Hamilton County "land bank" endeavor

Last Monday, Cincinnati.com carried a news article about the Hamilton County commissioners planning to take money from every school district, township and county levy-- whether those entities approve or not— to create a so-called "land bank," in which the county will amass clusters of properties so that developers can pick from larger development sites, similar to what they'd find in the suburbs.

Some were obviously objecting to being forced to pay, especially since almost every local school and government is already facing steep cuts from the expected state budget and revenue shortfalls due to the lingering effects of the recession., and at least one, according to the article, questioned the legality of taking money from county levies.

Be that as it may, County Commissioner Todd Portune, along with then-Commissioner David Pepper, pitched the idea of land bank back in 2008. But it wasn't until the state passed a law in April last year that made it easier for counties to fund land banks. The law specifically allowed counties to take delinquent taxes to fund the land bank entities.

The law which the Enquirer and Cincinnati.com were referring to is ORC 1724, which was created in 2009 (SB 353) and amended last year (HB 313). Summarized, those bills:

"Authorize a county with a population exceeding 1.2 million to form, within one year of the act's effective date, a county land reutilization corporation (CLRC), a nonprofit corporation, for the purposes of promoting development and managing and facilitating the reclamation, rehabilitation, and reutilization of vacant, abandoned, tax-foreclosed, or other real property.”

Revised Code Chapter 1724, however, does not specifically use the terminology "land banks," but HB 56, introduced in January and in the Judiciary & Ethics Committee since March does. While it has not yet passed its pertinent provisions with regards to "land banks" are:

• Provides that properties foreclosed due to delinquent taxes that are forfeited to a political subdivision, school district, or land bank are free of taxes, assessment charges, penalties, interest, costs, and subordinate liens.
  
  
• The board of county commissioners may dispose of abandoned property itacquires under the bill pursuant to rules it adopts. The rules must specify that theproperty be placed in the county's land bank if the county has a land bank. If the county does not have a land bank, the board is to dispose of the property at itsdiscretion.[ 2308.06(C)]
  
  
• Under continuing law, when the forfeiture is to a county land reutilization corporation (county land bank), the transfer of the property is free of "taxes, assessment,charges, penalties, interest, and costs" and subordinate liens. However, the law is silent with respect to the treatment of liens when the transfer is made to a politicalsubdivision or a school district.


HB 56 would "enact sections 2308.01 to 2308.09 of the Revised Code to permit the trial of a corporation in absentia in a criminal proceeding initiated by complaint and relative to residential foreclosure actions."

" 'Land banking', is described by Wikipedia as "the practice of purchasing raw land with the intent to hold on to it until such a time as it is profitable to sell it on to others for more than was initially paid. Typically parcels of land desirable for land banking are those that lie directly in the growth path of rapidly developing cities. The initial goal is to buy undeveloped land that will increase in value because it lies in the path of urban growth. The investment objective is to identify these parcels well in advance of the developers and wait for the value to be realized."

A 2009 USAToday article described them as "an idea gaining national attention for its positive impact on urban blight and abandonment at a time when most cities are dealing with more foreclosures. Instead of selling abandoned or foreclosed structures at auction, the city or county creates a land bank of properties. Some homes are fixed up and sold. The worst of the homes are demolished, and the land is then sold to nearby homeowners or developers."

And The Secretary of Housing & Urban Development, defines "land banks" as "governmental or nongovernmental nonprofit entities that focus on the conversion of vacant, abandoned properties into productive use," and provides a resource on its website of how some state and local governments and organizations are addressing the problem through their creation and operation. ( Here )

HUD also has a 27-page PDF guide, "Revitalizing Foreclosed Properties with Land Banks," with more information.