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Land Bank plays role in improving city housing

Nov. 27, 2013 @ 12:00 AM

HUNTINGTON -- While the Huntington Urban Renewal Authority's Land Bank Program has become an effective tool for eradicating vacant, abandoned housing quicker and returning the property to productive use, it should not be viewed as a comprehensive solution for all of Huntington's housing woes, a national expert on land bank programs says.

Questions about the HURA Land Bank's role in the future have surfaced recently as a community-driven group of people who work in some aspect of the local housing industry has begun looking at ways to improve the quality of housing for the middle-class in the city. The effort, spearheaded by Create Huntington, has targeted homes in the $100,000 to $200,000 range.

The working group met for the first time in October and plans to meet once a month beginning in January with the goal of releasing a comprehensive plan in late spring 2014.

The HURA Land Bank was set up in 2009 because city officials identified the annual Cabell County tax auction as a major contributor to substandard housing in Huntington. Properties in the auction often get tangled in years of bureaucratic red tape, only to fall back into the hands of people who already have abandoned them or a land speculator who is looking for a quick profit rather than a home to redevelop.

HURA's goal is to pre-empt this process by purchasing as many tax liens within the city as possible. If the original property owner chooses not to redeem the property after 18 months, HURA takes ownership and solicits redevelopment proposals from potential buyers. Any interest money that the program collects from properties that are redeemed is used to either pay down a $1.5 million line of credit that it obtained to kickstart the program or board up and demolish properties that are beyond repair.

There are approximately 150 land banks across the country, and Frank Alexander has been involved in creating many of them during the past 20 years. A law professor at Emory University in Atlanta where he serves as director of the Project on Affordable Housing and Community Development, Alexander has helped draft statewide land bank legislation in Michigan, Ohio, Pennsylvania, New York, Nebraska, Georgia and Missouri. He also co-founded and serves as a senior advisor for the Center for Community Progress, a nationwide, nonprofit organization that focuses on creating vibrant communities through the reuse of vacant, abandoned properties.

While the structure of and powers granted to land banks across the country vary, they all have a common goal of acquiring at little to no cost rundown properties that have been abandoned or are stuck in legal limbo, Alexander said. Some can be surgical in their approach and others can focus on wide swaths of a community that has suffered decades of population loss.

"It sounds like Huntington's land bank has been very successful in that regard and I'm encouraged by their work, but I get really nervous when a land bank is expected to do other functions," he said. "If there is no market demand for a certain range of housing in Huntington, a land bank can't create one. It was designed as a tool to fix one component of the housing market in a community, and that's the properties that pose the greatest liabilities on communities -- those that are abandoned or tax-delinquent."

Nationally, land banks do not have the power of eminent domain, Alexander said. That's a power that should be reserved instead for a redevelopment agency that is focused on assembling city blocks or neighborhoods. It also doesn't make any sense for a land bank to acquire property at the open-market rate, "because it would be a loser for a land bank, just as if it would be for a private buyer."

"Generally speaking, a land bank can be a player in the stabilization or renovation of middle-income housing to the extent that it has inventory or can acquire tax-delinquent properties in a targeted neighborhood at zero cost," Alexander said. "It's role then is to make that property available at zero cost to the private developer on the condition that they invest X amount of dollars and sell for a price range of Y."

Alexander's sentiments are echoed by Nate Randolph, HURA's chairman. Randolph also acquires the liens on tax-delinquent properties at the annual county auction. There are a few key obstacles that would make it difficult for the HURA Land Bank to become the lead entity on large redevelopment projects for middle-income housing market, he said.

For starters, there still are hundreds of rundown properties that need to be torn down or rehabilitated, he said.

"We're trying to get rid of a housing stock that once supported 85,000 people and now has 50,000 people," Randolph said. "We need to cull some more stock and trim down the total number of units to make the housing assets that we do have more attractive."

Since May 2011, when HURA took ownership of its first batch of properties, it has acquired 200 parcels. Of those, 74 have been resold for $453,901. The money has gone back into the program toward stabilization, demolition or paying down the Land Bank's line of credit, which stands at $608,000. Thirty-two vacant, dilapidated structures have been demolished at a cost of $268,000.

Secondly, HURA has discovered through its operations as a land bank that a tax-delinquent property doesn't have a spotless title even after HURA acquires it.

"As a result, banks won't loan any money against these types of deeds," Randolph said. "We could look at getting a consortium of lenders to provide loans to developers for these properties in the spirit that it's for the betterment of the community, but that's up to them."

There are ways, however, that land banks can expand their range of inventory beyond tax-delinquent properties and still serve their purpose of eradicating vacant, abandoned housing, Alexander said.

"Once they've used the tax foreclosure process as well as they can, I encourage them to partner with local governments and form aggressive code enforcement programs," Alexander said. "This allows land banks to capture the properties that may not necessarily have delinquent taxes but still have a negative impact on the surrounding community because of their appearance. We've found in many cases that the property owners are willing to give the property to a land bank instead of fight the code enforcement fines."

Follow H-D reporter Bryan Chambers on Facebook or Twitter @BryanChambersHD.

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