Land Bank Proposal Presented to Norristown, PA Council
On April 29, The Times Herald (Norristown) published an article titled Norristown council reviews ‘land bank’ proposal to combat blight.
Norristown council reviews ‘land bank’ proposal to combat blight
NORRISTOWN >> A land bank proposal for Norristown was presented to Norristown council Wednesday by a consultant for the Housing Alliance of Pennsylvania (HAP).
A land bank is a government organization committed to returning vacant, abandoned, tax-delinquent and foreclosed properties to productive use by acquiring them and renovating them for reuse.
Attorney Winifred Branton, the principal of Branton Strategies in Philadelphia and a consultant for the HAP, explained the land bank concepts to council members at a special workshop meeting.
“There are 300,000 blighted properties in Pennsylvania. A land bank is another tool to bringing properties back to useful life,” Branton said. “A three-pronged strategy with code enforcement to promote blight remediation, a modern land recycling system and a reinvestment plan.”
Jayne Musonye, the Norristown director of planning, said that a first round of 50 blighted properties in the municipality had been brought back up to code.
“We had a second round of 49 properties identified but it did not work as well the second time,” Muonye said. “The current number of blighted properties is fluid because some properties were taken off the list and others were added to the list.”
Under the commonwealth’s 2012 land bank legislation, any Pennsylvania county or municipality with more than 10,000 residents can start a land bank. A board of directors organizing a land bank must meet in public to make decisions and follow the state Sunshine Law regulations. A land bank can redevelop vacant, blighted and/or tax delinquent properties by acquiring them through a variety of methods. Property acquisitions by foreclosure, donation from municipalities or tax claim bureaus, purchase, donation, gift or transfer are allowed, but a taking by eminent domain is expressly prohibited.
A land bank can improve a property by new construction, redevelopment, demolition or renovation work. To finance the operations of a land bank, the board can issue tax-exempt revenue bonds or use (real estate) tax recapture agreements with school districts, or local towns, to receive up to half of the real estate property tax revenue for up to five years.
”What makes a property blighted?” Council President Linda Christian asked. “There are occupied homes that look blighted.”
Branton said that the law allows a “blighted” designation for just one of 11 criteria, but in reality more than one condition needs to be present to allow a foreclosure on the property.
“There are a number of counties in New York state that have land banks. In Philadelphia, cleaning and greening vacant lots increased the adjacent property values by 30 percent,” she said. “The land bank law gives flexibility in how they are set up. You have to give options for local governments.”
She said that financing was a major hurdle.
“You are allowed to take grants and loans. The five-year, 50 percent recapture rule allows a land bank to recapture up to 50 percent of the real estate taxes in the five years after a property is sold,” Branton said. “Land banks are able to clear title to a property through expedited quiet title action.
“A land bank can ‘trump’ another bid at a foreclosure sale with a prior notice to the parties to a sale.”
She emphasized that the sale process needs to be public to help move a property back into productive use.
Councilman Gary Simpson asked how the Marcellus Shale fees are distributed in the towns where the drilling activities are located.
“If we are not dealing with local governments but with a consortium. How does a CDC (Community Development Corp.) come into play?” Simpson asked.
Branton said that tax sales offer a productive place for a land bank to purchase blighted properties at reduced prices.
“A judicial tax sale is where the real bargains are. This is where properties are sold that are free and clear of the delinquent taxes,” she said. “In Reading, the median winning bid ranged from about $1,000 to nearly $5,000.”
HAP officials recommend making a strategic plan for a land bank proposal, she said.
In 2014, the Norristown tax sales prices were 30 percent of the assessed value of the properties sold because there was more competition to purchase the properties, Branton said.
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