Land Banks in Action: Fulton County, Georgia

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CED Program Interns & Students previous post by Tyler Mulligan explained how local North Carolina governments can utilize land banks to address vacant, abandoned, and tax foreclosed properties in their community. Another post provided a case study of the Genesee County Land Bank Authority in Genesee County, Michigan. This post examines the Fulton County/City of Atlanta Land Bank Authority and how this model may be useful for communities considering utilization of land banking strategies. 

Case Study 2: Fulton County/City of Atlanta Land Bank Authority – Fulton County, GA

In the early 1990s downtown neighborhoods in the City of Atlanta were starting to recover from the abandonment and suburbanization that undermined the health of many urban communities across the country. In the 1970s, the city had seen a loss of population to the surrounding suburbs resulting in significant increases in the prevalence of vacant property – from 5% of the overall housing inventory to over 15% during the decade. By 1990, Atlanta’s population had started to recover, increasing 30% between 1990 and 2007. As the increase in population spurred revitalization in an increasing number of downtown neighborhoods, certain areas continued to maintain significant inventories of vacant property that was unable to attract the investment happening elsewhere in the city. One common barrier to the reuse of such properties was past-due property tax, accumulated over time, which far exceeded the market value of the property.

In Georgia, state law required that minimum bid for properties sold via tax sale include all back-taxes, penalties and interest owed on the parcel. Because the law stipulated that delinquent taxes be compounded 18% each year taxes went unpaid, the amount owed on these properties accumulated quickly. Exacerbating the problem were artificially-high tax appraisals that didn’t account for the falling market values that occurred during the urban abandonment of previous decades. As a result of both legal requirements and market forces, property that might have been otherwise attractive for private and non-profit developers remained vacant as accumulated taxes exceeded the market value of the property.

In 1990, as a response to these challenges, Georgia legislators passed the state’s first land banking statue which gave land banks the authority to extinguish delinquent taxes on acquired properties. This included taxes designated for local school districts, with permission of the local school board. The law also required that land bank authorities be jointly formed by a municipality and the county in which the municipality was located. Additionally, in 1995, the state legislature reformed the tax foreclosure system to allow judicial foreclosures, making it easier to clear title and expediting the tax foreclosure process from 12 to two months. Following passage of the 1990 legislation, the city of Atlanta and Fulton County (where Atlanta is located) moved quickly to form Georgia’s first land-bank, the Fulton County/City of Atlanta Land Bank Authority.

For most of its existence, the Fulton County/City of Atlanta Land Bank Authority has focused on clearing title and taxes on tax delinquent properties to allow productive reuse as affordable housing. The board of the organization has limited the time that the land bank owns any property, instead acting as a conduit for tax-burdened properties acquired by affordable housing organizations. The land bank encourages affordable housing developers to purchase properties from current owners before the property enters the tax foreclosure process. Generally, organizations will negotiate a purchase subject to the outstanding back-taxes. Once acquired, the property is then transferred to the Land Bank Authority, which extinguishes past-due taxes, clears the property title and transfers ownership back to the purchasing organization. The Land Bank is also empowered to take ownership of tax-foreclosed properties that are unsold following public tax sale, to negotiate directly to purchase property on the private market or to accept donations of property.

The Fulton County/City of Atlanta Land Bank Authority has a number of policies and programs in place to encourage the productive reuse of properties transferred through the land bank. Upon disposition of a property to an affordable housing developer, the land bank imposes conditions requiring that the property is developed for affordable housing, neighborhood improvement or another public purpose. If the conditions of transfer are violated or redevelopment is not completed within three years, ownership of the property reverts to the land bank and delinquent taxes are reinstated.

Additionally, a policy enacted in 2007 allows the land bank to hold properties for longer time periods – 36 months for properties acquired by non-profits and 60 months for government owned property – while predevelopment work occurs. The express goals of this policy include:

a)     “Permit advance acquisition of potential development sites in anticipation of rapidly rising land prices;

b)     Facilitate pre-development planning, financing, and structuring;

c)     Minimize or eliminate violations of housing and building codes and public nuisances on properties to be developed for affordable housing; and

d)     Hold parcels of land for future strategic governmental purposes such as affordable housing and open spaces and greenways.”

During the land bank’s holding period, properties are not subject to property tax collection, reducing holding costs and making development of affordable housing financially feasible for non-profit development organizations. As of 2009, the Fulton County/City of Atlanta Land Bank Authority had facilitated the transfer of 50-100 properties each year for affordable housing or other public use.

In 2012, Georgia passed the Land Bank Act to enhance the ability of land bank authorities to acquire, manage and repurpose underutilized property. The new law allows land bank authorities to encompass multiple counties, which is particularly important for the Fulton County/City of Atlanta Land Bank since Atlanta city limits span both Fulton County and DeKalb County. Additionally, the law provides new financing mechanisms that allow land banks to retain revenue generated from property sales and gives local government the authority to direct up to 75% of property tax revenue on sold land bank properties to land bank organization for up to five years following sale.

Since its founding in 1991, the Fulton County/City of Atlanta Land Bank Authority has played an important role in expanding affordable housing opportunities and encouraging reuse of vacant properties throughout the Atlanta area. The conduit model utilized by the organization offers an example for communities with limited capacity to manage properties over long periods of time. By focusing on extinguishing past-due property taxes and quickly transferring property to non-profit developers, the Fulton County/City of Atlanta Land Bank Authority offers an alternative to the long-term acquisition, management and disposition model utilized by the Genesee County Land Bank Authority. For communities interested in land banking, both models offer useful strategies, policies and programs that may be relevant to returning underutilized properties to productive use.

Stay tuned for additional posts exploring land bank models from other communities.

 Michelle Audette-Bauman is graduate student in the Master of City and Regional Planning program at UNC-Chapel Hill and a Community Revitalization Fellow with the Development Finance Initiative.

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