A developing relationship.

AuthorDeMuth, Jerry

As the housing crisis winds down, land banks are increasing their activities and lenders are increasing their involvement. The success stories are starting to build up.

Land banks--the nonprofit, government-related organizations created to acquire, develop and dispose of the massive numbers of vacant and abandoned properties caused by the housing crisis--are growing not only in numbers but also in activity. And they are more actively involving mortgage lenders and real estate developers. [paragraph] Land banks now number more than 125, according to the Flint, Michigan-based Center for Community Progress, and have spread from their roots in the upper Midwest Rust Belt into the Plains states, the Southwest, the Northeast, the Northwest and the South. [paragraph] And in the first half of this year, at least eight cities and two states were considering legislation for the creation of new land banks, according to tracking done by Valley View, Ohio-based Safeguard Properties. [paragraph] All this growth, a Department of Housing and Urban Development (HUD) official who asked not to be identified tells Mortgage Banking, is "because their function has broadened toward a redevelopment function. It's one thing to sit there and hold properties; it's another thing to get out there and understand real estate finance, understand grant sources, understand all those kind of programs. They've become, in effect, redevelopment agencies."

He adds, "It's going from a passive to an active role. There's a whole chain of entities that are involved in real estate development and sales. So it makes sense to get them on your board, get their advice and take advantage of their skills. That's a smart move."

The laws under which the Macon-Bibb County, Georgia; Cook County, Illinois; and Omaha, Nebraska, land banks were established even require that the financial, real estate development and legal professions be represented on their boards.

According to a person who asked not to be identified because of his current position, who worked on the Nebraska legislation that created the land bank, told Mortgage Banking that board membership on the Omaha Land Bank requires the member to "have experience in a variety of financial sectors. The desire was to ensure that folks on the land bank board are people who know how these sectors work, so there wouldn't have to be an education process for board members."

Scott Goldstein, who contributed to the creation of the Cook County Land Bank Authority as chair of the Urban Land Institute Chicago's Public Policy Committee, said that those involved "were very intentional about reaching out to banking, real estate development and other real estate experts. The county really wanted their support. From the very beginning, there was an interest to work with the private sector."

While such board requirements are uncommon, most regulations under which land banks operate require that staff members have experience in a profession such as business, urban planning, community development, real estate, finance or law. And some, including the South Suburban (Chicago) Land Bank and Development Authority, are structured to work collaboratively with financial institutions, developers, Realtors[R], nonprofit organizations and others to promote community development.

The staff of the Greater Syracuse (New York) Land Bank even includes a full-time construction manager, and the Genesee County (Michigan) Land Bank has staffed a property maintenance department that mows grass and removes trash from all problem properties in Flint--not just those owned by the land bank.

Minneapolis-based Twin Cities Community Land Bank LLC, according to President and Chief Manager Sandra L. Oakes, "assembles, acquires and holds strategic sites and lends funds for predevelopment, site control and development. Within our seven-county metropolitan area, we prioritize development along transit corridors and in disinvested communities."

Since its inception in 2009, she explains, the land bank has acquired more than 1,100 properties worth more than $102 million.

"We have also provided over 450 loans totaling more than $63 million," Oakes says. "Sixteen of our larger site acquisitions will result in an estimated 500 affordable-housing units plus additional commercial space for economic development."

The overall impact

As for what all land banks combined have accomplished, there is no central source for information.

In a Jan. 4, 2012, white paper...

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