Evaluación de la Situación Económica – Financiera de la Empresa de

The concept of land banking dates to the 1960s, but the institutions as understood today have proliferated recently due to both the preponderance of shrinking cities as well as the sheer number of foreclosures resulting from the recent housing and mortgage crisis. (See Table 3.7) These institutions have been created by cities and counties to undertake land banking activities, defined as “the process or policy by which local governments acquire surplus properties and convert them to productive use or hold them for long-term strategic public purposes” (Alexander, 2011, p. 22). They were designed to address the physical, built-environment ramifications of deficiencies in the U.S. residential and commercial finance system.

Before their creation, as homes and lots became abandoned or vacant, they would sit empty, deteriorating for years while municipal authorities worked through lengthy foreclosure processes in order to gain title. Often, title could be only administratively acquired, not legally acquired through a judicial ruling. This situation left the title in question as far as development interests were concerned. When title was eventually acquired, these properties were often bought for low prices at municipal

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auction by investors only interested in deriving rents from their use until the houses became too deteriorated for the rental market. They were then subsequently re-abandoned (Gillotti & Kildee, 2009). These blighted properties “infected” or spread their mis-use to neighboring houses, lowering real estate values on entire streets and blocks. The parcels imposed “costs on the adjoining properties, on the fabric of the neighborhood and on the vitality of the community” (Alexander, 2011, p. 10). The only way to stop the effect of these infectious properties was to demolish them, although the resulting vacant lots could continue to threaten the stability of surrounding neighborhoods unless a municipal authority stepped in to maintain them. Today, land banks pre-empt this cycle of destruction by purchasing properties, stabilizing inhabitable homes or demolishing deteriorated ones, and maintaining them for future redevelopment or municipal use.

While the use of land banks today is relatively constrained to the acquisition of vacant land and vacant buildings, it was initially envisioned as a tool to address a multitude of redevelopment purposes. Their first creation was spurred by suburban sprawl. In the 1960s, sprawl came to be seen by planners and sociologists as a haphazard process, reflecting the preference for low density, single family housing, and occurring on an ad hoc, unplanned basis. In this context, land banking was seen as a tool to be used by local authorities to assemble properties and direct the speed, direction, and rate of future exurban development. In order to facilitate large-scale planning and create balanced development, land banking permitted “the proper proportion of various land uses, transportation facilities, and open space for the creation of a liveable [sic] environment” (Bosselman, 1968, p. 7). During this period, the “range of social and cultural problems to be solved by the early visions of land banks was limited only by the creative imagination of the social and urban planners” (Alexander, 2005, p. 143).

A 1970 Urban Institute study on the essential elements of land banking anticipated difficulties in the proposed wide-ranging and aggressive use of the tool by

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local municipalities. Its authors suggested that the problems could be avoided by working at a smaller scale (Kamm, 1970). The anticipated difficulties included contributing to price inflation, the limits of eminent domain, and the burden of debt service on large tracts of land. Kamm’s suggested smaller uses for land banking were a diverse set, ranging from the acquisition of sites for the private development of low to moderate housing and acquiring land near infrastructure investments such as highway interchanges, to acquiring open space to channel or control urban growth and acquiring inner city parcels to undertake urban renewal without the limitations of operating solely in blighted or slum areas (Kamm, 1970, pp. 54-58). This study was remarkably prescient about the uses which the courts (both of law and public opinion) would eventually find valid for land banking and land trusts.

In 1967, John Sanger anticipated Kamm, identifying urban redevelopment in the inner city as a possible prime venue for the use of land banks (Sanger, 1967). By this time, urban renewal policy was being widely criticized from both the left and the right sides of the political spectrum, from citizen activists and civil rights leaders, for its destructive effects on established urban neighborhoods—particularly on minority ethnic and racial communities (Sutton, 2008). By constructing land banks which would only acquire un- or under-utilized properties for inclusion and redevelopment purposes, it would perhaps be possible to avoid the issues which had caused strong citizen reaction, including race riots, at urban renewal locations in cities throughout the U.S.

(Mollenkopf, 1975). Land banks had thus proceeded, in a relatively short period of time, to be transformed from all-purpose development entities used to solve a range of social and built environment problems to organizations recognizable as modern land banks.

The Philadelphia Industrial Development Corporation (1957) and The Milwaukee Land Bank Program (1964-1971) were early instances of public entities formed for the purpose of acquiring and assembling land for a pre-determined redevelopment purpose (Alexander, 2005). As the focus of land banks honed in on

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redevelopment of inner-city parcels, the first general purpose urban land bank was created in 1971: the St. Louis Land Reutilization Authority. This land bank, and the four other major banks that followed it, Cleveland, Ohio (1976), Louisville, Kentucky (1989), Atlanta, Georgia (1991) and Flint/Genesee County, Michigan (2002) were the precursors of the land banks operating in the United States today. All of the cities were faced with similar situations of increasing vacancy and abandonment manifested in publicly or privately owned tax-delinquent properties, as well as a desire to somehow convert these liabilities into longer-term assets for the city (Alexander, 2005).

Land banks have recently become more widely used to address real estate market inefficiencies, currently operating in 28 states. As of 2013, there were approximately 113 land banking entities operating in the United States, most developed in the past five years as a number of states have authorized their creation. (See Table 3.7 below) Excess numbers of vacant properties have occurred in recent years due to both the foreclosure crisis associated with the recent recession as well as population loss due to economic and demographic changes in certain parts of the United States.

Market failure occurs when there is no private market for vacant or abandoned properties. In such situations, public interests must step in to manage these properties before deleterious effects such as blight and crime spread to surrounding properties and neighborhoods. Land banks have been brought in to organize this process, as “most local governments lack efficient and effective tools for preventing or reversing” the potentially devastating effects of abandonment and vacancy (Alexander 2008, 5).

Each land bank is structured by the state enabling law or city legislation that created it and proscribes its activity (Alexander, 2005). Contemporary land banks are funded through different sources, according to the state in which they are based. These sources include: the sales of land in the land bank, interest and penalties on taxes owed on land bank property, and fees paid by those contributing land to the land bank (Furman Center for Real Estate and Urban Policy, 2008). Some land banks are used as pass-throughs. That is, they are used to clear titles and pass the properties on to other

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bodies. Others hold onto land in anticipation of future needs. Still other land banks only hold land for short periods of time and try to remove them from city responsibility as soon as possible. Finally, another group of land banks operate more as independent entities, holding and selling, buying and trading, developing and financing properties as a functional arm of the city.

Land banks in the United States can be separated into those that came before the creation of the Genesee County Land Bank Authority (GCLBA) in 2002 and those that came after. The GCLBA and its founder, current U.S. Congressman for the 5^th District of Michigan Dan Kildee, were instrumental in the State of Michigan passing key legislation that widely expanded the activities possible for land bank authorities.

Called “the most progressive land banking legislation in the nation,” Michigan’s approach allows land bank authorities to assemble, sell, or redevelop tax-foreclosed properties on their own as well as allowing counties to use tax-increment financing for redevelopment purposes (U.S. Department of Housing and Urban Development Office of Policy Development and Research, Sage Computing, Inc., 2009, p. 10).

The 1999 and 2004 Michigan State laws that shaped and enabled the Genesee County Land Reutilization Council (2002 -2004) and Genesee County Land Bank Authority (2004 – present) created a body that demonstrated the possible control a city or county can take over its future. Prior to this fundamental change in approach, Michigan’s foreclosure process had been a patchy, lengthy, and piecemeal process very similar to that in other states. Table 3.2 (below) shows how enabling law PA 123 of 1999 established land banks in Michigan as bodies that would completely alter the way foreclosed properties were handled in the state.

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Table 3.2: Land Bank Operation in Michigan Pre – 1999 Tax Law and After

Source: Adapted from (Genesee County LandBank, n.d.)

States that have developed land banks in the post-GCLBA era have largely emulated the powers and latitude for action given to the GCLBA, expanding the activities in which land banks in their states can engage. Examples of these are legislation that speeds up and clarifies the foreclosure process and streamlines the title acquisition process, possibly cutting the time from initial tax delinquency notice to sale of rehabilitated properties by years.

Land banking is coming to be seen as a vital instrument for use in revitalizing blighted areas and assembling properties for redevelopment. The entities are being used to manage vacancy and attempt to stem deteriorating property values. Land banks also give cities the ability to capture the location-specific values associated with land, use those values to proactively redevelop, reinvest, and generate additional value in cities that are short on economic wherewithal, and provide guidance over a city’s future direction.

Former MI Foreclosure Law New Foreclosure Law (PA 123 of 1999)

Time: 4 - 7 Year Process 1 - 2 Year Process

Title: No Clear Title to Property Clear Title gained through Judicial Proceeding

Ownership:

Hundreds of (often unknown or missing) Owners; Low-end Speculation at Property Auction

Property Titled to County; Tax-liens Eliminated

Foreclosure Indiscrimate; Homeowners at Risk Hardship Postponments; Work with Homeowners

Contagious Blight

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Table 3.3: Land Banks currently in Operation in the United States (as of 2013)

Source: Author, (Alexander, 2005; Alexander, 2011; Alexander & Toering, 2013)

State Name of Agency

Alaska Anchorage / Heritage Land Bank

Alabama Alabama Department of Economic and Community Affairs Arkansas City of Little Rock Land Bank Commission

California California State Lands Commission

Georgia Athens-Clarke County Land Bank Authority; Atlanta Development Authority; Fulton County/City of Atlanta Land Bank Authority;Augusta, Georgia Land Bank Authority; Augusta - Richmond County Land Bank Authority; Columbus - Muscogee County Land Bank Authority; Dekalb Regional Land Bank Authority; Griffin-Spalding County Land Bank Authority; Lagrange - Troup County Land Bank Authority; Macon -Bibb County Land Bank Authority, Inc; Rome-Floyd Land Bank Authority; Chatham County/City of Savannah Land Bank Authority; Statesboro -Bullock County Land Bank Authority; Thomasville - Thomas County Land Bank Authority; Valdosta -Lowndes County Land Bank Authority Illinois Cook County Land Bank Authority

Indiana Allen County Land Bank; Elkhart Land Bank; Indianapolis Land Bank; Muncie Land Bank

Kansas Arkansas City Land Bank; Wyandotte County – Kansas City, KS Land Bank; Olathe Land Bank; Overland Park Land Bank Kentucky Louisville and Jefferson County Landbank Authority, Inc.

Louisiana East Baton Rouge Redevelopment Authority; Lafayette Land Revitalization Authority Massachusetts MassDevelopment

Maryland Baltimore Development Corporation Maine Portland, Maine Landbank

Michigan Arenac County Land Bank; Bay County Land Bank; Benzie County Land Bank; Berrien County Land Bank; Calhoun County Land Bank; Cass County Land Bank; Charlevoix County Land Bank; Clare County Land Bank; Delta County Land Bank;

Detroit Land Bank Authority; Emmet County Land Bank; Genesee County Land Bank; Gladwin County Land Bank;

Gogebic County Land Bank; Grand Traverse County Land Bank; Houghton County Land Bank; Ingham County Land Bank;

Ionia County Land Bank; Jackson County Land Bank; Kalamazoo County Land Bank; Kent County Land Bank; Lake County Land Bank; Lapeer County Land Bank; Leelanau County Land Bank; Lenawee County Land Bank; Marquette County Land Bank; Muskegon County Land Bank; Oceana County Land Bank; Ogemaw County Land Bank; Ottawa County Land Bank;

Saginaw County Land Bank; Sanilac County Land Bank; St. Clair County Land Bank; Van Buren County Land Bank;

Washtenaw County Land Bank; Wayne County Land Bank Corporation Minneapolis Twin Cities Community Land Bank; St. Paul Port Authority

Missouri Land Trust of Jackson County; St. Louis Land Reutilization Authority Mississippi City of Jackson Land Bank

Montana Department of Natural Resources and Conservation, Trust Land Management Division Nebraska Land Reutilization Commission

New York

Buffalo Erie Niagara Land Improvement Corp.; The Greater Syracuse Property Development Corporation; Land Reutilization Corporation of the Capital Region; Chautauqua County Land Bank Corporation; Newburgh Community Land Bank; Broome County Land Bank Corporation; Rochester Land Bank Corporation; Suffolk County Land Bank Corporation

Ohio

Cincinnati Economic Development Department; Cleveland Land Bank Program; Columbus Landbank; Cuyahoga County Land Reutilization Corporation; Dayton REAP; Erie County Land Reutilization Corporation; Franklin County, Dept. of Development; Lima Land Acquisition & Neighborhood Development Bank; Lucas County Land Reutilization Corporation; Mahoning County Land Bank; Montgomery County Land Reutilization Corporation; City of Warren Land Bank Program; Youngstown City Land Bank

Oregon City of Eugene; Portland Development Commission Pennsylvania

City of Coatesville; Dauphin County Land Bank Authority; Erie County Industrial Development Association;

Philadelphia Industrial Development Corp.; Urban Redevelopment Authority of Pittsburgh Rhode Island Rhode Island Housing Land Bank

Tennessee Shelby County Land Bank

Texas City of Dallas Urban Land Bank Demonstration Program

Wisconsin City of Milwaukee, Department of City Development Brownfields Redevelopment West Virginia Huntington Land Bank Fast Track Authority

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3.5.2 INDIVIDUAL AND GROUP-LED INTERVENTIONS

This section profiles vacant and abandoned lot interventions that are initiated by private individuals or groups and administered largely outside the realm of municipal government. They are often used in a more targeted fashion in cities, rather than as city-wide initiatives. Interventions like land trusts and ecological uses have been used in shrinking cities as methods of protecting or capitalizing upon existing natural resources. Interventions that align with temporary uses typology are not limited to parts of cities with specific natural characteristics, but may be targeted to other lot attributes, like location, site context, or amenability of owners. A final type of individual intervention is urban agriculture.