A previous post by Tyler Mulligan explained how local governments can utilize land banks to address vacant, abandoned, and tax foreclosed properties in their community. This post provides an example of a successful land bank in Genesee County, Michigan – home to the city of Flint – and discusses key elements of the Genesee model that may be useful for other communities.
Case Study 1: Genesee County Land Bank Authority – Genesee County, Michigan
Over the past 50 years, the city of Flint and other communities in Genesee County, Michigan have experienced deindustrialization and out-migration familiar to many cities in older, industrial regions. Flint, the birthplace of General Motors, was particularly hard hit, losing almost half its population between 1960 and 2010. As the population of Flint declined, the number of vacant properties in the city and surrounding areas continued to grow. Between 1980 and 2010, the vacancy rate in Flint increased from just over 5% to over 23% – almost twice the national rate in 2010. Vacant property imposes a number of costs on local communities, including lowering the value of nearby homes, increasing municipal costs to manage vacant structures, and increasing the risk of fire and crime.
Though many vacant properties in Genesee County were tax delinquent, state tax foreclosure rules did not provide a mechanism for local governments to take ownership of delinquent properties. Instead, private investors were allowed to purchase tax liens on these properties, while unsold properties reverted to state government ownership after a lengthy foreclosure process that could take up to seven years. To address these issues, in 1999 Michigan’s legislature authorized counties to assume ownership of tax foreclosed properties through a streamlined process that could be completed in less than three years. This legislation also authorized the creation of local land bank authorities to manage the county inventory of tax foreclosed property.
Within this framework, the Genesee County Land Bank Authority was formed in 2004 with the mission “to restore value to the community by acquiring, developing and selling vacant and abandoned properties in cooperation with stakeholders who value responsible land ownership.” Like many land banks, the Genesee County Land Bank acquires most property through the tax foreclosure process, though they also have the ability to receive property transfers and purchase property on the private market. As of the end of 2012, Flint and surrounding areas had about 22,000 blighted properties; the Genesee County Land Bank owned approximately one out of every three of these properties.
One important feature of the Genesee model is that the land bank functions at the county level, rather than at a city or neighborhood level. This broad geographic focus helps diversify the inventory of properties that are deeded to the land bank through tax foreclosure. Rather than be limited by the values in a narrow geography (i.e. a city or neighborhood), the county level structure offers the opportunity to include higher-value suburban properties in the land bank inventory. In some cases, the land bank may be able to sell such property on the private market; proceeds from these sales can then be used to subsidize demolition or improvements on lower value properties.
Another central element of the Genesee model is the broad range of programs utilized by the land bank to manage and return vacant property to productive use. In addition to demolition and rehabilitation programs, the Genesee County Land Bank’s “Clean and Green” initiative provides stipends to local groups in exchange for maintaining clusters of vacant land owned by the land bank. The land bank also offers a side-lot program to allow neighbors adjacent to vacant property owned by the land bank to purchase lots for as little as $64; lots return to the tax rolls and are maintained by the new owner. The Genesee County Land Bank Authority also maintains a searchable database of all property in its inventory; the land bank sells, rents and leases selected properties that are in good condition, provided the use of the property aligns with revitalization goals in the area. The diverse array of programs utilized by the land bank, allows the organization flexibility in determining the best option for reuse of property and in responding to changing market conditions.
In addition to the acquisition and programmatic strategies outlined above, funding from property taxes is another key element of the Genesee model. In Michigan, properties sold by a land bank authority are able to recapture 50% of property taxes generated for up to five years after sale. This dedicated funding source, authorized by state statue, offers a reliable revenue stream for land bank authorities and can help organizations become self-sustaining over the long-term. (In other states, penalties, interest, and fees on late property tax payments are designated to fund land bank operations.) In addition to this property tax revenue, the Genesee County Land Bank also generates income by selling, renting or leasing property in the land bank inventory and from grants, bonds or loans.
Decades of population decline have made addressing vacant property a priority for the city of Flint and other communities in Genesee County. The Genesee County Land Bank Authority is the primary mechanism used to mitigate negative impacts of vacant property, from decreased property values to reductions in municipal tax revenue. Though land banks are inherently local entities, necessarily designed to align with the unique needs, strengths, and opportunities of a specific area, the basic elements of the Genesee model outlined above may be useful for communities seeking to establish a local land bank authority.
Stay tuned for additional posts exploring land bank models from other communities.
Michelle Audette-Bauman is a graduate student in the Master of City and Regional Planning program at UNC-CH and a Community Revitalization Fellow.