Land Banking Comes to Birmingham

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On Tuesday, May 6, 2014, the City of Birmingham joined a number of other municipalities in a vote to authorize a Land Bank Authority. The Birmingham City Council passed the resolution to establish a land bank in hopes of combating blight within the city. The Birmingham Land Bank Authority will consist of seven persons, the majority of whom will be appointed by the city council, and the remainder will be appointed by the mayor.

What is a Land Bank and what does a Land Bank do?

Basically, Land Banks are governmental or nonprofit entities that acquire, hold, and manage properties, particularly foreclosed or abandoned properties. Urban areas across the country have created Land Banks in an effort to respond to the large number of abandoned, tax-delinquent, or foreclosed properties. These Land Banks acquire property through tax foreclosures, transfers, and, in some cases, open purchases. Likewise, in 2008, the Housing Economic Recovery allocated funding that allows communities to acquire mortgage foreclosures.

Once Land Banks acquire property, their goal is to promote the redevelopment and reuse of the properties. They try to accomplish these goals through exercising powers to waive or abate tax debt and clear title. They also will clean up vacant or blighted properties through maintenance, renovation, or demolition. The Land Banks ultimately seek to rehabilitate the properties for reuse by developers, neighbors, new homeowners.

One example of how such a program can work for developers can be seen in the Fulton County/City of Atlanta Land Bank Authority, which allows affordable housing developers to acquire tax-delinquent properties from current owners before foreclosure. The developers purchase the property and then transfer it to the Land Bank Authority which clears title and waives back-taxes before transferring the title back to the developer to rework the property.

It remains to be seen exactly what the Birmingham Land Bank Authority will do, as the city still needs to appoint its members and allow the members to adopt bylaws and articles of incorporation for its future actions. However, many states and cities have adopted Land Bank legislation and have allowed these Land Banks to assemble, redevelop, and sell abandoned properties. In some places, legislation has been passed allowing Land Banks to utilize tax-increment financing or other types of incentives to assist in the redevelopment of abandoned properties.