Detroit, MI (September 1, 2008)- Hailed by advocates as an important victory after a years-long effort, Detroit’s City Council has passed a resolution authorizing the establishment of a city land bank authority in response to Detroit’s large and growing number of vacant properties.
The resolution structures the land bank as a pilot project, limiting the initial transfer of city-owned properties to between 5,000 and 10,000 and allowing for review of the project by the Council after two years. Land bank advocates, including the Detroit Vacant Property Campaign, will work to see provisions for affordable housing and a disposition preference for nonprofits included among the land bank’s policies.
A land bank authority is a single purpose entity that can reduce the obstacles that prevent productive reuse of abandoned properties. In January 2004 Michigan Governor Granholm signed into law PA 258, the Land Bank Fast Track Act. The law was passed by the legislature in response to the challenges faced by state and local governments in converting large quantities of tax-reverted properties into productive, tax generating assets. The new law enables state and local governments to create a land bank authority.
Although the Detroit Planning and Development Department (PDD) has made notable progress, its limited legal capacity and resources make the transfer and redevelopment of approximately 38,000 tax-reverted properties a challenge. Obstacles to the land disposition process include clouded title, prohibitively high prices, protracted sales transactions, a fragmented land disposition process and land speculation.
Prior to passage, the University of Michigan reviewed the objectives, financing, management structure, and land pricing of land banks in other cities, and showed how the framework of such a system could function in the City of Detroit. The peer review illustrated how Cleveland, Flint, Atlanta, and St. Louis have used these single-purpose entities to facilitate redevelopment of tax-reverted properties in their communities. The Flint model provided the most useful comparison for Detroit because its planning driven land bank is bound by the same state laws.
The legislation provides a land bank authority with the following legal abilities (several of these legal abilities are not currently available to city agencies that handle tax-reverted property):
1. Expedite quiet title and foreclosure action
2. Sell land at nominal prices
3. Generate operating revenue
4. Receive releases from taxation by the state or other political subdivisions
5. Purchase property, assemble property, and hold property
The purpose of the Detroit land bank is not only to return property back to the tax rolls, but also to be a catalyst to foster quality developments that will be long-term community assets.
Detroit City Council Passes Land Bank Ordinance
Harnessing Community Assets: A Land Bank Authority for Detroit