Land bank lets community control its destiny

2/14/2010

LUCAS County, like many Midwestern communities, has been hit disproportionately hard by the national recession. We've seen record numbers of foreclosures, neighborhoods pockmarked by vacant land and blighted properties, rising tax delinquencies, double-digit unemployment, and a steady decline in population.

Our neighborhoods, communities, and local governments are in crisis. Our current options offer little hope to stem the tide, let alone steer us back to prosperity.

Fortunately, a bill before the Ohio General Assembly offers a framework to help address these problems.

The legislation, approved by the state House and pending in the Senate, would provide Lucas County with the ability to create what's called an "active" land bank.

Its attached funding stream would allow community leaders to deal with the problems associated with urban blight, while promoting economic development and smarter land use.

Only Cuyahoga County now has the authority to create such a land bank in Ohio. The measure before the Senate would extend that authority to counties with populations of more than 100,000 residents - 29 counties in all. In northwest Ohio, Lucas, Wood, Erie, and Allen counties would qualify.

The concept of the legislation emerges from the award-winning land bank program created by Genesee County, Michigan, which includes the city of Flint. Cities such as Indianapolis, Atlanta, and Louisville also have embraced the concept.

Under the bill, tax-foreclosed properties would be transferred to the county's new land bank - called a Land Reutilization Corporation (LRC) - instead of being sold at sheriff's sales, as they are now.

Mortgage-foreclosed properties, by far the biggest culprits in the foreclosure crisis, could also be transferred to the LRC by banks or other financial institutions that want to walk away from distressed properties.

Cuyahoga County has seen a large number of mortgage-foreclosed properties shifted to its LRC.

Properties that are transferred to the LRC would receive a free and clear title. The lack of such a title often discourages private interests from investing in economically disadvantaged urban areas.

Most important, the LRC would have a consistent, self-sustained funding stream. Money generated from land sales and the collection of delinquent taxes would fund the LRC, which could use that revenue to pay for rehabilitation or demolition of abandoned properties.

In many ways, the primary beneficiaries of this proposal would be the roughly 90 percent of Lucas County residents who pay their taxes and mortgages on time. Failure to enact the land bank measure will place an ever-increasing burden on these people.

The result will be a destructive spiral of lower property values, shrinking government revenue, diminishing public services, and higher and more frequent tax levies. This is a recipe for disaster.

By contrast, if the bill passes, the land bank essentially would replace the tax-lien sale as a mechanism for collecting delinquent taxes.

Since 2006, my office has collected more than $15 million through the sale of tax liens to a third party.

This is new money to our community that never would have been collected otherwise. It has helped fund the operations of roughly 50 taxing districts: schools, the zoo, the public library, parks, senior citizen services, and the 911 system.

It is frightening to think where the Toledo Public Schools would be without the more than $6 million the tax lien program has generated for the district since 2006 - or how many more tax levies voters would have faced to make up this difference without the program.

The tax lien program has done what it was intended to do. But it has run its course, and now there is a better way. Instead of enabling an out-of-town third party to profit, the new land bank approach will allow us to keep revenue in Lucas County to fund the LRC.

Most of all, passage of the land bank bill will allow our community to take control of its destiny, instead of being held hostage by land speculators or Wall Street banks. The measure will not solve all of the problems that Ohio's urban areas face. But it will give us an important weapon in the battle to stabilize and restore our neighborhoods.

We are not asking Columbus to do this work for us. We can do it ourselves. All we need is the permission.

Wade Kapszukiewicz is Lucas County treasurer.