Can ‘land banks’ help rebuild post-industrial US cities?
WASHINGTON: When Jamil Bey wanted to move back to the Pittsburgh neighborhood where he had grown up, he found the perfect house to buy. There was just one problem - a fall in property values on that street had left the owners trapped in negative equity. Unable to agree on a price that would allow the sellers to pay off their mortgage, Bey realized he would not be able to buy a house in his old neighborhood - and that the owners would be stuck with a property they did not want.
Across the United States, former manufacturing centers like Pittsburgh have experienced overwhelming population declines in recent decades, pushing down property prices and leaving homes empty and neglected. “For folks who have a connection to those neighborhoods because they grew up there, there’s not a whole lot of quality properties to choose from,” Bey told the Thomson Reuters Foundation. “Even if you’re looking for property to invest in, you can’t fund new
construction because the property values in those neighborhoods are too low.”
It took a trip to New York state for Bey to find a potential solution to the problem blighting his city - land banks, which have the power to search out vacant properties and work to return them to the market. “I was in Syracuse and realizing that the vacant lots looked well taken care of - planted, with cut grass and nicely maintained,” he said. “And I was told, ‘We have a land bank’.”
Many former industrial cities, particularly in the northeastern United States, have lost a quarter of their population or more since the 1950s, according to census data. Pittsburgh, once one of the largest and most prosperous cities in the country, has been among the hardest hit. Some neighborhoods there have suffered population declines of 80 percent and more, said Bey, setting up a cycle of decline that has blighted entire communities.
Recycling land
Bey is now vice chairman of the Pittsburgh Land Bank, which is set to start operating this summer, aiming to take on the growing numbers of abandoned properties in the city. He describes its remit as “recycling land” - working through entanglements of ownership, addressing tax issues and fixing up or tearing down structures with a view to getting vacant property back on the market or giving it over as a public space. Houses that have sat for long enough to become blighted are often saddled with significant tax arrears, reducing their appeal to investors.
Many land banks are able to short-circuit this process, clearing arrears before addressing regulatory violations to make the property appealing to new buyers. Land banks have existed in the United States since the 1980s, but interest has spiked since the economic downturn of 2008-09, according to law professor Frank S Alexander. That created a wave of foreclosures in which “abandonment was occurring, particularly at the low end of the property spectrum,” said Alexander, a leading authority on land banking who said the sector had seen “tremendous growth” as a result. —Reuters