Clear, accessible definitions for common urban planning terms.

What Is a Land Bank?

4 minute read

Land banks are public or private organizations that purchase, hold, redevelop, or otherwise manage foreclosed or abandoned properties with the goal of achieving community objectives such as affordable housing construction or public park space.

Vacant home with foreclosure sign.

zimmytws / Foreclosed home.

In the United States, a land bank is a public or quasi-public authority or non-profit organization with the purpose of acquiring, managing, and redeveloping underutilized properties in alignment with community goals. These entities aim to improve the productivity of the land, prevent blight, and provide community benefits such as affordable housing or public amenities. The concept became popular in the mid-twentieth century, when deindustrialization led to high foreclosure rates and the hollowing out of many U.S. cities, creating areas with large numbers of abandoned properties.

According to the Center for Community Progress, land banks are not financial institutions, but rather “public or community-owned entities created for a single purpose: to acquire, manage, maintain, and repurpose vacant, abandoned, and foreclosed properties –the worst abandoned houses, forgotten buildings, and empty lots.” The land bank system uses the government’s right to seize properties with unpaid taxes to shift the earnings from the foreclosure process from investors and speculators to the local community. Land banking advocates such as the Center for Community Progress believe states should make it easy for land banks to obtain foreclosed properties at low or no cost, clear back taxes owed on properties and pay no property taxes, lease properties for temporary uses, and negotiate sales on their terms.

Belying its roots in the midcentury urban renewal movement, the language behind land banking indicates that a primary purpose is preventing ‘blight’ by buying and rehabilitating abandoned or vacant lots to prevent a decline in surrounding property values and stem the potential growth of crime in the area. Land banks are also formed to combat the commodification of real estate, where investors buy up properties with little regard to how their use (or lack thereof) impacts the surrounding neighborhood. Among the special powers land banks have are the abilities to hold land tax-free, negotiate sales, and impose specific restrictions on properties. Most frequently, land banks are created in areas with low housing costs and a large number of tax-delinquent or foreclosed properties. In higher-cost cities, land banks can also help public agencies or nonprofits hold on to valuable land for future development.

Creating a land bank depends, first and foremost, on state and local laws. As of March 2022, the seventeen states that have legislation enabling land banks are: New York, Michigan, Ohio, Georgia, Nebraska, Missouri, Tennessee, Alabama, Delaware, Virginia, West Virginia, Indiana, Pennsylvania, Kentucky, Connecticut, New Jersey, and Maryland. Additionally, municipalities in 28 states have land banks. The National Land Bank Map lists 251 land banks as of March 2022. If state legislation or local regulations permit land banking, land banks can be created as public entities, quasi-governmental organizations, or non-profit organizations. Land banks may have a board, often made up of local residents, city staff, and other stakeholders.

Funding sources for land banks include foundation and government grants, such as the Department of Housing and Urban Development (HUD)’s Neighborhood Stabilization Program (NSP) grants, revenue from land sales, tax revenue from properties sold by the land bank, developer’s fees if the land bank participates in development projects, and rental income. While some land banks can become self-sufficient after acquiring enough properties, most require government or institutional support.

The most common way for land banks to acquire properties is foreclosure auctions. In most cases, land banks get special access to foreclosed properties and special powers to clear titles and resolve tax issues, making it easier to transfer the property. After purchase, land banks manage the maintenance and upkeep of properties they acquire. They often lease out properties, using the revenue to acquire more properties or build affordable housing or community amenities. Unlike community land trusts, land banks frequently resell properties after resolving the issues that prevented the property’s sale and rehabilitation, sometimes with certain conditions (such as requiring affordable housing development or minimum occupancy length). Community land trusts (CLTs), on the other hand, usually purchase properties later and become the permanent owner.

Land banks can operate as several types of entities. The New Orleans Redevelopment Authority (NORA), a government entity, was created in 1968 as the Community Improvement Agency (CIA) as part of the state’s effort to implement federal Urban Renewal policies. Today, it continues to partner with developers and other organizations to revitalize properties in underinvested parts of the city. In New York, the Chautauqua County Land Bank is an independent public corporation that operates independently from the local government. Land Bank Twin Cities, meanwhile, operates as a private non-profit corporation, which opens up the potential for private investment, but also raises concerns about transparency. Recently, the Los Angeles County Metropolitan Transportation Authority (LA Metro) launched a land banking program aimed at preventing displacement and gentrification along its future transit lines. Similarly, the Los Angeles County Board of Supervisors allocated $50 million for land banking along the Los Angeles River as part of the master plan to revitalize the 51-mile corridor.

While land banks face some challenges, such as the onerous acquisition process itself, a lack of resources and dedicated staff, and financing, a 2009 HUD report calls land banks “an effective tool for stabilizing communities,” eliminating blight and putting properties back on the tax rolls, and supporting the creation of more affordable housing. The land bank model can reduce the impacts of foreclosure on neighborhoods, keep wealth in the community, and ensure that development aligns with local needs and goals.

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