Revitalizing Foreclosed Properties with Land Banks

When properties remain vacant for prolonged periods, they can fall into disrepair,
become neglected, and eventually be abandoned by their owners. Abandoned
properties pose significant fire and safety hazards, attract
vandalism, and generate criminal activity.
These properties create a ripple effect, lowering adjacent property values and contributing
to the decline of entire neighborhoods. A 2005 report prepared
for the Homeownership Preservation Foundation notes that a
single foreclosed unit in a Chicago neighborhood reduced the
property values of 13 homes located within 150 feet.

In addition, communities with a large number of tax-delinquent properties lose
considerable revenue and further burden local governments with
increased maintenance and service costs. For instance, according to
a National Vacant Properties Campaign report, Detroit, Michigan
spends $800,000 a year on vacant lot cleanup alone.

While it’s in a community’s best interests to promote the
redevelopment of abandoned and tax-delinquent properties, there
are a number of barriers that inhibit progress, such as complicated
state tax foreclosure processes and a lack of local government
mechanisms to regain control of such properties. Some states allow
tax liens to be sold at auctions, where buyers (usually speculators)
have no immediate interest in returning the property to reuse. In
other instances, properties that remain unsold at auctions become
government-owned through a lengthy foreclosure process, during
which time they decline in value and potential use.
To ameliorate the negative effects of foreclosures, some communities are creating public entities — known as land banks — to
return these properties to productive reuse while simultaneously
addressing the need for affordable housing. This report examines
the concept of land banking and discusses barriers and solutions
to the successful implementation of land banks. The report also
contains case studies from three local jurisdictions — Genesee
County, Michigan; Atlanta, Georgia; and, Baltimore, Maryland
— that detail their experiences in land banking.