Land banks acquire, repair, resell abandoned property to be used again

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HARRISBURG -- From Philadelphia to Westmoreland County to the Monongahela Valley, land banks -- entities that collect tax-delinquent and abandoned properties -- have the potential to be a significant tool in the battle against urban blight.

And that tool finally is available for use in Pennsylvania. The state law allowing the creation of land banks went into effect last year.

"We all know those places that have been sitting there for the better part of a generation, and everyone wonders why nothing has been done," said Westmoreland County Commissioner Ted Kopas. "This is the first time we can really take a targeted approach to them."

But just one land bank is up and running in Pennsylvania -- largely because of the novelty of the law, but also for financial reasons.

"Part of the problem is startup costs," said Dave Johnston, planning director for Butler County.

A land bank is a governmental or nonprofit entity that acquires and manages tax foreclosed, blighted and abandoned properties with the goal of returning them to productive reuse. The law allows any county, city or borough with a population of 10,000 or more to establish a land bank. Smaller towns can form them, too, if they team up.

Pennsylvania has about 300,000 vacant and abandoned properties, according to an estimate from the office of state Rep. John Taylor, R-Philadelphia, who championed the law. Of these properties, about 35,000 are in Philadelphia and 19,000 are in Pittsburgh, according to a summary of the bill.

Westmoreland County could pass legislation to enact a land bank by the end of the month, Mr. Kopas said.

"This is the most significant tool we've been given to battle blight in a long time," he said.

Here's how it would work: For properties that are delinquent at least two years, prior taxes would go to tax sale. There are about 500 parcels, countywide, in this category, Mr. Kopas said. The land bank can purchase these properties at any stage of the tax sale process, with the goal of redeveloping them.

The fixed property is then sold, and the money put in the land bank to acquire other properties.

The land bank concept has been around since the early 1970s and originated in St. Louis, said Kim Graziani, a vice president at the Washington, D.C.-based Center for Community Progress. The idea quickly spread, and now about 12 states, including Ohio and New York, have laws enabling municipal land banks, said Ms. Graziani, a former director of neighborhood initiatives for the city of Pittsburgh.

Ms. Graziani said successful land banks have the ability to acquire inventory through the tax foreclosure process for little to no cost, set a strategy in response to local goals, and are transparent in regard to how they acquire and dispose of properties.

The Westmoreland County land bank would not have the power of eminent domain -- that is, it could not simply take property -- and it couldn't do away with back taxes on the property without the approval of the local municipality and school district, said Mr. Kopas.

"The goals here are long-term," Mr. Kopas wrote in an explanation on his website of why he supports the creation of the land bank. "The land bank is not designed to 'flip' properties like one of those reality TV shows."

The land bank would not immediately have any dedicated funding, and part of its primary charge will be working with municipalities to fund itself to pay legal fees and operating costs.

Monongahela Valley communities that have long been plagued by blight issues are also seriously examining the creation of a land bank, said An Lewis, executive director of the Steel Valley Council of Governments.

Vacant and neglected properties cost the Mon Valley $19.4 million every year in municipal services and lost tax revenue, according to a recent study the group conducted.

The Steel Valley COG along with the Turtle Creek Valley COG and the Twin Rivers COG, which collectively representing 41 municipalities, could form a multi-municipal land bank.

"We have been actively looking at the issue of blight in our member municipalities" and trying to figure out how a land bank could be constructed and could be sustainable, Ms. Lewis said.

Ms. Graziani cautioned that a land bank shouldn't be expected to turn around a depressed residential real estate market overnight, and shouldn't be expected to repair every blighted property in a community.

"[A land bank] has to be seen as one tool," she said. "It also takes money and commitment and leadership."

The challenge of finding funds for such a project is a stumbling block for some communities.

"The county is interested if there would be some money for startup costs," said Mr. Johnston, the planning director for Butler County. The county currently uses federal Community Development Block Grant funds to clean up dilapidated properties by razing them or selling them to adjacent property owners, but hasn't embraced the land bank model.

Statewide, the only land bank that has been created thus far is in Central Pennsylvania's Dauphin County. One could be launched soon in Philadelphia. And there's interest in the concept from all parts of the state, said Liz Hersh, executive director of the Housing Alliance of Pennsylvania.

"There's a lot of enthusiasm and a lot of communities exploring it," she said.

Kate Giammarise:, 1-717-787-4254 or on Twitter @KateGiammarise.

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