New York State’s economy is being attacked by “zombies.” So begins testimony submitted by the New York Land Bank Association at the 2019 Joint Legislative Hearing on Economic Development. “They can be found in just about every community in New York State, hiding in plain sight among occupied buildings and well-maintained lots, consuming municipal resources, depressing property values, reducing tax revenue, and harming surrounding residents.”
These zombies? Vacant properties.
Starting in the 1970s, factory closures, population migration, and disinvestment distorted the supply and demand of housing, leaving many properties vacant and abandoned in cities across the country, especially former industrial and Rust Belt cities. The Great Recession and the foreclosure crisis only exacerbated the problem: one estimate puts the number of unoccupied homes up 26 percent between 2005 and 2010, from 9.5 to 12 million.
The negative consequences of urban blight aren’t simply aesthetic; a 2016 study of Toledo, Ohio found that vacant and abandoned properties cost the city $9.2 million annually in direct service costs and lost tax revenue, and the cumulative loss in residential property value was more than $98 million. As the urban theorist Richard Florida notes in City Lab:
High rates of vacancy and hyper-vacancy have traumatic impacts on neighborhoods and cities. Vacant homes reduce the value of neighboring properties and of entire neighborhoods… They are breeding grounds for drug abuse, crime, and violence. Blocks with vacant properties face crime rates twice as high as blocks without them, the study notes.
The problem is particularly stark in former industrial powerhouses that have experienced job and population loss, like Detroit, St. Louis, and Cleveland. New York has many “legacy cities” that fit the profile unfortunately well, from Buffalo and Schenectady to smaller urban centers like Newburgh and Troy, which have endured significant population decline, home foreclosures, and blight. While New York has largely bounced back from the recession, the economic recovery isn’t being felt equally across the state. But some of these same New York cities are also leading the way forward with a pioneering solution: land banks.
Turning Liabilities into Assets
First, some terminology. The Center for Community Progress defines a land bank as:
[A] direct response to this growing trend of vacancy and abandonment, created to strategically acquire problem properties and convert these liabilities into assets. In short, land banks are intended to acquire title to these problem properties, eliminate the liabilities, and transfer the properties to new, responsible owners in a transparent manner that results in outcomes consistent with community-based plans.
Most land banks have special powers that enable them to undertake these activities more effectively and efficiently than other public or nonprofit entities. When thoughtfully executed, land banking can resolve some of the toughest barriers to returning land to productive use, helping to unlock the value of problem properties and converting them into assets for community revitalization.
The movement started in St. Louis in 1971 but has flourished in recent years as a creative placemaking tool to help solve the problems created by vacancy and blight. Since the 2011 passage of New York’s Land Bank Act, New York has developed one of the most active and sophisticated networks of land banks in the country. They’re part of what Center for Community Progress cofounder Frank Alexander has called the third generation of land banks, a simpler and more coherent application of the land bank model in the 21st century.
As of February, 2019, New York land banks have reached these benchmarks:
- Over 2,800 problem properties acquired
- More than $100 million of private investment generated
- Over $40 million in assessed value returned to tax rolls
- 600+ blighted structures demolished
- 500+ buildings renovated or stabilized
- More than 1,200 properties sold to responsible buyers
And the Land Bank Act grants land banks in our state these special powers to:
- Obtain property at low or no cost through the tax foreclosure process, usually through local agreements/arrangements with a foreclosing governmental unit
- Exercise “super bid” authority, which allows land banks to jump in front of speculators and other bidders at tax foreclosure auctions
- Hold land tax-free
- Lease properties
- Negotiate sales based not only on the highest bid but also on outcome(s) aligned with community needs (such as workforce housing, a grocery store, or expanded recreational space)
In New York, land banks are nonprofit corporations also governed as local public authorities. The funding comes from a variety of places: local dollars in the form of appropriations from county and local governments, a portion of the property taxes generated from repurposed properties, sales proceeds, and grants. Most of the support thus far, however, has come from the state Attorney General’s Office via its Community Revitalization Initiative. That initiative was funded by the National Mortgage Settlement, a historic 2012 joint federal-state settlement of a suit brought against the country’s five largest mortgage services by 49 states, the District of Columbia, and the federal government. So, yes: the mortgage foreclosure crisis that helped accentuate vacancies and blight is also helping to fund solutions to the problem.
The 25 land banks in New York range from Long Island to Buffalo. Most are countywide entities, but a handful are limited to specific municipalities, including the Kingston City Land Bank, which was inaugurated in 2018, and the Newburgh Community Land Bank (NCLB), which was one of the pilot programs in the state. Newburgh has “several hundred” vacant and abandoned properties, according to the city. NCLB has acquired more than 100 properties and returned 60 to active use since 2012, via a plethora of creative programs and partnerships that, for example, help renovate abandoned properties into affordable rental units or assist city residents in becoming first-time homebuyers by making fully renovated residences available for owner-occupancy.
I wrote about the Newburgh Community Land Bank recently as part of my enterprise feature on economic development initiatives in the Hudson Valley, published this week in Chronogram and here on The River. As NCLB’s founding executive director, Madeline Fletcher, told me, a land bank is just one tool to help correct a broken market. A patchwork of solutions is needed to help our cities recover in an equitable way.
“We’ll know we have succeeded when we close,” Fletcher says. “The goal is not to make this a fancy and inaccessible place. We want to make this place better, and with that, provide opportunities for everyone who is here.”