Land banks popped up across the eastern half of the U.S. in the wake of the foreclosure crisis, as 11 states passed land bank legislation between 2009 and 2016. More than 170 land banks are now in operation, according to the Center for Community Progress. These quasi-government agencies help counties and municipalities take control of vacant and abandoned properties, maintain them, keep them out of the hands of speculators until they can be returned to productive use.
But how are land banks funded? They typically work in disinvested neighborhoods, acquiring and transferring property where housing markets are weak or nonexistent. How to Fund Land Banks, an article in Shelterforce magazine by Tarik Abdelazim of the Center for Community Progress, sheds light on how these entities sustain their operations for the benefit of their localities and what kinds of funding sources are most valuable. The article offers a series of lessons supported with real world examples.
The first lesson, not surprisingly, is that predictable, recurring funding sources are best. Consistent funding allows land banks to innovate and carry out long-term strategies because they do not have devote as much time and effort to finding new funding sources and simply keeping the lights on. For example, the state of Ohio allows counties to direct a percentage of delinquent property tax assessments, interest and penalties to their land banks, resulting in annual revenues over $1 million for the Lucas County Land Bank and around $7 million for the Cuyahoga County Land Bank.
Second, the author explains land banks are not self-financing. In other words, they will not earn enough from tax recapture or land sales to support themselves completely. They will always require subsidy, so local governments must understand their value and commit to supporting them over the long term.
The article’s other lessons include the importance of partnerships for land banks’ sustainability and mission fulfillment, as well as the need for land banks to be entrepreneurial in seeking funding, taking advantage of grants and other limited funding opportunities.
Abdelazim closes with an appeal to invest in land banks, explaining how they contribute to the stabilization and revitalization of neighborhoods and noting “the success of a land bank is almost directly proportional to the level of funding it receives.”
Learn more about land banks with the Center for Community Progress Land Bank FAQ