Nebraska Municipal Land Bank Act Helps Manage Abandoned Properties

Industry Update: On July 15, Omaha.com published an article titled Land Banks Offer Tool for Abandoned Properties.

Please click here for prior reporting (previous article has slight variances).  Following is the aforementioned article.

Land banks offer tool for abandoned properties

A new state statute gives Sarpy County’s five cities a new tool to manage abandoned and declining properties.

The Nebraska Municipal Land Bank Act was introduced by State Sen. Health Mello, who represents South Omaha, and was signed into law June 4 by Gov. Dave Heineman.

The statute empowers cities in counties that contain at least three cities of the first class -- that is, Douglas and Sarpy counties -- to establish “land banks” empowered to buy, renovate and re-sell land or properties abandoned by landowners.

Nebraska law defines cities of the first class as those possessing populations between 5,000 and 100,000. Sarpy County possesses three such cities -- Bellevue, Papillion and La Vista -- which allows all five of the county’s municipalities to establish land banks.

The Land Bank Act additionally empowers any municipality in any county that contains a city of the metropolitan class to establish land banks. Since Douglas County contains Omaha, the only Nebraska city to attained the 300,000 population threshold for metropolitan status, Omaha and the other cities in the county, including Ralston, are empowered to establish land banks.

The law reflects concern about an increasing number of abandoned properties in the metropolitan area, a cause taken up by Bellevue City Councilwoman Carol Blood who formed Bellevue’s Vacant Property Committee.

The committee, which included Mello among its members until portions of northern Bellevue were removed from his district, was charged with identifying owners of abandoned properties and billing them for city services.

Blood welcomed land banks as a potential tool for economic revitalization. But she said it does not address the specific difficulty of tracking down the owners of abandoned properties so that they might be charged for upkeep services provided by the city.

She said she is confident that issue will be addressed in the Nebraska Legislature’s next session.

Darren Carlson, spokesman for the City of Papillion, said city leaders would certainly familiarize themselves with the new law but that no plans are afoot to establish such a bank.

“There’s no activity at City Hall in that direction,” he said. “No staff members are working on it and it won’t be before the city council any time soon.”

Mitch Beaumont, spokesman for the City of La Vista, said city officials know about the new law.

“We are aware of this legislation, and we will evaluate it as a potential tool in the future,” he said. “But at this point in time staff has not discussed it.”

Springfield Mayor Mike Dill expressed similar views.

“I think it’s a good addition to our package of legislation, although I don’t know that Springfield will use it in the near future,” he said. “I do think it has potential, particularly in dealing with derelict properties.”

A land bank will consist of seven voting members appointed by a mayor and confirmed by a two-thirds vote of a city council. The entities have the status of a public corporation, a political subdivision that is empowered to assume debt by issuing bonds.

Land banks may bid on tax delinquent properties at tax auctions, which would allow them to acquire property.

But they may not possess property that lies outside the corporate boundaries of the municipality that created it, a prohibition that includes a city’s extra-territorial jurisdiction or associated sanitary improvement districts.

The act also prohibits land banks from owning more than 7 percent of the total number of parcels of real property located within its parent municipality.

Municipalities may partner with other cities to create a joint land bank, in which case the land bank’s governing committee may consist of more than seven members so long as the total number is not even.

Land banks are not universally welcomed. The Lincoln Independent Business Association argued that they can exacerbate the problem they are supposed to solve.

Being government bodies without no tax pressure, the association argues land banks tend to hold properties in anticipation of future development, thereby turning down purchase offers from private sector buyers whose purpose may not mesh with the city’s goals.

Other objections have included the cost to the land bank of maintaining properties at public expense and the fact that they do not pay tax on their revenues, thus giving them an advantage over private interests when buying properties.

To view the online article, please click here.

About Safeguard 
Safeguard Properties is the largest mortgage field services company in the U.S. Founded in 1990 by Robert Klein and based in Valley View, Ohio, the company inspects and maintains defaulted and foreclosed properties for mortgage servicers, lenders,  and other financial institutions. Safeguard employs approximately 1,700 people, in addition to a network of thousands of contractors nationally. Website: www.safeguardproperties.com.

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