities are granted limited immunity for environmental cleanup costs whenownership of the property is considered to be an "involuntary acquisition."To ensure that acquisitions by a land bank from local governments wouldstill fall within this safe harbor of protection, the recent Michigan land banklegislation affirmatively provides that the governmental immunity for in-voluntary acquisitions extends to the properties of the land bank.

72

Disposition of PropertyOne of the barriers to the transfer and transformation of vacant and

abandoned properties in inner cities has been the existence of state andlocal laws regulating the disposition of publicly owned properties. Withthe majority of these properties being acquired as a result of tax foreclosureproceedings, local governments have found themselves with propertiesthat they do not want, and cannot transfer. Part of the important functionof a land bank is to recognize the special nature of these properties and tocreate a far greater degree of flexibility in the terms and conditions uponwhich the land bank can convey these assets to third parties.

Both the St. Louis Land Bank and the Cleveland Land Bank have theauthority to determine the terms and conditions of the sale or other dis-position of properties, bu t with the significant caveat that sales to privatethird parties must be at fair market value. Created several years after theSt. Louis Land Bank and the Cleveland Land Bank had begun operations,the Louisville Land Bank and the Atlanta Land Bank were created with afar broader range of discretion. In both instances the enabling state legis-lation expressly exempts the land banks from the property disposition re-quirements otherwise applicable to local governments and delegates to thelocal governments the ability to establish disposition policies in the inter-

local agreements. 73 The Genesee Land Bank has complete authority to es-tablish the terms and conditions for the transfers of its properties. 74

Financing

Revenues from Operations

With the exception of the Atlanta Land Bank, the primary source offinancing for the operations of land banks tends to derive either from thebudgets of parallel local government agencies or from the managementand disposition of the properties. The St. Louis Land Bank, the ClevelandLand Bank, and the Louisville Land Bank all address questions of propertymaintenance and property management in tandem with "sister" agenciesin the participating local governments. In both St. Louis and Cleveland, aHousing Trust Fund is available to support activities that relate to the trans-formation of land bank properties into affordable housing.



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When property is transferred by a land bank for more than nominalconsideration, the proceeds of the sale are generally available to the land

bank for purposes of recovery of costs and expenses and for the operationsof the land bank itself. 75 When a land bank is required to convey propertiesat fair market value, there can be a substantial flow of funds from theproperties for sustaining the operational budget. The Atlanta Land Bank,in contrast, is required to distribute proceeds from sales back to the par-ticipating governments to the extent of the original tax delinquency, withany excess being available for operational expenses. The reliance of theAtlanta Land Bank on annual appropriations for its operating costs, to-gether with its inability to gain substantial funds from the sale and transferof properties, reflects a policy decision that the activities of the AtlantaLand Bank should be focused on transfers of property at nominal prices asa way of facilitating the development of the properties in a manner mostconsistent with the stated goals of the Atlanta Land Bank, such as the crea-tion of affordable housing.

The Genesee Land Bank has the broadest discretion and authority withrespect to its revenues. It is permitted to retain all income from all sourcesrelated to its property and operations, and is liable to its participating gov-ernments only in the event that it receives funds as payments of propertytaxes.

76

Special FundingAlthough there is debate as to whether the total operational costs of a

land bank are consistent with the costs recovered by transforming the prop-erty,7 an economic analysis of the efficiency of a land bank needs to ex-amine not just the "hard" costs of operations and taxes lost but also thecosts of the status quo of leaving the land vacant and abandoned (the ex-ternal costs imposed on surrounding properties as well as lost taxes) andthe long-term benefits from returning the land to productive taxpayingstatus. In recognition of the close connection between the transformativework of the land bank and future property tax revenues, the Michiganlegislature provides that 50 percent of property taxes for the five-year pe-riod commencing upon transfer to a private third party are returned to theland bank. 78 The Michigan land bank legislation also goes further than anyprior parallel initiatives in permitting a land bank to borrow money andissue tax-exempt financing.7

Waiver of Delinquent Taxes

The Atlanta Land Bank is unique among the five major land banks inthe manner in which it focuses its statutory and contractual authority tofacilitate the conversion of tax-delinquent properties into productive use.The core power utilized by the Atlanta Land Bank is its power "to extin-guish all county and city or consolidated government taxes" at the timethat the land bank sells or otherwise disposes of the property. 8 It uses thispower to encourage private third parties to acquire tax-delinquent property

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from existing owners and then engage in a "conduit transfer," in which theproperty is conveyed to the Atlanta Land Bank, the taxes are extinguished,

and the property is reconveyed by the land bank back to the new owner.81

Reliance on this power and the conduit transfer structure have severaladvantages. This program allows the private market, whether not-for-profit affordable housing developers or other entities, to identify and selectthe specific properties that they are willing to redevelop. This providessome assurance that the properties that pass through the land bank will in

fact be redeveloped within a specific period of time.This conduit transfer program of the Atlanta Land Bank also has the

advantage of not involving in any way the tax foreclosure process. It func-tionally uses the existence of delinquent taxes as a subsidy to encouragethe private market transfers to take place. 8 2 Prospective owners of the va-cant, abandoned, and tax-delinquent properties are in a position to acquire(by option agreement) the properties they seek without having to be subjectto the risk of bidding at foreclosure sales. Because the Atlanta Land Bankdoes not automatically receive title to all properties that are not sold at taxsales for minimum bids, it has a relatively small inventory of properties atany given time and these consist primarily of other properties conveyed toit by the participating governments. Conduit transfers are essentially si-multaneous transfers to the land bank, and then from the land bank to thenew owner, leaving the Atlanta Land Bank with no property managementor maintenance responsibilities.

Core Public Policies of Land Banks

Disposition Priorities

Disposition policies of land banks are structured both according to theidentity of the future owner of the property as well as to the future use ofthe property. It is common in practice that a land bank will give a prioritypreference on property dispositions to local governments or other publicagencies seeking to acquire the property. Public agencies in Missouri havethe right to acquire properties classified by the land bank as "suitable forpublic use"8

3and this is a permitted use, although not a priority use, for

the Atlanta Land Bank.84

The Louisville Land Bank is required to give ad-vance notice to all public housing authorities of anticipated transfers of itsproperty.

85In Michigan the local governments have a right of first refusal

on the acquisition of tax-reverted property prior to the conveyance to theland bank.

8 6

The Atlanta Land Bank gives first priority to "neighborhood non-profitentities obtaining the property for the production or rehabilitation of hous-ing for persons with low-incomes," with a second priority given to all otherentities seeking to use the property for low-income housing. 87 On a regularbasis the Atlanta Land Bank establishes applicable definitions of low in-come and moderate income to guide its preference for affordable housing.

88

The top priority for the Louisville Land Bank is the transfer of properties



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for residential use, 8 9 and priority in the Cleveland Land Bank is given "tothose proposals which involve new construction or are necessary for an

established development to be retained and expanded." 90 The GeneseeLand Bank has established six priorities to govern its disposition of prop-erties: (1) homeownership and affordable housing; (2 ) neighborhood revi-talization; (3) return of the property to productive tax-paying status; (4 ) landassemblage for economic development; (5) long-term "banking" of prop-erties for future strategic uses; and (6) provision of financial resources foroperating functions of the land bank. 91

Strategic Banking of Properties

The earliest proposals for land banking, originating in the 1960s, envi-sioned land banks as public entities that would acquire and hold for ex-tended periods of time large amounts of land. 92 The rationale for thesemajor "land reserve" initiatives was primarily that through public own-ership of land the local governments could control more effectively landuse patterns and development trends. The financial cost of such programs,the multiplicity of local government structures that insisted on autonomy,and constitutional questions about the use of eminent domain for suchpurposes kept these ideas simply in the proposal stage.

What was not contemplated by these early land bank proposals was thelarge volume of properties within the inner areas of both large and smallcommunities that would become vacant and abandoned in the last quarterof the twentieth century. While land banks were created to facilitate thetransfer of ownership of these properties and their redevelopment, theyhave become-although not necessarily by design-entities that in facthold significant inventories of properties for future use. This is particularlytrue in those instances in which a land bank automatically receives title toall properties that pass through a tax foreclosure proceeding without re-demption by the owner or purchase by a third party. In its first two yearsof operation (2002-2003), the Genesee Land Bank became the owner of2,000 parcels of property. In 2002, the St. Louis Land Bank and its sisteragencies had almost 10,000 parcels in inventory, including 2,000 buildings,amounting to roughly 3 percent of the total land area of the City of St.Louis, and 7 percent of all of the parcels of land in the city 93 The inventoryof the Cleveland Land Bank ranges from 4,000-6,000 parcels. 9 4 The St. LouisLand Bank transfers approximately 500 parcels each year 95 and the Cleve-land Land Bank has transferred as many as 500 parcels in certain years. 6

Both the Atlanta Land Bank 97 and the Louisville Land Bank 98 average 10 0to 150 dispositions each year.

If the primary function of a land bank is to facilitate the transformationof vacant, abandoned, and tax-delinquent properties into new productiveuses, then the ultimate success of a land bank is best measured by its owndemise. If a land bank is able to eliminate abandoned buildings that areharmful to a neighborhood and to attract new owners willing to invest newfunds in development, the very process of abandonment is slowed, and

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then halted. Tax delinquency declines and the private market are able toaccomplish property rehabilitation and renovation. A community that hasno vacant, abandoned, or tax-delinquent property has little need of a landbank. At least one jurisdiction, Cleveland, adopted this perspective as amatter of law by requiring that all land be conveyed from the land bankprogram within a fifteen-year period. 99

The original vision for land banks as land reserve entities remains rele-vant, however, in two ways. First, a continuing lack of demand in the pri-vate sector for properties within the inner city, as is the case when munic-ipal population has declined significantly, simply means an inadequatenumber of potential transferees of the land bank properties. In this situationthe land bank becomes by default the owner of properties for long periodsof time. As owners of significant portions of the land area in their munic-ipalities, the St. Louis Land Bank and the Genesee Land Bank necessarilybecome lead actors in community and land use planning. Their efforts andemphases inevitably require major policy decisions that will shape thecharacter and culture of the community for decades to come. City andregional planning undertaken either by the land bank staff or in conjunc-tion with sister departments and agencies becomes a major focus in plan-ning for the future uses of their properties.

The second aspect of the original vision for land banks that stands asan exception to the "successful demise" of a land bank is the possibility ofintentional decisions to hold tracts of land for future uses. A land bankshould evaluate its existing inventory of properties with an eye towardpublic or private uses of the land for which a demand emerges in the future.The easiest example is the identification of properties that could be heldfor future use as public spaces-parks, open spaces, recreation areas-when and as the surrounding neighborhoods stabilize and revitalize. An-other example would be for a land bank to hold properties pending thedevelopment of adequate capacity in the not-for-profit community devel-opment sector, or pending the possible expansion of industry, or of existinginstitutions, such as educational or health care. 100 The Genesee Land Bankhas adopted a policy expressly contemplating the transfer of ownershipby not-for-profit entities to the land bank to be held pending futuredevelopment.

Governance of Land Banks

The governance structure of a land bank reflects three important vari-ables that are different for every city. First is the nature of the allocation ofauthority between the state government and the local governments. Secondis the presence of multiple local governments with overlapping jurisdiction.Third

isthe

set of socioeconomicconditions

ofthe particular community.

Corporate Structure

The formal legal structure for a land bank is determined primarily bythe allocation of powers and authority between the state and its local gov-



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ernments. Among the five major land banks, four of them-St. Louis, Lou-isville, Atlanta, and Genesee-exist as independent public legal entities.The St. Louis Land Bank is an independent authority authorized by stat-ute. 10 ' In Louisville 1 2 and Atlanta, 10 3 the land banks are authorized by statestatute but created pursuant to an interlocal agreement. In Michigan, theland banks are created pursuant to an intergovernmental agreement be-tween the local government and the state land bank authority.' 4 The At-lanta, Louisville, and Genesee Land Banks each has its own articles of in-corporation and bylaws. The Cleveland Land Bank does not exist as aseparate legal entity independent of the city. Instead, it operates as a pro-gram of the city authorized by state statute in which the city elected toparticipate. 5

The primary advantage of being an independent public legal corpora-tion is a degree of autonomy and independence from the various levels ofbureaucracy and from political considerations that may characterize a localgovernment structure. As a separate legal corporation, it must have its ownboard of commissioners or directors, but these may consist of or be ap-pointed by local government officials. Unless it is a separate land reutili-zation program expressly authorized by state statute as in the case of Cleve-land, a separate legal corporation is necessary so that the entity havepowers of property acquisition and disposition that are not subject to thedisposition procedures of the local governments. The essential powers ofa land bank for property management and disposition, for financing, andfor waiver of delinquent taxes need to be specifically authorized by lawfor the independent corporation, or the program of the city.

The existence of a land bank as an independent corporate entity pos-sessing its own powers is a separate issue from whether a land bank canor should have its own independent staff. In the instance of the LouisvilleLand Bank, the local governments provided in the interlocal agreementthat the land bank would not have any employees of its own and that allwork would be done by the staff of other local government departments."'

6

As the Cleveland Land Bank is not a separate legal entity, the employeesare all employees of the City of Cleveland. The Atlanta Land Bank providesfor direct employment of the necessary staff, as do the St. Louis Land Bankand the Genesee Land Bank.

Governing Board

Whenever a land bank is a separate legal entity, it is by law governedby its own board of directors or board of commissioners. In each of thefour major land banks in which this is the case, members of the governingboard may be either private citizens or employees of one of the local gov-

ernments. In all cases they serve without compensation. In St. Louis, theland bank board is composed of three commissioners appointed by themayor, the comptroller, and the superintendent of the public schools. 1 7 InLouisville, each participating local government appoints one member ofthe authority, the local school district appoints one member, and the gov-




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ernor has one appointment.'08 A similar approach is taken in Georgia,where participating local governments each appoint two members. Under

the Georgia structure, a land bank authority may consist of one or moremunicipalities in a county, together with the county in which they are lo-cated, so the size of the board is limited only by the number of parties to

the interlocal agreement.'9

In the Atlanta Land Bank, the city and countyschool districts may appoint a representative to the board who serves inan advisory capacity"

Local land banks in Michigan determine the size,

composition, and method of appointment of board members in the inter-governmental agreement, with the statute requiring only that the boardconsist of an odd number of members and that the country treasurer serveas one of the members."'

Administrative Policies of Land Banks

Setting Categories of Properties or Disposition

With a goal of transforming vacant, abandoned, and tax-delinquentproperties into productive use, each land bank is faced with the challengeof establishing criteria for the future use of the property and in many in-stances the identity of the future users of the property. When the inventoryavailable to a land bank has been classified and evaluated, the land bankturns its focus to the disposition of the property.

For some land banks, the primary goal is simply to return the propertyto private ownership that will be responsible in future years for paymentof property taxes and for maintaining the property in compliance withbuilding and housing codes. With this overriding purpose, the land banksets few, if any, preferences or priorities for future use of the land. Any useis permitted by any party so long as it is otherwise consistent with localzoning. The Louisville Land Bank follows a broad standard of evaluatingpotential uses based on a determination of what is the highest and best useof property for the city."

2Other jurisdictions, in contrast, have established

preferred future uses of properties that are indicative of specific needs ofthe community. Special disposition programs for the conveyance of "sidelots" to the adjoining property owners for nominal consideration have beencreated by the St. Louis, Cleveland, and Genesee Land Banks.

The Atlanta Land Bank is required to adhere to a first-priority use forits properties in the development of affordable housing."

3The land bank

regularly adopts definitions for income eligibility as the operating guide-line for what constitutes "affordable" housing."

4A second priority is given

to the proposed use of the property for "community improvement or otherpublic purposes." These uses include community gardens, playgrounds,and parking for schools and cultural centers. In order to qualify for thissecond-priority use, the transferee must demonstrate that no alternativetax-generating use is available and that the proposed use is consistent witharea redevelopment plans.



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Both because it is the most recent land bank to be created and thus ableto build upon the experiences of the other cities and because of the sheer

magnitude of the number of its properties, the Genesee Land Bank hasadopted three different categories for evaluating proposed dispositions ofproperty: (1) priorities for the use of the property, (2) priorities as to thenature of the transferee, and (3) priorities concerning neighborhood andcommunity development. 1 5 The ranking of priority as to use begins withhomeownership and affordable housing, followed by neighborhood revi-talization and returning the property to taxpaying status. A total of sixpotential uses are identified. The priorities as to the nature of the transfereereflect a preference for nonprofit corporations but include a range of fivedifferent forms of transferees. The priorities concerning neighborhoodand community development essentially serve as guidelines for directingthe efforts of the land bank across neighborhoods throughout the entirecommunity.

Identifying Eligible Property Owners

Developer Proposals: All land banks require that an individual or entityseeking to obtain property from the land bank submit a written proposal.The written proposal is then used to evaluate both the transferee and theproposed use of the property to make sure that it meets the minimum

criteria. There is a wide range in the extent of information that is requiredby land banks in the development proposal. The Louisville Land Bankrequires a letter stating the proposed use of the land, a building plan, andevidence of financial backing. 1 6 The Genesee Land Bank requires an ex -tensive application for commercial land transfers containing the essentialinformation that would normally be required for an application for devel-opment financing.' 7 In light of the length of time that may be required toassemble all of the components for a complete development proposal, sev-eral of the land banks have an express policy permitting a transferee toacquire an option on the property held by the land bank. The St. Louis

Land Bank permits options ranging from three to twelve months."8

TheGenesee Land Bank permits a transferee to obtain an option to acquire theproperty upon payment of 10 percent of the anticipated price. The optionis valid for one year and subject to compliance with all other policies." 9

In al l jurisdictions both corporations and individuals may apply to ac -quire property from the land bank. The Atlanta and Genesee Land Banksgive preference to not-for-profit corporations planning to use the propertiesfor affordable housing, and the largest transferee of properties from theCleveland Land Bank has been a not-for-profit housing developer. If itappears that no not-for-profit corporation is interested in or perhaps ca -pable of developing the property, it can be made available to any otherprivate corporation. The St. Louis Land Bank establishes a sales price forland sold to nonprofit entities or entities that will use the property for "astrong public purpose" at 50 percent of the standard price.

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Although all of the land banks seek to have properties returned to pro-ductive use and become tax-generating properties once again, most of theland banks are concerned about the possibility of transferees of the prop-erties being individuals or entities whose primary goal is to hold owner-ship of the land for future resale. The acquisition of land bank propertiesfor long-term speculation may indeed accomplish the goal of placing own-ership in a new entity that will pay property taxes. It will fail, however, tomeet the parallel goals of revitalization and redevelopment. To address thisconcern most land banks require not only that the requests for propertiesset forth specific development plans but also that the development occurwithin a specific period of time. The Louisville Land Bank is expresslyprohibited by statute from conveying property to any entity that plans tohold it "for investment purposes only and with no intent to use the prop-erty other than to transfer the property at a future date for monetarygain."

1 2 0

Requirements for Owner-Occupied Properties: Both in form and infunction, a major result of land bank programs has been the creation ofnew homeownership opportunities. Land banks that deal only with vacantland accomplish this by transfers to residential developers for sale to newhomeowners, or occasionally by transfers directly to an individual whobuilds and occupies a new residence. Land banks that also deal with prop-erties having residential structures on them transfer these properties to newowners who undertake the structural rehabilitation necessary for occu-pancy. Properties in these single-family homeownership programs are sub-ject to the same eligibility requirements applicable to other programs. Therecan be no prior or existing tax delinquency, no existing code violations onother properties, and the proposed development must be completed withina specific period of time. In order to avoid the potential problem of trans-ferees acquiring property solely for purposes of resale, both the AtlantaLand Bank and the Genesee Land Bank require that the transferee occupythe property as his or her principal residence for a period of five yearsfollowing the date of the transfer.121 Breach of this contractual obligationrenders the transferee liable to the land bank for the full value of subsidyprovided by the land bank.

Establishing the Price: One advantage of possessing tax-foreclosedproperties, land acquired by local governments from other liens or sales,or other surplus lands is, at least theoretically, the flexibility of pricingpolicies. The most significant differences, however, among existing landbanks occur in the prices that they charge for the properties they convey.These differences reflect profound differences in state laws and local poli-cies and in the function of the land bank itself. At one end of this spectrumis the classic position of local government law that publicly owned prop-erties must be sold at fair market value. At the other end of this spectrumis the position that the properties should be conveyed to transferees forlittle or no cash consideration as a way of subsidizing the long-term goalsof the land bank.



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16 2 Journal of Affordable Housing

There are four primary justifications for requiring that property be trans-ferred for fair market value. The first is that the value received from thetransfers can provide revenues both to cover land bank operational costsand to generate possible general revenues to the local government. Thesecond is that transfer of property for less than fair market value confersa benefit on the transferee-a form of gratuity or gift of public assets toprivate parties. The third justification arises from a concern that transfersfor less than full value can result in inconsistent transactions with differentparties and the appearance of favoritism. A fourth justification is that prop-erties obtained by a land bank have very little fair market value so thereis no obstacle to conveyances.

A requirement that full fair market value be obtained for all transfersby a land bank creates, however, a number of problems. The most signifi-cant one is that many of the properties end up in the land bank preciselybecause there is no clear private market for their sale, or no clear marketvalue. A fair market value requirement can ironically undercut one of thegoals of the land bank and leave large inventories of properties remainingin public ownership generating no tax revenues. Equally significant is thatfair market value transactions often must be based on professional ap-praisals, which themselves create additional transaction costs for transfers.When the underlying property has little if any development potential, anappraisal requirement is counterproductive. If approval of transfers is re-quired not just by the land bank staff and board but also by the governingbody of the local government, the land bank ends up serving little function.

Both the St. Louis Land Bank122 and its predecessor the JacksonCountyLand Trust (Kansas City, Missouri) 123 have presumptions that property suit-able for private use must be conveyed at full fair market value. The St.Louis Land Bank publishes standard selling prices for properties as deter-mined by the land bank based upon its own analysis of the neighborhoodconditions and specific property attributes. Properties in certain locationsand properties involving commercial, industrial, and riverfront locationsrequire appraisals,

asdo occupied residential buildings and buildings

ca-pable of occupancy. Every deed must indicate whether the property is be-ing sold for an amount equal to or less than two-thirds of fair market value,and, if less than two-thirds, the separate approval of the local governmentsis required. Property that is suitable for public use or not usable in itspresent condition can be transferred at no cost.

The Louisville Land Bank establishes a minimum price of $300 per par-cel for properties to be used as new single-family homes and in all othercases sets the minimum price as the tax-assessed value of the property. 124

The Cleveland Land Bank is required to obtain fair market value, but it

takes the simple and perhaps most time-efficient approach by selling non-productive land at its fair market value (which presumably is minimal)and all buildable lots at $100 per lot.25

A land bank has maximum flexibility to meet a range of public goalsand policies when the land bank has discretion either to set the selling price

Volumel14 Number 2 Winter 2005



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for the property or to agree that the value of the consideration can be metthrough the development commitments of the transferee. The Atlanta LandBank has complete discretion in establishing the sale price for its property

1 6

and, as a routine matter, does not require that any cash consideration bepaid at the time of property transfers. This approach enables the AtlantaLand Bank to utilize the value of the property as a subsidy to the transfereeto assist it in accomplishing the primary purpose of providing affordablehousing.

With the broadest range of types of properties in its inventory of all landbanks, the Genesee Land Bank has adopted a multitiered structure for pric-ing and payment of consideration, depending primarily on the types ofproperty involved and the nature of the intended uses. 27 Except with re -spect to its Side Lot Program, the minimum consideration is set at the lowerof fair market value or "Project Costs." Project Costs are defined as "theaggregate costs and expenses of the Land Bank attributable to the specificproperty in question, including costs. of acquisition, maintenance, repair,demolition, marketing of the property and indirect costs of the operationsof the Land Bank allocable to the property."'1

28

Key to the pricing policies of the Genesee Land Bank is its authority todetermine when and how the consideration is "paid" by the transferee.When properties are transferred to not-for-profit entities for affordablehousing, the amount of consideration is determined both by the value ofthe property and by the level of indirect subsidy required for the housingto be affordable. The consideration can be provided by annual performanceof the commitment to provide affordable housing. Correspondingly, whenthe Genesee Land Bank elects to transfer property, whether unimprovedland, parcels with residential structures ready for occupancy, or commer-cial tracts, without any restrictions or requirements that the property beused to achieve specific public goals, the consideration is set at fair marketvalue and must be fully paid at the time of the transfer.

Possessing a Right to Reacquire Properties: When a land bank transfersproperties, it normally does so in anticipation that the transferee will un-dertake certain commitments concerning development and future use ofthe property. The initial approach taken to provide assurance of perfor-mance of the written commitments was the St. Louis Land Bank require-ment that it retain a right of reentry for an eighteen-month period followingclosing. 129 This concept was carried forward to the Louisville Land Bank.130

The procedures for the Atlanta Land Bank require that all conveyancesprovide that "title will revert" to the land bank if construction or rehabil-itation is not commenced within three years of the conveyance.' 3' The Gen-esee Land Bank expressly provides that both restrictive real covenants andsecured financing may be used to enforce the obligations.

32

Conclusion

Cities that are confronting significant inventories of vacant, abandoned,and tax-delinquent properties can benefit from the creation of a land bank



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that has as its primary purpose the transformation of these properties intoproductive uses under new ownership. The work of land banks in St. Louis,Cleveland, Louisville, Atlanta, and Flint over the past twenty-five yearsdemonstrates a range of approaches in overcoming the barriers to renewingurban land. With adequate enabling statutes, land banks can be created inany jurisdiction and adapted to meet the particular needs, concerns, andpriorities of each specific jurisdiction. Land banks have become essentialtools in the hands of local governments to convert abandoned propertiesfrom liabilities into assets.

1. See FRED P. BOSSELMAN, ALTERNATIVES TO URBAN SPRAWL: LEGALGUIDELINES FO R GOVERNMENTAL ACTION

(1968).2. See, e.g., WILLIAM L. LETWIN, MUNICIPAL LAND BANKS: LAND-RESERVEPOLICY FOR URBAN DEVELOPMENT (1969); SYLVAN KAMM, LAND BANKING: PUB-LIC POLICY ALTERNATIVES AND DILEMMAS (1970).

3. See, e.g., Peter A. Buchsbaum,.Old Wine in New Bottles: RedevelopmentTales of a City, Suburb, and a State, 30 URB. LAW. 745 (1998); Rick Cole et al.,Building Livable Communities: New Strategies or Promoting Urban Landfill, 55 URB.LAND 37 (1996). This included recommendations for zoning and other regula-tory requirements for mixed-income residential neighborhoods. See DAVIDRUSK, INSIDE GAME/OUTSIDE GAME: WINNING STRATEGIES FO R SAVING URBAN

AMERICA (1999).

4. See J. M. Schilling, The Revitalization of Vacant Properties: Where BrokenWindows Meet Smart Growth (International City/County Management Ass'n2002). The National Vacant Properties Campaign of Smart Growth America,Local Initiatives Support Corporation, and International City/County Man-agement Association were launched in July 2003, available at www.vacantproperties.org (last visited Nov. 23, 2004).

5. Early in the twentieth century, Congress created a system of federal landbanks for the purpose of providing long-term agricultural loans. See FederalFarm Loan Act, Pub. L. No. 64-158, 245, 39 Stat. 360 (1916). In many ways aforerunner to the creation of the federal home loan banks in the 1930s and thegradual emergence of the secondary mortgage market for residential loans, theFederal Land Banks and their sister agencies, the Federal Intermediate CreditBanks, were reorganized and renamed Farm Credit Banks by Congress in 1987.See The Agricultural Credit Act of 1987, Pub. L. No. 100-233, 101 Stat. 568-1718(1988). These Federal Land Banks did not acquire, convey,or hold property forassemblage or for long-term development. They were (and are) banks in theconventional sense of providing liquidity.

6. The original, and dominant, use of land trusts has been for environ-mental preservation with millions of acres of land now being held by nationaland local land trusts for ecological and environmental purposes. See Itzchak E.Kornfeld, Conserving Natural Resources and Open Spaces: A Primer on Individual

Giving Options, 23 ENVTL. L. 185 (1993). See also Randee Gorin Fenner, LandTrusts: An Alternative Method of Preserving Open Space, 33 VAND. L. REV. 1039(1980). The Institute for Community Economics defines a community land trustas "a private non-profit corporation created to acquire and hold land for thebenefit of a community and provide secure affordable access to land and hous-

Volume 14 , Number 2 Winter 2005



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ing for community residents." Institute for Community Economics, available atwww.iceclt.org/clt (last visited Nov. 23, 2004).

7. Sylvan Kamm suggests that the earliest reference to a public land bankauthority can be traced to a 1937 proposal of the National Resources Commit-tee. See KAMM, supra note 2, at 2, n.6.

8. See BOSSELMAN, supra note 1, at 44-45.9. David L. Callies, Commonwealth of Puerto Rico v. Rosso: Land Banking

and an Expanded Concept of Public Use, 2 LAND USE CONTROLS: A QUARTERLYREVIEW 17 , 18 (1968).

10. LETWIN, supra note 2, at 3. Letwin identified fourteen separate functionsfor the municipal land reserve policies of a land bank. Id. at 19.

11. Richard P. Fishman & Robert D. Gross, Public Land Banking: A New Praxisfor Urban Growth, 23 CASE W. RES. L. REV. 897, 899 (1972).

12. See LETWIN, supra note 2, at 19 (one objective may be "to reduce the priceof land on the open market").

13. See Charles M. Haar, Wanted: Two Federal Levers for Urban Land Use-Land Banks and Urbank, U.S. Congress, House Committee on Banking and Cur-rency; Papers submitted to Subcommittee on Housing; Panels on Housing Pro-duction, Housing Demand, and Developing a Suitable Living Environment927-40 (June 1971).

14. Id. at 935.15. See Vance Hartke, Toward a National Growth Policy, 22 CATH. U. L. REV.

231 (1973); Sylvan Kamm, Land Availability or Housing and Urban Growth, Sub-committee on Housing; Panels of the House Committee on Banking and Cur-rency, 92d Congress 263-86 (June, 1971).

16. See KAMM, LAND BANKING, supra note 2; HARVEY L. FLECHNER, LANDBANKING IN TH E CONTROL OF URBAN DEVELOPMENT (1974).

17. JOHN SANGER, LAND BANKS FO R PLANNING AN D CONTROL: SOME G E N -

ERAL PRINCIPLES AND A SPECIFIC APPLICATION IV-10 (1967).18. Id. at IV-18.19. LETWIN, supra note 2, at 182 ("A municipal land bank should have as its

secondary function to assemble, redevelop, and reparcel land in decayed areaswithin the city, so as to correct and reduce decay within the developed areas.");id . at 235.

20 . Haar, supra note 13, at 933.21. See FLECHNER, supra note 16.22 . See MILWAUKEE DEP'T OF CITY DEV., DIV. OF ECON. DEV., THE LAND BANK:

EIGHT YEARS OF INDUSTRIAL DEVELOPMENT PROGRESS, 1964-1971 (1972).23. See ADVISORY COMM'N ON INTERGOVERNMENTAL RELATIONS, URBAN

AND RURAL AMERICA: POLICIES FO R FUTURE GROWTH 110, 161 (1968).24. LAND BANK HANDBOOK: ADVANCE ACQUISITION OF SITES FO R LOW AND

MODERATE INCOME HOUSING A-1 (Carol Van Alstyne ed., 1972).25. For purposes of simplicity and clarity, this article refers to the land bank

programs and activities of these five cities with shorthand references. The for-mal identities of the programs, and the references as used herein, are: (i) the St.

Louis Land Reutilization Authority-the St. Louis Land Bank; (ii) the ClevelandLand Reutilization Program-the Cleveland Land Bank; (iii) the Louisville andJefferson County Landbank Authority, Inc.-the Louisville Land Bank; (iv) theFulton County/City of Atlanta Land Bank Authority, Inc.-the Atlanta LandBank; and (v) the Genesee County Land Bank, Inc.-the Genesee Land Bank.



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50 . See 1893 Mich. Pub. Act 206, as amended by 1999 Mich. Pub. Act 123;MICH. COMP. LAWS 211.1 et seq.

51. See 2003 Mich. Pub. Act 258; MICH. COMP. LAWS 124.751.52 . See MICH. COMP. LAWS 124.773(4). Pursuant to this legislation, the In-tergovernmental Agreement between the Michigan Land Bank Fast Track Au-thority and the Treasurer of the County of Genesee, Michigan, creating theGenesee County Land Bank was signed December 7, 2004. The land bank cre-ated by this agreement is designed to serve as the successor to the initial Gen-esee Land Bank.

53. See Mo. REV. STAT. 92.830; Ky. REV. STAT. ANN. 65.375(1).54 . See OHIO REV. CODE ANN. 5722.04.55. See MICH. COMP. LAWS 124.755(3)(b).56 . See id. LAWS 124.755(6).57 . See GA. CODE ANN. 48-4-64(a).58. See Atlanta Land Bank Interlocal Agreement, supra note 44, at VII.B.59. OHIO REV. CODE ANN. 5722.01(E)(2).60. See generally Frank S. Alexander, Renewing Public Assets for Community

Development (2000).61. Mo. REV. STAT. 92.875(1); Ky. REv. STAT. ANN. 65.370(1).62. GA. CODE ANN. 48-4-61(b), 16-13-49(u)(2.1).63. See Atlanta Land Bank Interlocal Agreement, supra note 44 , at IV.B;

MICH. COMP. LAWS 124.755(4).64. OHIO REv. CODE ANN. 5722.10; Atlanta Land Bank Interlocal Agree-

ment, supra note 44, at IX.A.4; MICH. COMP. LAWS 124.756(3).65. See GA. CODE ANN. 48-4-63(b); Ky. REv. STAT. ANN. 65.370(2); MICH.

COMP. LAWS 124.757(2); Mo. REv. STAT. 92.900(1), 92.910; OHIO REV. CODEANN. 5722.06(B), (C).

66 . Mo. REv. STAT. 92.875(1).67 . Ky. REV. STAT. ANN. 65.370(2)(d); Atlanta Land Bank Interlocal Agree-

ment, supra note 44, at VI.C.4.68. MICH. COMP. LAWS 124.764(1).69. Id. 124.756(1)(b).70. Atlanta Land Bank Interlocal Agreement, supra note 44, at VII.C.71. See MICH. COMP. LAWS 124.754(1).72. See id. 124.765(4).73. GA. CODE ANN. 48-4-63(c); Atlanta Land Bank Interlocal Agreement,

supra note 44, at VI.C.4.; Ky. REv. STAT. ANN. 65.370(7); Louisville Land BankInterlocal Agreement, supra note 41, at V.

74 . MICH. COMP. LAWS 124.757(1).75. See Mo. REV. STAT. 92.915(2) (sales proceeds applied to payment of

expenses); OHIO REv. CODE ANN. 5722.08 (sales proceeds applied first to re-imbursement of expenses).

76. MICH. COMP. LAWS 124.758.77 . Robert Simons & Dean Thomas Hall, Strategies for More Efficient Utili-

zation of Non-Productive Land (1993).78. 2003 Mich. Public Acts 260,261; MICH. COMP. LAWS 211.7gg, 211.1021.

79. MICH. COMP. LAWS 124.774.80. GA. CODE ANN. 48-4-64(c).81. See Larry Keating & David Sjoquist, The Fulton County/City of Atlanta

Land Bank Authority: Program Overview and Application (2001); Lisa Mueller, At-lanta Case Study: Model Practices n Tax Foreclosure and Property Disposition (2003).



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113. See Atlanta Land Bank Interlocal Agreement, supra note 44, at IX.B.114. Atlanta Land Bank Interlocal Agreement, supra note 44, at VI.D.2.

115. See Genesee Land Bank Policies and Procedures, supra note 91, at 2.116. See Louisville Land Bank Policies and Procedures, supra note 89, 19.117. See Genesee Land Bank Policies and Procedures, supra note 91, at 6.B.118. See St. Louis Land Bank Policies, available at stlouis.missouri.org/

development/realestate (last visited Jan. 26, 2004).119. See Genesee Land Bank Policies and Procedures, supra note 91, at 5.A.8,

6.A.8.120. Ky. REV. STAT. ANN. 65.370(5).121. See Atlanta Land Bank Owner Occupant Policy (revised Nov. 23, 1998);

Genesee Land Bank Policies and Procedures, supra note 91, at 5.A.17.122. See Mo. REV. STAT. 92.900(3).

123. See Jackson County Land Trust, available at www.jacksoncountylandtrust.org (last visited Nov. 23, 2004).

124. See Mo. REV. STAT. 92.895(2). This same approach is followed by theland reutilization commissions in Nebraska. See NEB. REV. STAT. 77.3205.

125. See OHIO REV. CODE ANN. 5722.07; Cleveland Land Bank Policies,available at www.city.cleveland.oh.us/government/departemtns/commdev/edneihdev/cdndlandbank.html (last visited Nov. 23, 2004). The Dallas, Texas,land transfer program is authorized by statute to transfer tax-foreclosed landat a fixed price of $1,000 for up to 7,500 square feet of land, and an additional$0.133 for each additional foot. TEX. TA X CODE 34.015.

126. See GA. CODE ANN. 48-4-64(e).127. See MICH. COMP. LAWS 124.755(1), 124.757(1); Genesee Land Bank

Policies and Procedures, supra note 91, at 3.128. Genesee Land Bank Policies and Procedures, supra note 91, at 3.129. See St. Louis Land Bank Policies, available at stlouis.missouri.org/

development/realestate (last visited Jan. 26, 2004).130. See Louisville Land Bank Policies and Procedures, supra note 89, 1 22,

25.131. Atlanta Land Bank Interlocal Agreement, supra note 44, at XI.B.132. See Genesee Land Bank Policies and Procedures, supra note 91, at

5.A.10.

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