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WHILE PLENTY HAS BEEN WRITTEN ABOUT EFFORTS TO MITIGATE or minimize foreclosures, there is often little discussion of the potential opportunities that are created in the current foreclosure crisis. This article focuses on the use of land banking as a redevelopment tool for communities.
I. What Is a Land Bank?
Land banking is a land management technique used by local governments to purchase tax-delinquent, tax-reverted, foreclosed, or abandoned properties. These foreclosed properties are then "banked" for future use or resale.1 Goals of a land bank might include: (a) providing affordable housing; (b) putting property back on the tax rolls; (c) stabilizing declining neighborhoods by repairing, removing, or redeveloping abandoned property; (d) developing green spaces; (e) collecting and joining abandoned lots into one consolidated, developable site; and (f) facilitating the revitalization of brownfields.2
By transferring vacant and abandoned properties to responsible land owners through a land bank program, local governments benefit because they avoid the significant cost burden of property maintenance, like mowing and snow removal, as part of their nuisance abatement responsibilities. In addition, local governments benefit from increased revenue because the new property owners pay taxes on the property. Also, the local schools benefit because they receive more funding when there is an increase in property owners in their school districts. Land bank programs can increase the variety of mixed-income housing offered and provide more opportunities for affordable housing. Moreover, land bank properties that become owner-occupied discourage criminal activity, thereby benefiting public safety and decreasing the cost burden on the local police and fire departments. Finally, the more residents and businesses that occupy property in a neighborhood, the more services and amenities will be needed, which boosts local economic activity.
Land banks may also be used to pool blighted properties for efficient demolition. Land banks are not, however, limited to blighted areas. Often, land banks serve as a "middle man" for future use. By banking properties that are rented or sold back into the market, land banks cannot only generate revenue, they can provide a positive social force for individuals and communities. For example, land banks can be used to reconnect residents to distressed neighborhoods by rerenting apartments to former tenants or repairing and reselling houses to new buyers at reduced prices. While...