Updated 4/30/15: On April 27, The News Journal published an article titled Bill targets Wilmington’s vacant homes.
Link to article
On March 12, The News Journal released an article titled Wilmington leaders eye new development tool: land bank.
Wilmington leaders eye new development tool: land bank
The 600 block of W. Fifth St. in Wilmington has at least eight vacant homes, some marked by boarded-up doors and windows.
Dilapidated blocks like this one in West Center City are what City Council President Theo Gregory has in mind when he discusses establishing a land bank. The development tool – also in place in cities like Cleveland, Detroit and Philadelphia – is used by municipalities to acquire abandoned and tax-delinquent properties.
Then the properties are either razed or renovated. If they are renovated, the buildings are sold, with profits supporting the land bank.
Gregory and Mayor Dennis P. Williams are among those pushing for state legislation that would allow Delaware cities to create their own land banks. In addition to the legislation, the city would need between $6 million and $10 million to make sure the land bank is effective.
Wilmington had nearly 1,500 abandoned houses as of January, according to the city. Officials say a land bank would make it easier for the city to take control and decide the fates of abandoned or blighted property.
“Having that much surplus blighted property is bringing down the value of the city and making it very difficult for people to redevelop and sell properties,” said Paul Calistro, executive director of the West End Neighborhood House, a community improvement group.
If it comes to fruition, the proposed Wilmington Neighborhood Conservancy Land Bank would be a city-owned entity with the ability to purchase abandoned properties at foreclosure auctions, also known as sheriff’s sales. The land bank also would have the power to negotiate directly with owners for their property and could assume ownership of the roughly 140 empty houses the city already maintains.
Having a land bank in place, experts say, means code-enforcement liens and assorted fines against a property can be kept intact at auction. The higher minimum bid would increase the likelihood for serious private bidders or the city to take control. That, in turn, improves the possibility that the property will be renovated – either by a serious buyer or by the land bank – or demolished, instead of purchased cheaply and left vacant.
For the land bank to become a reality, the state Legislature has to first pass enabling laws, which city leaders hope happens during this session.
There is enough support for the initiative among city leadership that Williams and Gregory, who are often at loggerheads, agree on the matter.
“We do have urban blight. We have vacancies, and we have to get a handle on a specific strategy that’s city-wide,” Gregory said, adding a land bank would allow for a “comprehensive approach” to handling blighted property.
Alexandra Coppadge, a Williams spokeswoman said: “This is providing a coordinated approach to tackling issues of vacancy and blight in the city.”
Deborah Kraak, the president of the Trinity Vicinity Neighborhood Association, located slightly north of the streets Gregory pointed out, also supports the concept of a land bank.
“This way you know where the people are, you can go down to City Hall and say, ‘Look, we have this problem,’ ” Kraak said, adding that a water pipe burst in a forceclosed home in her neighborhood and residents couldn’t find a contact at the bank that owns it to let them know what happened.
Kraak said that if a land bank becomes reality, she hopes there would be steps to allow for neighborhood association input. That would hopefully protect historic homes while also allowing residents to provide input on how properties could be repurposed – as “anything but a parking lot,” she said.
In December, the Center for Community Progress, a national nonprofit that addresses blight and vacancy in cities across the country, produced a report focused on Wilmington. A land bank could benefit the city, but only if it was taken in connection with other steps, it said.
Among the other strategies recommended for Wilmington are a “Blight and Crime Action Team” featuring representation across the city’s departments, ensuring that the minimum bid at sheriff’s sales represents all fees and interests against the property, and possibly investing in a multiyear demolition campaign.
“The creation of a land bank is not the solution to vacant and abandoned properties, but it can be one component part of a solution,” the report said, adding a land bank would be used only to clear out existing vacancies, not prevent more houses from becoming blighted.
The City Council on Thursday approved a $2.125 million budget amendment that includes $325,000 to pay consultants who are writing the state legislation and city code pertaining to land banks.
Fourteen state legislatures have passed laws allowing land banks, and there are 120 programs across the country. One of the newest is in Philadelphia.
“In some places, land banking has been successful; in some places, it has not,” said Wilmington Councilwoman Hanifa Shabazz, who supports the concept. “We have some examples of trial and error to go by, and hopefully we can be successful.”
Across the country, land banks take many different approaches, and it is still unclear which is favored by Wilmington leadership. Furthermore, the state’s potential legislation also could provide clearer parameters for what Wilmington’s organization might look like.
“Land banks are very much creatures of local conditions and local needs, and they need to be tailored very carefully to the local conditions for the places they’re being built,” said John Carpenter, deputy executive director of the Philadelphia Land Bank.
In Syracuse, New York, a city about twice Wilmington’s size, the land bank is partially funded by the state’s mortgage settlements and is used to enforce delinquent taxes by making it easier to foreclose on properties. The Center for Community Progress calls the Greater Syracuse Land Bank “a catch basin for all the property that failed to pay back taxes.”
When the Syracuse land bank started in 2012, leaders planned to foreclose on 4,000 vacant properties, with the expectation that the stricter rules would lead to half of those paying up on taxes and the other half to be sold to the land bank. During the land bank’s first two years, more than $5 million in delinquent taxes above historical level was collected.
As of September, the organization had control of about 356 properties and had sold 52 properties.
City leaders are in a holding pattern until they receive permission from the state, but some state legislators support the idea.
State Rep. Helene Keeley, a south Wilmington Democrat, is planning to be one of the primary sponsors of the land bank ordinance when it is introduced, likely in the coming week or so.
A land bank would help Wilmington update its urban housing stock to meet the needs of the 21st century and present an opportunity for the private and public sectors to forge stronger partnerships, she said.
“I think it’s a good opportunity for banks to come back in and help urban areas that were extremely hard hit by the financial crisis that was caused by subprime lending,” Keeley said. She did not provide specifics about the kind of support banks and other private institutions could provide a land bank.
In addition to the legislation, a land bank effort would also require funding for staff and the efforts of buying, renovating and demolishing homes. A Wilmington land bank, Gregory said, would likely take $6 to $10 million in funding to have any impact. If the city were to step in and purchase, say, all the even-numbered properties on the 600 block of W. Fifth St. at their assessed values, the effort would cost about $500,000.
In most instances, though, the city already has liens against vacant properties. By keeping those liens intact at sheriff’s sales, the city could lower the cash cost to itself or its land bank in trying to take over the property while increasing the cost to other possible buyers.
“It’s going to be a challenge, of course, but we still have to move forward,” Gregory said.
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Safeguard Properties is the mortgage field services industry leader, preserving vacant and foreclosed properties across the U.S., Puerto Rico, Virgin Islands and Guam. Founded in 1990 by Robert Klein and headquartered in Cleveland, Ohio, Safeguard provides the highest quality service to our clients by leveraging innovative technologies and proactively developing industry best practices and quality control procedures. Consistent with Safeguard’s values and mission, we are an active supporter of hundreds of charitable efforts across the country. Annually, Safeguard gives back to communities in partnership with our employees, vendors and clients. We also are dedicated to working with community leaders and officials to eliminate blight and stabilize neighborhoods. Safeguard is dedicated to preserving today and protecting tomorrow. Website: www.safeguardproperties.com.