Central city population loss of this magnitude can be manifested as a patchwork of vacant or abandoned properties in city cores or as a blight affecting whole blocks or even whole neighborhoods.  According to the 2009 American Community Survey, abandonment/vacancy is 84% higher in Buffalo than New York State’s average.  In Rochester it is 67% higher, in Syracuse 52% and in Albany it is 36% higher.   This “hollowing out” is often accompanied by sprawl that pushes suburban and exurban growth further and further from the city’s historic, efficient, dense, neighborhoods and centers.

Vacant and abandoned properties in New York present serious challenges for municipalities. They pose safety risks for residents, decrease the values of surrounding property and increase insurance premiums.  Local residents have voiced their displeasure with the epidemic.  An Albany Times Union article from October 2010, reported that when adjacent duplexes in Albany’s Arbor Hill neighborhood fell after years of neglect, neighbors were happy to see them go, lamenting that many such buildings were left standing year after year.  The effect on surrounding property values is made evident in a study conducted by Temple University. which found that in Philadelphia, properties within 150 feet of an abandoned property experienced a $7,627 decrease in property value, diminishing to a $3,542 decrease at a distance of 400 feet. While no such study done in New York is known to ESF, it seems pretty clear that abandonment has reduced and continues to reduce the value of nearby properties across this state.

Vacant properties can wallow in a state of neglect for decades.  In some cases, perhaps many cases, back taxes eventually exceed the market value of the property.  Demolition is an option, though an expensive one.  The City of Rochester, New York estimates the cost of a demolition at $16,000 while the average value of properties to be demolished as part of their Project Green initiative is merely $3,000.

In recent years, many upstate cities including Albany, Newburgh and Binghamton have begun vacant building registries to help maintain contact with owners of vacant properties and can generate revenues through annual registration fees. While registries are a step in the right direction, they rely on initiative from owners to take responsibility for properties that they might prefer to write off completely. When code violations are sufficiently serious and back taxes sufficiently high, the taxing entity can foreclose on a property bringing it onto the public rolls. Tax foreclosure is often a lengthy and expensive undertaking, which typically ends with the foreclosing entity having title to a parcel that must be maintained but doesn’t generate any revenue. Often, parcels do not have clear title and cannot be legally sold or insured.  In too many cases, municipalities, hard-pressed for current revenues, sell the tax liens on the foreclosed properties at a huge discount to out-of-state speculators.  Once this is done, the city, or county, loses control of that land and its ability to improve its use.

One answer to the problems posed by vacant and abandoned parcels is a Land Bank. A Land Bank is a public entity that can acquire, manage and transfer title of tax-foreclosed properties not reclaimed or redeveloped by market forces. Land Banks are often the result of multi-jursidictional agreements between various taxing entities such as cities and counties and are better suited than the individual entities to manage a portfolio of property. Land Banks can generally acquire land through transfer from public entities, donations and purchase on the open market.

Revenue can be collected from rents, sale of properties, payment for services, grants, loans, bonds and local, state and federal sources. Some Land Banks receive a portion of the property taxes generated by a parcel that is returned to the tax rolls over a set number of years. The staffing necessary to operate a Land Bank can be independent of its parent entities or rely on existing staffers at the city and county level and is typically overseen by a board of local public officials or other interested individuals. Such staff costs are typically covered by the land bank revenues making them self-sufficient entities.

Land Banks can set priorities with regards to future land use as well as the type of owner (such as preferring a non-profit to a for-profit developer).  Enabling legislation is typically needed for the creation of a Land Bank.  Currently, only 8 states have enacted such legislation, the oldest has been operating for over 30 years in St. Louis, Missouri. While land banks in other states are much younger, the results have been impressive. The Genesee County Land Bank in Flint, Michigan has acquired more than 4,000 residential, commercial and industrial properties through tax foreclosure since 2002. It has transferred 300 parcels through its Side Lot Program, renovated 65 homes for rent and 30 for sale, partnered with others to provide 150 units of affordable housing and demolished over 800 structures. A University of Michigan study of the Genesee Land Bank estimated that $3.5 million invested by the Land Bank in demolitions alone increased surrounding property values by over $112 million.

In January, Assemblyman Hoyt (D-Buffalo) and Senator Valesky (D-Oneida) introduced A373/S663, the Land Bank Act, which would enable the creation of land banks in New York State. Land Banks could be a viable solution to the vacancy and abandonment problems in New York State, providing municipalities with a powerful tool to transform tax  delinquent liabilities into revenue producing assets block by block and keeping them out of the hands of absentee speculators.

Links:

http://www.timesunion.com/default/article/Buildings-fall-but-tears-don-t-714010.php

http://www.thelandbank.org/downloads/LandBank_Overview.pdf

http://www.vacantproperties.org/latestreports/True%20Costs_Aug05.pdf

http://www.vacantproperties.org/strategies/documents/LBpolicy-package.pdf