Land Banking: An Opportunity for Southern New England?
From Bubble to Crisis Over 14.2 million year-round housing units were vacant in 2010 . . . a 3.8 million increase from 200...
What Is a Land Bank? Land banks are governmental, quasi-governmental, or nonprofit entities that acquire distressed proper...
Genesee County Land Bank Authority This land bank became a remarkable success and a model for other land banks in response...
Cuyahoga County Land Reutilization Corp. CCLRC was established in 2009 as a nonprofit community corporation. In just over ...
New York’s Land Banks NY passed legislation in July 2011 authorizing the creation of 10 land banks to acquire tax delinque...
Saving Our Neighborhoods: Rhode IslandHousing’s Land Bank ProgramA presentation to the 2012 Southern New EnglandPlanning C...
Outline of Presentation•   History and Intent of Program•   Key Aspects•   Recent Trends•   Examples of Properties•   Conc...
History and Intent of Program• Authorized in 1990s became active in 2001• Last program change enabled provision of  bridge...
Key Aspects: Who• Rhode Island Housing is authorized to acquire and  hold properties on behalf of eligible developers for ...
Key Aspects: What• Threshold Requirements:    – Infrastructure    – Ability to proceed    – Consistent with zoning, or dim...
Key Aspects: What (cont.)• Evaluation:    –   Meets threshold requirements, especially Holding Period    –   Developer cap...
Key Aspects: What (cont.)• Developer Agreement:    – Pays for appraisals and title searches    – Pays for “carrying costs,...
Key Aspects: What (cont.)• Option for Bridge Financing:    – New since 2001    – Exercised when Property is occupied    – ...
Recent Trends: Investment History                  Rhode Island Housing Annual Investments in Land Bank Program           ...
Recent Trends: Investment History (cont.)• In the last 13 years, Rhode Island Housing has made nearly  $44 million worth o...
Recent Trends: Investment History (cont.)• History reflects trends pertaining to mission of  Rhode Island Housing, state’s...
Recent Trends: Other RI Programs• HUD Neighborhood Stabilization Program    – $4.35M of $19.6M award used for Land Bank   ...
Achieving Affordable Homes: Block IslandRhode Island HousingSNEAPA Conference, 9/21/2012         20 of 20
Achieving Affordable Homes: Block Island (cont.)Rhode Island HousingSNEAPA Conference, 9/21/2012                       21 ...
Saving Our Neighborhoods: ProvidenceRhode Island HousingSNEAPA Conference, 9/21/2012       22 of 20
Saving Our Neighborhoods: Providence (cont.)Rhode Island HousingSNEAPA Conference, 9/21/2012             23 of 20
Saving Our Neighborhoods: PawtucketRhode Island HousingSNEAPA Conference, 9/21/2012          24 of 20
More Work To Be Done: ProvidenceRhode Island HousingSNEAPA Conference, 9/21/2012   25 of 20
More Work To Be Done: ProvidenceRhode Island HousingSNEAPA Conference, 9/21/2012   26 of 20
Conclusions• Land banking facilitates an organizations ability  to assemble critical mass of properties for large  scale r...
For more information:                  Carol Ventura            Director of Development              Rhode Island Housing ...
Land Banking in    MassachusettsErin Graves, Policy Analyst
Overview• Why the Fed cares• Land Banks in context• Applying the land bank model in  Massachusetts• Receivership as an alt...
Why the Boston Fed cares• Mission• My work
“Promoting Economic Growth in Lower Income Communities” The Federal Reserve’s Community Development Unit promotes this age...
NSP Study• Instruments  – Survey  – Open ended  – Parcel condition• Administration  – Pre and post treatment
A little Context• Other Massachusetts Land Banks  – Massachusetts Land Bank of 1740  – Massachusetts Land Bank Fund 1980s ...
Land Banks:An Option for Low-Value Properties• Some REO properties are low value and less likely to be  viable in private ...
Land Bank capacity•   Limited capacity nationwide     – Institutional infrastructure     – Funding•   Land banks and low v...
Similarity to Banks• Four analogous functions  – Storing assets  – Stabilizing secondary markets  – Holding capital reserv...
Foreclosures in Massachusetts• Areas  – Boston metro  – Shrinking cities• Low value locations• Multi jurisdictional
Applying the land bank model to                MA• Can mitigate extremes in the regional real  estate  – Shrinking cities ...
Target properties in  Massachusetts
Target properties in  Massachusetts
Considerations and caveats• Foreclosures: a symptom not a cause• Maintaining properties both fiscally and physically   –  ...
Receivership: An alternative• What is it?• Why is it used?• Key players and processes• Who qualifies• Funding streams
CONNECTICUT: THE LAND OF STEADY HABITS ANDALMOST NO LAND BANKS  By Timothy D. Bates
Land Bank “Lite”The Connecticut Approach1. Focuses on environmentally-   distressed property or inner-   city housing.2. T...
The State has anauthorized land bankprogram, but it iscurrently not funded.See Section 8-214d.
LAND BANK PROGRAMThis program lasted 10 to 15 years, but went intodormancy in about the year 2000.It was run by nonprofits...
Build your own land bank by selling taxliens.-- Used by Plainfield andNorwich to attractdevelopers to old industrialsites....
Authorized by Section 12-195h, which reads:      Any municipality, by resolution of its legislative body, as defined      ...
The development agreement allowsthe municipality to acquire the taxliens if:-- The developer does not completedue diligenc...
-- The advantage to themunicipality is that itinvolves a developer in anotherwise unmarketableproperty.-- The advantage to...
ANOTHER APPROACH           Local development           corporations use tax credits           to purchase homes out of    ...
Funded by the Department ofRevenue Services through theNeighborhood Assistance ActProgram.-- These State tax credits arefu...
The program targets certainneighborhood clusters of 3 to5 homes and seeks to connectand build around thoseclusters.-- It i...
Science Park Development Corporation hasutilized tax foreclosures to enlarge or fill in its88-acre industrial site in New ...
Science ParkDevelopment Corp.has been funded overthe years by StateDECD and federalHUD money.-- Targetssurroundingproperti...
ANTI-BLIGHTThe anti-blight ordinance can help around the edges. C.G.S.Section148(c)(h):   Make and enforce regulations for...
Section 12-183 creates a new programadministered by DEEP to encourageinvestment in Brownfields.•   Promotes economic devel...
Connecticut’s programsare: limited, targeted,incremental.• Reflect a stable  population, as opposed to  Midwest industrial...
Land Banking
Land Banking
Land Banking
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Transcript of "Land Banking"

  1. 1. Land Banking: An Opportunity for Southern New England?
  2. 2. From Bubble to Crisis Over 14.2 million year-round housing units were vacant in 2010 . . . a 3.8 million increase from 2000. U.S. Census Bureau, Table 982, Total Housing Inventory for the United States: 1990 to 2010, (2012). In July 2012: Overall foreclosure activity had decreased since July 2011. Bank repossessions decreased annually for the 21st straight month. “Foreclosure starts” increased 6% from July 2011. CT led (201% increase), NJ (164% increase), PA (139%), IN (83%), and MA (65%). RealtyTrac’s Foreclosure Market Report (July 2012), available at www.realtytrac.com. CA, AZ, and FL have highest foreclosure rates.
  3. 3. What Is a Land Bank? Land banks are governmental, quasi-governmental, or nonprofit entities that acquire distressed properties and then hold and manage them for future use or resale. They typically acquire properties through tax foreclosure, mortgage foreclosure, market transfers, and/or donations. They maintain properties and rehabilitate them through improvements, redevelopment, or demolition.
  4. 4. Genesee County Land Bank Authority This land bank became a remarkable success and a model for other land banks in response to the mortgage crisis and the Great Recession. Between 2004 and 2009, it repurposed 1,500 properties. GCLBA acquires most of its properties through tax foreclosure. It receives half of the property taxes that are collected on the properties for the first five years after they are transferred. Michigan’s Delinquent Property Tax Foreclosure Act of 1999 and Land Bank Fast Track Act in 2003 paved the way for its success.
  5. 5. Cuyahoga County Land Reutilization Corp. CCLRC was established in 2009 as a nonprofit community corporation. In just over a year, CCLRC acquired 495 properties, demolished 167 properties, and transferred 80 properties to cities or redevelopers. It now acquires about 100 per month. CCLRC is a private nonprofit corporation, but also has key public powers. CCLRC has a reliable and significant funding stream, which is approximately $7 million per year. It is primarily financed through the payment of interest and penalties on delinquent property taxes and assessments. Most of CCLRC’s properties come from Fannie Mae, HUD, and major lenders.
  6. 6. New York’s Land Banks NY passed legislation in July 2011 authorizing the creation of 10 land banks to acquire tax delinquent, foreclosed, vacant, or abandoned properties. Any foreclosing governmental unit (“FGU”) can apply to the state to create a land bank, which will be a nonprofit corporation. As of May 2012, five land banks were approved in New York: The Cities of Buffalo, Lackawanna, and Tonawanda, as well as Erie County The City of Syracuse and Onondaga County The City of Schenectady, County of Schenectady, and City of Amsterdam Chautauqua County The City of Newburgh
  7. 7. Saving Our Neighborhoods: Rhode IslandHousing’s Land Bank ProgramA presentation to the 2012 Southern New EnglandPlanning Conference, September 21, 2012, Hartford, CT
  8. 8. Outline of Presentation• History and Intent of Program• Key Aspects• Recent Trends• Examples of Properties• ConclusionRhode Island HousingSNEAPA Conference, 9/21/2012 9 of 20
  9. 9. History and Intent of Program• Authorized in 1990s became active in 2001• Last program change enabled provision of bridge financing• Primary purpose to reduce barriers to the production of long-term affordable homes• Also used as tool for neighborhood revitalizationRhode Island HousingSNEAPA Conference, 9/21/2012 10 of 20
  10. 10. Key Aspects: Who• Rhode Island Housing is authorized to acquire and hold properties on behalf of eligible developers for a limited period of time• Interdivisional committee makes decisions• Eligible Developer: – Government entity – Public housing authority or redevelopment agency – Non-profit corporations – Partnerships or joint ventures of eligible developersRhode Island HousingSNEAPA Conference, 9/21/2012 11 of 20
  11. 11. Key Aspects: What• Threshold Requirements: – Infrastructure – Ability to proceed – Consistent with zoning, or dimensional variance – No other sources of funding to secure property – Identify all sources of funding for development – Relocation plan, if applicableRhode Island HousingSNEAPA Conference, 9/21/2012 12 of 20
  12. 12. Key Aspects: What (cont.)• Evaluation: – Meets threshold requirements, especially Holding Period – Developer capacity – Financial feasibility – Consistent with neighborhood revitalization, or – Consistent with smart growth – Prefer unoccupied properties – Produces long-term affordable homes – Environmental Impact on surrounding areaRhode Island HousingSNEAPA Conference, 9/21/2012 13 of 20
  13. 13. Key Aspects: What (cont.)• Developer Agreement: – Pays for appraisals and title searches – Pays for “carrying costs,” including reasonable interest – Rhode Island Housing determines steps to ensure property stability and safety of tenants, if applicable – If not acquired by agreed-upon Holding Period, Rhode Island Housing has right to terminate and sellRhode Island HousingSNEAPA Conference, 9/21/2012 14 of 20
  14. 14. Key Aspects: What (cont.)• Option for Bridge Financing: – New since 2001 – Exercised when Property is occupied – All commitments for financing are secured – Demonstrated ability to repay within six months, or specified date – Demonstrated ability to manage occupied property or provide relocation of tenantsRhode Island HousingSNEAPA Conference, 9/21/2012 15 of 20
  15. 15. Recent Trends: Investment History Rhode Island Housing Annual Investments in Land Bank Program 2000-2012 $9,000,000 $8,000,000 $7,826,454 $7,000,000 $6,000,000 $5,747,663 $5,586,337 $5,319,895 $4,958,346 $5,000,000 $4,815,930 $4,000,000 $3,470,253 $3,000,000 $2,445,210 $2,000,000 $1,348,155 $1,419,065 $1,000,000 $528,049 $307,106 $15,390 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Rhode Island HousingSNEAPA Conference, 9/21/2012 16 of 20
  16. 16. Recent Trends: Investment History (cont.)• In the last 13 years, Rhode Island Housing has made nearly $44 million worth of investments in Land Bank properties• Historic increases in property values drove significant investment from 2002-2008 during which 86% of total was made• Most urban purchases are of existing multi-family buildings, some to be demolished, purchases range from $150K at the height of the market to recently under $40K• Suburban purchases vary greatly—from a high of $382K/acre for Block Island to $7,300/ac for large parcel in BurrillvilleRhode Island HousingSNEAPA Conference, 9/21/2012 17 of 20
  17. 17. Recent Trends: Investment History (cont.)• History reflects trends pertaining to mission of Rhode Island Housing, state’s efforts and recent economic crisis• From urban multi-families through larger purchases in towns seeking to reach goal of 10% long-term affordable homes• Most recently additional vehicles for other land bank programsRhode Island HousingSNEAPA Conference, 9/21/2012 18 of 20
  18. 18. Recent Trends: Other RI Programs• HUD Neighborhood Stabilization Program – $4.35M of $19.6M award used for Land Bank – 49 properties in 11 targeted cities – Approximately 100 homes developed• State Housing Acquisition and Rehabilitation Program (SHARP) – Capitalized by CDBG funds from RI Office of Housing and Community Development – Administered by statewide non-profit organization, the Community Housing Land Trust of RIRhode Island HousingSNEAPA Conference, 9/21/2012 19 of 20
  19. 19. Achieving Affordable Homes: Block IslandRhode Island HousingSNEAPA Conference, 9/21/2012 20 of 20
  20. 20. Achieving Affordable Homes: Block Island (cont.)Rhode Island HousingSNEAPA Conference, 9/21/2012 21 of 20
  21. 21. Saving Our Neighborhoods: ProvidenceRhode Island HousingSNEAPA Conference, 9/21/2012 22 of 20
  22. 22. Saving Our Neighborhoods: Providence (cont.)Rhode Island HousingSNEAPA Conference, 9/21/2012 23 of 20
  23. 23. Saving Our Neighborhoods: PawtucketRhode Island HousingSNEAPA Conference, 9/21/2012 24 of 20
  24. 24. More Work To Be Done: ProvidenceRhode Island HousingSNEAPA Conference, 9/21/2012 25 of 20
  25. 25. More Work To Be Done: ProvidenceRhode Island HousingSNEAPA Conference, 9/21/2012 26 of 20
  26. 26. Conclusions• Land banking facilitates an organizations ability to assemble critical mass of properties for large scale redevelopment/revitalization• Must carefully evaluate the availability of resources for redevelopment and the viability of each proposal• Evaluate neighborhood trends - what can be built today may not be appropriate for tomorrowRhode Island HousingSNEAPA Conference, 9/21/2012 27 of 20
  27. 27. For more information: Carol Ventura Director of Development Rhode Island Housing (401) 457-1129 cventura@rhodeislandhousing.orgRhode Island HousingSNEAPA Conference, 9/21/2012 28 of 20
  28. 28. Land Banking in MassachusettsErin Graves, Policy Analyst
  29. 29. Overview• Why the Fed cares• Land Banks in context• Applying the land bank model in Massachusetts• Receivership as an alternative
  30. 30. Why the Boston Fed cares• Mission• My work
  31. 31. “Promoting Economic Growth in Lower Income Communities” The Federal Reserve’s Community Development Unit promotes this agenda through: • Developing Cutting Edge Research •Convening a Broad Spectrum of Constituencies •Identifying and Disseminating Approaches That Work www.bos.frb.org/commdev
  32. 32. NSP Study• Instruments – Survey – Open ended – Parcel condition• Administration – Pre and post treatment
  33. 33. A little Context• Other Massachusetts Land Banks – Massachusetts Land Bank of 1740 – Massachusetts Land Bank Fund 1980s – Cape Cod and the Islands Land Banks 1990s • Nantucket Land Bank • Martha’s Vineyard Land Bank • Cape Cod land bank
  34. 34. Land Banks:An Option for Low-Value Properties• Some REO properties are low value and less likely to be viable in private market• About 5 percent of properties in the REO inventory of the GSEs and FHA are appraised at less than $20,000• In some markets, the share is significantly higher• In these markets, low-value properties are less suitable for disposition through sales in the owner-occupied market or through rental market strategies• Alternative disposition strategies may be needed
  35. 35. Land Bank capacity• Limited capacity nationwide – Institutional infrastructure – Funding• Land banks and low value properties – ½ GSE and FHA inventory of low-value REO properties in metropolitan areas with an existing land bank. – Existing land banks have limited resources• Strategies – Consider increasing local funding – Create a national land bank program – Such initiatives would need appropriate controls
  36. 36. Similarity to Banks• Four analogous functions – Storing assets – Stabilizing secondary markets – Holding capital reserves – Operating within a regulatory framework• Dissimilarities – Banking: National and international markets – Land banking: neighborhood stability and land-use planning
  37. 37. Foreclosures in Massachusetts• Areas – Boston metro – Shrinking cities• Low value locations• Multi jurisdictional
  38. 38. Applying the land bank model to MA• Can mitigate extremes in the regional real estate – Shrinking cities – Development pressure• Should be done in conjunction with regional and master planning• Funding streams – State level real estate taxes and fees – NSP – New sources via Massachusetts legislature or Federal funding
  39. 39. Target properties in Massachusetts
  40. 40. Target properties in Massachusetts
  41. 41. Considerations and caveats• Foreclosures: a symptom not a cause• Maintaining properties both fiscally and physically – No standardized funding stream – NSP is complete – A collection of properties that have no market value – Staggered sites – Abutter issues• Property disposition – Requires sophistication • Land banks are government entities that have the ability to purchase and sell real estate, clear titles, and accept donated properties. Properties may be rehabilitated as rental or owner-occupied housing, or demolished, as market conditions dictate.**
  42. 42. Receivership: An alternative• What is it?• Why is it used?• Key players and processes• Who qualifies• Funding streams
  43. 43. CONNECTICUT: THE LAND OF STEADY HABITS ANDALMOST NO LAND BANKS By Timothy D. Bates
  44. 44. Land Bank “Lite”The Connecticut Approach1. Focuses on environmentally- distressed property or inner- city housing.2. Tends to work off of existing State statutes.3. Uses State and federal incentives.
  45. 45. The State has anauthorized land bankprogram, but it iscurrently not funded.See Section 8-214d.
  46. 46. LAND BANK PROGRAMThis program lasted 10 to 15 years, but went intodormancy in about the year 2000.It was run by nonprofits, including the ChristianActivities Council of Hartford.It provided affordable housing for 250 families in theHartford region.Limited to nonprofit corporations, funded by Statebonding. See Section 8-214e.
  47. 47. Build your own land bank by selling taxliens.-- Used by Plainfield andNorwich to attractdevelopers to old industrialsites.-- Tax liens sold at a deepdiscount.-- Protects the municipalityfrom taking on pollutedproperty.
  48. 48. Authorized by Section 12-195h, which reads: Any municipality, by resolution of its legislative body, as defined in section 1-1, may assign, for consideration, any and all liens filed by the tax collector to secure unpaid taxes on real property as provided under the provisions of this chapter. The consideration received by the municipality shall be negotiated between the municipality and the assignee. The assignee or assignees of such liens shall have and possess the same powers and rights at law or in equity as such municipality and municipality’s tax collector would have had if the lien had not been assigned with regard to the precedence and priority of such lien, the accrual of interest and the fees and expenses of collection. The assignee shall have the same rights to enforce such liens as any private party holding a lien on real property.
  49. 49. The development agreement allowsthe municipality to acquire the taxliens if:-- The developer does not completedue diligence-- The developer does not filequarterly progress reports-- The developer does not commenceforeclosure by a certain date orconclude it by a certain time-- As long as the buyer is not indefault, and the municipalitycontinues to transfer annual taxliens-- The advantage to the municipalityis that it involves a developer in anotherwise unmarketable property
  50. 50. -- The advantage to themunicipality is that itinvolves a developer in anotherwise unmarketableproperty.-- The advantage to thedeveloper is that it createslegitimacy in negotiationswith environmentalregulators and lienholders.
  51. 51. ANOTHER APPROACH Local development corporations use tax credits to purchase homes out of foreclosure and improve them.
  52. 52. Funded by the Department ofRevenue Services through theNeighborhood Assistance ActProgram.-- These State tax credits arefunded by Connecticutbusinesses, particularly utilitiesand insurance companies andprovide funding for constructionand rehabilitation of dwellingunits.-- To sign up for the program,the state companies must file anapplication with the ConnecticutHousing Finance Authority.
  53. 53. The program targets certainneighborhood clusters of 3 to5 homes and seeks to connectand build around thoseclusters.-- It improves and sells housesto qualified homeowners.-- Neighborhood services inNew Haven maintains aninventory of 35 homes andtries to turn over 10 a year.-- It uses tax lien assignmentsand foreclosures to “fill in”some clusters.
  54. 54. Science Park Development Corporation hasutilized tax foreclosures to enlarge or fill in its88-acre industrial site in New Haven.--A nonprofit corporation represented by theCity of New Haven, Yale, property owners,and neighborhood stakeholders.-- Originally established by United StatesRepeating Arms Corp., Olin, the City of NewHaven, and Yale.-- Took over property by agreeing to limit theenvironmental liability of USRAC.
  55. 55. Science ParkDevelopment Corp.has been funded overthe years by StateDECD and federalHUD money.-- Targetssurroundingproperties foracquisition and taxcredit foreclosures.
  56. 56. ANTI-BLIGHTThe anti-blight ordinance can help around the edges. C.G.S.Section148(c)(h): Make and enforce regulations for the prevention and remediation of housing blight, including regulations reducing assessments and authorizing designated agents of the municipality to enter property during reasonable hours for the purpose of remediating blighted conditions, provided such regulations define housing blight, and further provided such regulations shall not authorize such municipality or its designated agents to enter any dwelling house or structure on such property, and including regulations establishing a duty to maintain property and specifying standards to determine if there is neglect; prescribe fines for the violation of such regulations of not less than ten or more than one hundred dollars for each day that a violation continues and, if such fines are prescribed, such municipality shall adopt a citation hearing procedure in accordance with Section 7-152c.
  57. 57. Section 12-183 creates a new programadministered by DEEP to encourageinvestment in Brownfields.• Promotes economic development by bona fide purchasers, innocent landowners, or contiguous property owners.• Does not apply to properties on the National Priority List, the Connecticut Superfund Priority List, or RCRA properties.• Currently limited to 32 properties per year.• Allows properties to avoid Transfer Act and off-site liability.
  58. 58. Connecticut’s programsare: limited, targeted,incremental.• Reflect a stable population, as opposed to Midwest industrial cities.• As a result, Connecticut cities do not own the large inventory of foreclosed or abandoned properties.• And the future: a similar cautious approach?

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