Land Banks: Preventing the Next Generation of Ghost Towns?

Population losses, the mortgage foreclosure crisis, and general urban decay have left neighborhoods around the United States abandoned and unoccupied. Abandoned property can result in chronic problems for both the remaining property owners, who are faced with reduced property values and an increased criminal presence; and municipalities, which can find itself with lower property tax revenues and an increased demand for public safety services.

In order to cope with these problems, governments have taken a renewed interest in Land Banking. The idea of land banks is not new (the earliest contemporary land bank was established in St. Louis in 1971), however, in the wake of the Great Recession, many state and local governments are taking a harder look at land banking as a way to stabilize reeling metropolitan areas.  

Land Banking refers to the policy where local governments, through a public development authority or other public agency, acquire abandoned property and then either convert the property into a productive use (through renovation, demolition, sale, or other means), or hold the parcels for long term land use planning. When disposing of property, land banks don’t operate in the usual sell-to-the-highest-bidder-as-quickly-as-possible mentality that plagued tax foreclosure sales (which usually resulted in the properties going to vacant landlords), instead, most land banks are guided by disposition policies which favor buyers who can help the long-term revitalization of the community, such as charities or nonprofits. Each land bank has different policies and prerogatives to accommodate the distinctive needs of each municipality.

Probably the most well-known “modern” land bank is the Genesee County Land Bank Authority (GCLBA), located in Flint, Michigan. Through state legislation, the GCLBA is able to take clear title to abandoned property in half the time, eliminating tax liens and resulting in hardship postponements. The GCLBA then has a variety of programs the abandoned lot can find itself in: demolition, housing renovation and rental, sales, side lot transfer (a program where the adjacent property owner may purchase the vacant lot for $25 plus fees), as well as a variety of gentrification programs. The GCLBA’s disposition of property is governed by a variety of policies which favor nonprofit, government, or charitable buyers who present the best opportunity for continued neighborhood revitalization. The GCLBA has acquired and encouraged the re-use of more than 4,000 residential, commercial, and industrial properties since its inception. However, continuing financial woes of both Flint and the GCLBA leaves the overall effectiveness of land banks in question.

Regardless, an effectively implemented land bank is believed to offer municipalities a number of benefits, including: acting as a catalyst for economic development, stabilizing municipal finances through both increased (or stablized) tax receipts and the decreased need for public safety expenditures; expanded housing opportunities, decreased criminal activity, and a decreased number of public nuisances. Although the results of land banks are subject to interpretation, a 2009 report issued by the U.S. Department of Housing and Urban Development has noted the benefits of land banks in Michigan, Maryland, and Georgia. Additionally, recent legislation in New York and pending legislation in Pennsylvania, among other states, suggests that land banks could be more widespread in the future.

A more in-depth explanation of Land Banks, all by Professor Frank S. Alexander, can be found here (from the Journal of Affordable Housing), here (from the Brookings Institute), and here (from the Center for Community Progress).

State Government Privatization Reform: Examining the States

The Reason Foundation is a California based public policy think tank that, among other policy issues, conducts research on state government privatization and examines the public-private partnership models of various state governments.  Recently they have released their Annual Privatization Report 2010: State Government Privatization.   The report is a great resource for exploring state initiatives aimed at reforming state government and privatizing state government functions as a way to decrease government spending.  The following are examples of the content within the Reason Foundation’s annual report.

New Jersey’s Privatization Task Force

The Report highlights New Jersey’s efforts to reform government privatization policies by creating the New Jersey Privatization Task Force, which was established by Executive Order 17 under Governor Christie.  The Task Force reported to the Governor in 2010 outlining  various recommendations and identifying privatization opportunities available to New Jersey’s state government.  One recommendation is that the Governor should make it an administration priority to make private sector competition the standard for all state agencies and the creation of a centralized privatization entity.  Other recommendations and privatization opportunities identified by the task force include state parks management, state psychiatric hospitals, vehicle fleet maintenance and management, performance based highway maintenance, state parking facilities, water, printing services, workers compensation claim processing, toll collection, vehicle emissions inspections, higher education facility maintenance, correctional food services, hospital debt collection, golf corse management and housing and construction code enforcement.  The report also highlights that some of these recommendations have already been implemented by Governor Christie and the New Jersey State Legislature.

The Privatization Task Force report is available here

Louisiana’s Commission on Streamlining Government

Louisiana has implemented broad government reform efforts to increase public private partnerships by establishing the Commission on Streamlining Government (CSG).  The objective of the Commission is to recommend reform efforts that will reduce the cost of government through privatization, downsizing, and creating a more efficient government.  Recommendations include creating a state spending limit, shifting state retirement plans to 401K style and to reform state education financing to student based budgeting.  The full report includes over 200 recommendations for privatizing, streamlining, and downsizing state government.

The report is available here.

Puerto Rico’s Privatization Program

The Reason Foundation notes that in 2009 Puerto Rico enacted a law that allows state government agencies to enter into public-private partnerships with firms for the design, construction, finance, and maintenance of public facilities.  Furthermore, the law created the Public Private Partnership Authority (PPPA) which is a separate entity responsible for identifying and monitoring public private contracts as well as the enforcement of their terms.

Arizona and the Privatization of State Parks

In Arizona there is a proposal that would allow the state to privatize state parks by leasing them to Recreation Resource Management, which is one of the largest private park oversight companies in the United States.  By leasing the state parks through public-private partnership contracts the state would be able to reduce the cost of managing parks during a time when they are threatened by budget cuts.  Other states considering this model  include New Jersey, Utah, California, Georgia, and Kentucky.

The Arizona State Park Foundation has released a report “Arizona State Park privatization and Efficiency Plan” which lays out how such a privatization scheme would work and addresses the policy and financial details of the plan.

Reason’s Notable Privatization Highlights

The Reason report goes on to discuss the privatization of alcohol regulation, the Illinois program for the private management of the state lottery, California’s (and the United State’s) first privately financed courthouse, the privatization of worker compensation programs, and the privatization of Economic Development Agencies.

Public Authorities Blog Offers Much Food for Thought for the Reform Minded

Albany Law School  Government Law Center Senior Staff Attorney Amy Lavine blogs about public authorities here. The blog is growing in popularity as “the” source for everything related to public authorities – reported cases, reform efforts, reports from various governmental agencies and task forces, as well as reports from non-governmental organizations.  It also provides links to many informative sites that discuss various aspects of government reform efforts.  Another unique feature of the blog is a routine round-up of news articles that discuss public authorities in New York, across the country, and even across the world (e.g., a recent post discussed public authorities in China.) The blog, part of the Government Law Center’s Public Authorities Project, also links to a national clearinghouse on public authorities maintained by the Center.  Interested readers may subscribe to the blog by email and/or by RSS.