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Using Land Banks to Address Brownfields
- 1. Using Land Banks to Address Brownfields and Promote Economic Development 2016 PA Brownfields Conference October 27, 2016 Lancaster PA
- 2. Principal in Branton Strategies LLC Assisted land bank planning in Montgomery, Luzerne and Allegheny Counties Winnie Branton
- 3. Chris Gulotta Started The Gulotta Group LLC in 2010 Assisted land bank planning in Northumberland, Schuylkill, Westmoreland, and Washington Counties
- 4. PA Land Banks 101
- 5. PA Land Bank Basics Enabling legislation enacted in 2012 Counties and municipalities with 10,000 population or more may create a land bank Created by ordinance and intergovernmental agreements Image Source: www.smartgrowthamerica.org
- 6. PA Land Bank Basics Authorized, for the first time, the establishment of public entities to “confront the problems caused by vacant, abandoned and tax-delinquent properties through the creation of new tools to enable municipalities to turn vacant, abandoned and tax-delinquent spaces into vibrant places.”
- 7. What is a Land Bank? A governmental entity whose single purpose is the conversion of vacant, abandoned and tax- delinquent properties to productive use.
- 8. How Does a Land Bank Work? Image credit: Philadelphia Land Bank
- 9. What Challenges Can a Land Bank Address? Remove barriers to redevelopment Address the staggering cost of blight Harness the positive economics of blight remediation Create a unified, predictable and transparent process for land recycling Serve as a start-to-finish central hub for a local government’s blight prevention and removal efforts
- 10. Who’s In Charge? Governed by appointed, volunteer Board with 5 to 11 members Typically administered by existing government departments or agencies Subject to all sunshine and ethics laws
- 11. Key Land Bank Powers Acquire, hold and dispose of property Accept and extinguish tax liens Quiet title to property expeditiously BUT, NO EMINENT DOMAIN POWER
- 12. Established PA Land Banks Dauphin County (excluding Harrisburg)(5/13) Lackawanna County (6/15) Westmoreland County (12/13) Schuylkill County (multi-municipal)(12/15) Philadelphia (12/13) Northumberland County (12/15) Pittsburgh (4/14) Washington County (3/16) North East Pennsylvania Land Bank (multi-municipal, Luzerne)(6/14) Lancaster County (excluding Lancaster City) Harrisburg (7/14) Tri-COG Land Bank (multi-municipal, Allegheny) Venango County (8/14)
- 13. Land Banks, Brownfields and Economic Development
- 14. Definition of “Brownfield” "real property, the expansion, redevelopment, or reuse of which may be complicated by the presence or potential presence of a hazardous substance, pollutant, or contaminant“ Small Business Liability Relief and Brownfields Revitalization Act, 42 USC 9601 (39), enacted January 11, 2002
- 15. Brownfields Redevelopment as an Economic Development Priority More and more this is a priority for economic developers who are increasingly focused on redevelopment opportunities in core communities. These types of projects are highly challenging because of the size and cost of the project. Many involve repurposing or tearing down old manufacturing buildings Some involve redevelopment on land that has been cleared but is tax delinquent Frequently there are environmental contamination issues
- 16. Brownfields Redevelopment as an Economic Development Priority Land banks can be part of the solution in these situations to acquire the real estate, especially if the property is tax delinquent. Under the Land Bank Law land banks may file expedited quiet title actions. Land banks do not need to go through a formal redevelopment contract process that sometimes hinders Redevelopment Authorities. Land banks may dispose of property without going through a competitive bidding process.
- 17. Brownfields Redevelopment as an Economic Development Priority In many counties there is no organization that has expertise in acquiring and disposing of difficult to develop real estate. These functions (acquisition, environmental remediation, disposition) require skill sets that many existing organizations don’t have. In the alternative a land bank could be administered by an existing organization that has these skill sets.
- 18. Opportunities at Tax Sales Upset Sales-Land Bank Powers The Tax Claim Bureau and land bank enter into an agreement for the land bank to purchase the property(ies) at the minimum amount if no party bids higher than the minimum amount at the upset sale. The minimum price is typically municipal liens, tax liens, and costs The property is purchased by the land bank subject to other liens such as mortgages.
- 19. Opportunities at Tax Sales Judicial Sales-Land Bank Powers An agreement is entered into by the Tax Claim Bureau and the land bank to purchase a property(ies) listed for judicial sale for a negotiated sum. In effect, land bank may trump other bidders. The land bank as purchaser has an absolute title to the property sold, free and discharged of tax and municipal claims, liens, mortgages, ground rents, charges and estates. Multiple properties may be bundled for sale.
- 20. Opportunities at Tax Sales Judicial Sales-Land Bank Powers (cont.) Frequently properties at a judicial sale are acquired for relatively small amounts (usually the Tax Claim Bureau costs) Speculators frequently bid on these properties and sit on the properties with no intention of redeveloping them. A land bank can keep the properties from falling into the hands of speculators and clear title through the judicial sale process.
- 21. Acquisition Risks and Liability Concerns Is there contamination on the site that will need to be cleaned up? How much will it cost? Who is responsible to pay for the cleanup?
- 22. Liability Protections for Land Banks (and Local Governments) Act 3 of 1995, Economic Development Agency, Fiduciary and Lender Environmental Liability Protection Act Section 2117(f) of the Land Bank Act – land bank acquisition at tax sale is an “involuntary transfer” under HSCA – basis for innocent landowner defense Land bank actions are not attributable to the local government that created it Local government is not responsible for the Land Bank’s debt unless it expressly agrees to be See also EPA’s CERCLA Liability and Local Government Acquisitions and Other Activities, https://www.epa.gov/sites/production/files/documents/local-gov-liab-acq- fs-rev.pdf
- 23. Case Studies
- 24. Jeannette, Westmoreland County • Former hospital property; closed in 2006 • Acquired by land bank at judicial sale in 2014 for $15,127 • Property has been torn down and site improvements are being undertaken
- 25. Jeannette, Westmoreland County • Property was an eye sore along Route 30 and was a target for thieves, vandals and arsonists • The land bank contracted with Westmoreland IDA to handle demolition and clean- up • Environmental conditions included asbestos and medical waste
- 26. Jeannette, Westmoreland County • Environmental conditions included asbestos and medical waste • $1.1 million demolition contract • Demolition completed in April 2016 • IDA is handling the marketing of the property
- 27. Easton, Northampton County • Former manufacturing building • Sold at Sheriff’s sale for $1,560 • Buyer appears to be reputable • Land bank could have purchased at Sheriff’s sale and developed RFP to vet reputable buyers
- 28. Easton, Northampton County • Proximate to school and residential neighborhood so redevelopment of property plan for redevelop is critical to mitigate any negative impacts • Vertical growing operation planned
- 29. Mahanoy City, Schuylkill County • Community is served by Schuylkill Land Bank • Property purchased by Borough from county repository • Former brewery-long term vacant • Borough received a grant from PA DCED for demolition
- 30. Mount Carmel, Northumberland County • Former Pepsi Plant • 15,500 square feet • Community is served by Northumberland Land Bank
- 31. Mount Carmel, Northumberland County • Long term vacant • Located in residential neighborhood and near schools
- 32. Kulpmont Borough, Northumberland County • Former seed packaging building • 210,000 square feet; 4 acres • Long term vacant • Located on Route 61
- 33. Suffolk County Land Bank (Long Island, NY) • Focused exclusively on tax-delinquent brownfield sites and zombie foreclosures • Eastern half of Long Island • Population 1.5 million • Bedroom communities, mostly suburban • Identified +130 tax-delinquent brownfield sites that were difficult to redevelop due to state and local tax laws
- 34. Suffolk County Land Bank (Long Island, NY) • RFP issued for the redevelopment of 8 tax- delinquent brownfield sites in Jan. 2016 • Decided to proceed with 4 of the sites • Actively negotiating with 4 developers Former Liberty Industrial Finishing site in Brentwood, NY, seen in 2000 (Photo credit: Newsday)
- 35. Suffolk County Land Bank (Long Island, NY) • Agreement with NYSDEC and NYS Oil Spill Fund - ready to be signed • Clears cleanup liens • Costs paid proportionally from the net proceeds of the sale • Covenant not to sue • Buyer enters remedial program determined by NYSDEC Former Jericho Marine site in Babylon, NY, seen in 2013 (Photo credit: Lindenhurst Patch)
- 37. Conclusions Land banks can add value in redeveloping brownfields sites for economic development purposes especially in those situations where properties may be scooped up by speculators. Objective is to maximize and combine brownfields and land bank activities as powerful redevelopment tools Leadership is critical! Partnerships matter: Bring all the stakeholders together including school districts and tax claim bureau director as well as code enforcement and community development and economic development staff. Messaging is important: The land bank is not being formed to squeeze out private sector investment but to create opportunities for that investment
- 38. Questions? Contact Information Winnie Branton wbranton@brantonstrategies.com or 267-788-1651 Chris Gulotta gulottagroup@gmail.com or 717-580-0439
Editor's Notes
- Two or more municipalities may join together to form LB
- Land bank is a new tool for addressing blight
- The latest and best thinking about how to address blighted, abandoned, tax foreclosed properties and get them back onto market. Now being used in Michigan, New York, Georgia, Ohio, St. Louis, Louisville, Kansas. About 120 nationally.
- Enacted to enable communities: To systematically remove problem properties from an endless cycle of vacancy, abandonment, and tax foreclosure, to clear title, and return them to productive use. Land banks are a tool to address long-term vacant and abandoned blighted properties. Blight is remediated by getting the property into the hands of a responsible new owner who will choose to either demolish or rehabilitate the property. A land bank can make problem properties more attractive by working to remove liens and clear back taxes ~ clean title.
- Discuss current situation – dispersed local government authority and responsibility for dealing with blight existing barriers to property transfers like complicated titles, excessive liens, and cumbersome processes deter investment Tri-COG cost of blight study Philadelphia: cleaning and greening of vacant lots increased adjacent property values by 30%
- At least one member who is a community resident, not an elected official, and a member of recognized civic association Board governance varies: Strong cross-over with Redevelopment Authority Board – Dauphin and Westmoreland 2 County commissioners and Tax Claim Bureau Director on board – Venango Member appointments evenly split between mayor and council - Philadelphia
- No limitation on type of property that land bank can acquire – includes commercial and industrial although much of the focus is on residential. Needs to be strategic acquisition Site assembly plus hold for later opportunity – tax exempt Disposition priorities may be established – includes commercial and industrial, green space, green infrastructure, etc. Can also issue bonds and borrow
- Who else is on the horizon? Considering? Discuss status and number of properties under development or anticipated for each.
- Maximize and combine brownfield and land bank activities as powerful redevelopment tools. Brownfields are real property. Just like that deteriorating, blighted house or old restaurant. They all represent opportunities. For new jobs, new businesses, new and rehabbed housing. Improved quality of life and public health. But they have challenges that have to be addressed in order to redevelop these properties and return them to productive use and the tax rolls. Impediments to redevelopment include: Uncertain cleanup costs Long term liability for contamination
- Land bank community where EPA Brownfield Assessment going on: Lackawanna County,
- EPA brownfields grant money cannot be used to pay response costs at a brownfield site for which the grantee is potentially liable under CERCLA § 107. Governmental entity acquiring needs liability protection if it hopes to use brownfields grants on a property. So, avoiding liability is critical. “Purchasers of property from a land bank may want to assess whether there is an applicable CERCLA exemption, affirmative defense, or liability protection. These concerns also apply in the local government context. Whether a local government acquiring a land bank property will qualify under the involuntary acquisition exemption, BFPP, or the third party defense will be determined on a case-by-case basis.”
- Established in 2013. Not a government entity. Public benefit corporation authorized by NY Land Bank Law (passed in 2011). Staffed entirely by county employees and housed within the county economic development and planning office As of February 2013, there were 133 tax delinquent and potentially contaminated parcels within Suffolk County. Covered 266 acres Represented $28.8 million in unpaid taxes and penalties With an annual burden to Suffolk County taxpayers of $2.1 million Suffolk county tax law precludes sale of tax liens for less than the amount of the liens; land bank can avoid the minimum lien sales price requirement and sell the liens on environmentally compromised to willing buyers
- The 8 proposed sites had been tax-delinquent for an average of 19 years and all together owe over $11 million in taxes For the first sites, looked for (1) vacant (2) not subject of ongoing state remediation (3) long term bad actors associated with sites Liberty Industrial site: low income area, high profile site, vacant for +20 years, good location Past use: industrial plating Proposed site reuse: retail/office shopping center Purchase price: $500,000 Estimated cleanup: $825,000 per proposer team $1.5 million in tax and cleanup liens to be extinguished via agreement with NYDEC, Oil Spill Fund, County and using LB powers
- Jericho Marine Past use: gas station and marine supplier Proposed site reuse: retail, commercial, single story Purchase price: $120,000 Estimated cleanup: will vary depending on DEC monitoring results $850,000 in tax and cleanup liens to be cleared
- Michigan – Kent County LB example. Land bank is “tool to help increase the profitability and viability of real estate and economic development projects.” Routinely uses land bank to leverage funds to clean up environmental contamination Oregon – land banks specifically for brownfields HB 2734, the Land Bank Authority bill (2015), and HB 4084, the Brownfields Property Tax Incentive bill (2016), now provide a means for local governments to acquire brownfields properties without also acquiring "owner" liability, and to provide direct financial benefits to private entities that are prepared to enter into public/private partnerships for redevelopment.