City of Belvidere may provide land bank to region

 

Land bank to help revive Rockford region’s abandoned properties

By Jeff Kolkey
Staff writer

Posted Aug 25, 2018 at 6:00 AM

ROCKFORD — Regional leaders could tap Belvidere’s home rule authority to establish a land bank dedicated to rehabilitating problem properties and stabilizing neighborhoods in Boone and Winnebago counties.

City leaders had hoped to establish a Rockford-based land bank to acquire blighted properties and put them back into productive use, but that strategy hit a road block this spring when voters rejected restoration of home rule — a set of self-governing powers stripped from the city 35 years ago.

Without home rule authority, Rockford doesn’t have the power to establish a land bank on its own. That’s where Belvidere, the Region 1 Planning Council and a $225,000 grant from the Illinois Housing Development Authority enter the picture.

By harnessing Belvidere’s home rule authority through intergovernmental agreements, a regional land bank can be established throughout Boone and Winnebago counties, Rockford City Administrator Todd Cagnoni said.

“A land bank would allow us to go after some of the blighted properties in the community where the private sector has failed,” Cagnoni said.

What is a land bank?

A land bank isn’t a bank at all. It is a unit of government that specializes in the acquisition of distressed, foreclosed or abandoned properties. It works to eliminate liens and tax liabilities and transfer clean title to new owners in order to restore blighted properties and put them back into the hands of the private sector.

It could give the Rockford region a new weapon in its fight against blighted properties. It is envisioned that the regional land bank could eventually join forces with and manage a Freeport land bank.

The land bank would be governed by an appointed board of trustees and a director.

“You are basically taking a property that is functionally obsolete, restoring it, creating new stock and creating a new marketplace for properties in that neighborhood,” said Michael Dunn Jr., executive director of the Region 1 Planning Council. “That is very, very powerful.”

Why it’s needed

Studies have found that a home that is foreclosed, but not vacant, lowers neighboring property values by up to 3.9 percent, said Andrew Field of the Illinois Housing Development Authority.

“However, if a home is foreclosed, tax delinquent and vacant, it can lower neighboring property values by nearly two and a half times that amount,” Field said in an email to the Register Star. “By acquiring, managing and repurposing these parcels, land banks provide benefits such as increased tax base, reduction in crime and improved quality of life for nearby homeowners.”

Rockford is monitoring more than 1,920 vacant properties where water service has been turned off for thee months or more as potential candidates for demolition. Another estimated 3,708 residential and 720 commercial properties are believed vacant.

Those structures can attract crime, vagrants and arson. They also devalue neighboring properties and can have a destabilizing effect on neighborhoods, Cagnoni said.

In Belvidere, and other areas of Boone and Winnebago counties, there are similar concerns, but on a far smaller scale.

Belvidere is monitoring 26 homes it considers distressed, Mayor Mike Chamberlain said.

Chamberlain has sought the creation of a land bank for years. Until the recent grant, there was no seed money for it.

“We have 26 residential units on our list that are rundown to the point where they need to be rehabbed or taken down,” Chamberlain said. “We have a couple that are actually abandoned. For us, it’s not so much the residential, it’s more looking at larger properties that can be rehabbed, that were manufacturing or institutional buildings, we would look at trying to rehab into something positive for the community.”

How it works

Land banks are new to Illinois, where there are only two established, but have had success in Ohio and Michigan, said Eric Setter, 29, who was hired by the Regional 1 Planning Council to manage the $225,000 grant.

Setter is a Rockford native who is returning home after working for Peoria for six years, most recently as a land development manager.

Setter said land banks acquire properties and clear title most often through the state’s abandonment law. After a property has remained tax delinquent for two or more years, or has an unpaid water bill for two or more years, the land bank can seek an abandonment order from the court awarding a municipality clean title to the property, he said.

“It’s a way to get properties that are in the tax sale trustee limbo of three, five or even 10 years of delinquency and sales in error and what not,” Setter said. “Hopefully, if it’s only been vacant for two years, we may be able to go in and save it before it’s to the point where demolition is the only option.”

The properties can be demolished or rehabilitated, subdivided or consolidated, Setter said. Money can come from grant funding, municipalities, nonprofit organizations or even the private sector.

Any profit is reinvested in the land bank for future acquisitions of blighted properties.

“It’s not ever going to enter into a fair market transaction,” Dunn said. “A land bank’s role is to go in and acquire property that if not for the land bank would sit there blighted and vacant.”

Land banks avoid serving as the landlord of a property, if it can.

“It can be a landlord, but the goal is to get the property back into private sector hands as fast as possible,” Dunn said. “Rehabilitate, refurbish and create new real estate markets for property that doesn’t have a private sector buyer today — because of taxes, liens, foreclosure, blight or whatever reason.”

What’s next

The $225,000 Land Bank Capacity Grant was funded by a national settlement with lenders by Illinois Attorney General Lisa Madigan with other state attorneys general over fraudulent foreclosure and mortgage practices.

The Region 1 Planning Council will use it to work with advisors from the Illinois Housing Development Authority, in addition to leaders from Belvidere and Rockford and Boone and Winnebago counties, to create a governance structure, mission and goals.

Aldermen from Rockford and Belvidere and Boone and Winnebago county board members would be asked to sign an intergovernmental agreement in the next few months to create the land bank.

Dunn said there is hope for future grant funding that will help the new land bank acquire properties.

Jeff Kolkey: 815-987-1374; jkolkey@rrstar.com; @jeffkolkey

Above is from:  http://www.rrstar.com/news/20180824/land-bank-to-help-revive-rockford-regions-abandoned-properties

how does a land bank work?

The best answer maybe to look at a working land bank.  Chicago (Cook County) has a land bank.  SEE:  http://www.cookcountylandbank.org/