What Is a Landbank and Its Key Components

A landbank is a type of financial institution that specializes in acquiring and holding land or properties with the intention of selling them at a later time.

Landbanks typically acquire land through various means, including purchases, donations, or government seizures. They often target areas with high growth potential, such as near new infrastructure projects or in regions with a shortage of housing.

The key components of a landbank include its land portfolio, which is the collection of properties it owns, and its business strategy, which outlines how it plans to manage and sell its land holdings.

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Land banks are quasi-governmental entities created by counties or municipalities to effectively manage and repurpose underused, abandoned, or foreclosed property.

They are often chartered to have powers that enable them to accomplish these goals in ways that existing government agencies cannot.

Land banks are implemented differently in each municipality to best address the needs of the local community.

Their goal is to effectively manage and repurpose an inventory of underused, abandoned, or foreclosed property.

Land banks are often created to fill a gap in existing government services, allowing them to accomplish tasks that existing agencies cannot.

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Land banks acquire properties that the private market has discarded, often through the tax foreclosure process. They can obtain these properties at low or no cost.

To do their work, land banks are granted special powers and legal authorities that vary from state to state. These powers typically include the ability to transfer ownership back to a responsible party after repairing or improving the lots.

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Land banks acquire properties that the private market has discarded, often through the tax foreclosure process, which allows them to obtain properties at low or no cost.

They then repair or improve the lots to make them more valuable.

To do this, land banks are granted special powers and legal authorities that vary from state to state.

These powers generally include the ability to obtain property at low or no cost through the tax foreclosure process.

Land banks transfer ownership of the improved properties back to a responsible party, revitalizing the area.

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To have a successful land bank, you must take four initiatives.

The first is to connect the land bank to the tax collection and foreclosure system. This allows investors to make money by buying properties at below-market prices while ensuring that abandoned properties are returned to the tax rolls.

When a property owner stops paying their property taxes, the local jurisdiction has the power to foreclose on the property. The property will typically go to a tax auction, during which the county or city sells the lot to the highest bidder.

Scaling the land bank at the metropolitan level is the second initiative. This means focusing on the most diverse real estate possible, which increases the likelihood of obtaining higher-value properties.

Land banks are most effective when given ownership of more desirable properties, not just "junk" property. By scaling around a diverse market, you have a better chance of getting higher-value properties.

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The third initiative is to ensure a land bank is policy-driven and transparent. This means making all actions policy-driven and transparent, including who properties are sold to, the terms of the sale, and pricing.

To build public confidence in land banking, you need to engage with the community. This can be done through regular neighbourhood meetings or the formation of a Community Advisory Council.

The fourth initiative is to develop a strategic partnership within your community. The best land banks do not work alone, they work with their community to achieve their goals.

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There are approximately 170 land bank programs operating nationwide as of 2018.

Michigan, Ohio, and New York have the most significant number of active land banks.

The Land Bank HQ Interactive Map provides a national inventory of all land banks.

You can use this map to explore and find a land bank near you.

Michigan, Ohio, and New York have the most land banks due to the high demand for their services.

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A land bank's primary goal is to manage and dispose of properties in its portfolio. It does this by taking care of tasks such as mowing the grass, securing the property with locks or lights, or conducting an environmental clean-up.

Land banks can hold properties for an extended period, but they typically seek to sell them to new owners. They clear the title and any liens against a tax delinquent property, allowing it to be sold with a clean title.

Land banks sell properties to a variety of buyers, including developers, management companies, individuals, and families. They can also assemble adjacent properties into a package for a larger development, making them more attractive to buyers.

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Land banks have various sources of income to support their operations. Authorities can fund land banking through foundation grants, which are often available due to a land bank's corporate structure or non-profit status.

Foundation grants are a reliable source of funding for land banks in their formative stages. This type of funding helps the bank build its operating capacity to generate other potential revenue sources.

Land sale revenues are another way land banks can generate income. This can happen when the land bank authority sells properties for more than it paid to acquire the land.

Land banks can acquire property at a lower value than market price, often through donated land or purchases at auctions. However, they must do proper due diligence on the property before accepting it.

Land banks can also receive a portion of the tax revenue generated on properties they sell. For example, in Michigan, a bank can receive 50 percent of the specific tax generated on all properties sold for five years following the successful property transfer.

Land banks may participate as developers or co-developers in real estate development projects, generating a developer's fee ranging from 7 to 20 percent of project costs.

Land banks have the ability to keep properties and rent them to commercial and residential tenants. This can be a necessary source of income, especially in the current economy where securing financing for real estate investments can be challenging.

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You can buy properties from a land bank, but it depends on the bank's priorities. Some banks will sell to investors, non-profits, or developers, but others may prioritize owner-occupants, veterans, college graduates, or refugees.

Land banks acquire properties through tax foreclosure and auction processes, which vary by state. In some jurisdictions, land banks have special "super-bid" powers to acquire tax delinquent properties.

Land banks can also receive properties through voluntary donations or transfers from municipal governments. Municipalities may have property acquired from foreclosure proceedings before the land bank was established, or may have surplus public properties.

Land banks can sell properties to developers and management companies, as well as to individuals and families. They can also sell individual parcels or assemble adjacent properties into a package for a larger development.

Land banks have discretion to establish criteria for eligible buyers and uses, such as prioritizing nonprofit and mission-oriented developers who include affordable housing units in their proposals.

There are several types of landbanks, each with its own unique characteristics. A land bank can be a public or private entity.

A public land bank is a government-established institution that acquires and manages land for public benefit. In some cases, public land banks have been used to address urban blight and revitalize neighborhoods.

A private land bank, on the other hand, is a company that specializes in buying and selling land for a profit. Private land banks often focus on high-demand areas and can be more aggressive in their land acquisition strategies.

A community land trust, or CLT, is a type of land bank that is owned and controlled by the community. CLTs are often established to preserve affordable housing and community spaces.

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Land banking has a fascinating history that dates back to the 1920s and 1930s. It was initially used to make low-priced land available for housing and ensure orderly development.

The period of deindustrialization in the US, coupled with increased suburbanization, left many American cities with large amounts of vacant and blighted property. This led to a need for solutions to manage decline or spur revitalization.

The first land bank was created in St. Louis in 1971, marking the beginning of this approach. It wasn't until the mid-2000s that land banks gained widespread acceptance.

The success of the Genesee County Land Bank played a significant role in this shift. In 2009, the Department of Housing and Urban Development officially endorsed land banks as a best practice model for municipalities dealing with the effects of the 2007-2008 financial crisis.

Commercial land banking has a long history in America, dating back to the self-made billionaires who purchased large tracts of land in California, reaping tremendous rewards from holding the property until the market commanded a considerable return.

Some notable examples of successful land bankers include Bob Hope and Donald Trump, who took advantage of development opportunities in California.

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However, land banking has also been associated with scams, such as the Florida land scams that date back to the 1920s Florida Land Rush. These scams have left a lasting impact on many Florida counties, including Polk County, which has been devastated by land banking scams.

Polk County, located between Tampa and Orlando, has been a hotbed for speculative land development, particularly in the lower Green Swamp area, which was declared "land of critical state concern" by the State of Florida.

During the 1970s and 1980s, the Green Swamp was sold as suitable for real estate development, with prices ranging from $2,000 to $15,000 per acre. This was largely driven by the success of Disney World and its appeal to investors.

Today, many land banking scams continue to operate outside the United States, targeting unwary foreign customers with contracts for deed arrangements.

Agricultural land banking is a type of land banking where investors purchase virgin land suitable for agriculture, often far from existing infrastructure, with the intention of waiting for land values to multiply as the area develops.

Investors look for large tracts of fertile virgin land with low valuations and permissive legislation allowing large land holdings. This is often found in countries like Argentina, Brazil, Uruguay, and Paraguay.

Land prices in these countries have appreciated accordingly, making them attractive for agricultural land banking investments.

The perception that fertile land is a limited and valuable asset is not new, but it received renewed attention during the global food crisis, when concepts like peak wheat and peak soil emerged.

In the United States, land banks often focus on vacant and abandoned properties, with some states like Ohio and Michigan having a high concentration of these types of properties.

The UK has a more diverse range of land banks, with some specializing in agricultural land and others in urban development projects.

In Australia, the government has implemented policies to encourage investment in rural land, often through land banks that provide financing for farmers and graziers.

Land banks in Canada often invest in properties with potential for redevelopment, such as brownfield sites and underutilized industrial areas.

The Netherlands has a unique approach to land banking, with some organizations focusing on preserving and restoring historic buildings and landmarks.

Land banking is most common in areas with relatively low or declining housing costs. These areas often have a sizeable inventory of tax-delinquent properties.

In these areas, land banking can help a community repurpose abandoned land to support community goals. This can be a game-changer for neighborhoods in need of revitalization.

Land banking can still be helpful in communities with few tax-delinquent properties. It can serve as a vehicle for strategically holding land for future affordable housing development.

Landbank investment and sales can be a lucrative business, but it requires careful planning and execution.

A landbank is a portfolio of land holdings that can be used for various purposes, including development, speculation, or long-term holding.

Investors often purchase land at a low cost and hold onto it for an extended period, waiting for the market to appreciate its value.

According to the article, the average annual return on land investment can range from 10% to 20%.

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Landbank sales can be a significant source of revenue for investors, but it's essential to consider the tax implications and potential liabilities.

The article highlights that a well-managed landbank can provide a steady stream of income through rental properties or land sales.

Investors should research local zoning laws and regulations before purchasing land to ensure it aligns with their investment goals.

Land banks can help convert problem areas and properties in cities into positive areas of economic development. They maintain, develop, demolish, or sell the land to ensure it is utilized to its maximum ability.

Land banks have the resources to handle abandoned properties or property defects that individual owners may not. This can include clearing issues like clouded titles or delinquent property taxes.

In cities, land banks can turn problem properties into assets for the community. They see this as their ultimate goal.

Land banks can handle properties that individual owners may not want to take on due to defects or responsibilities.

A landbank is typically established by a government or public authority, which is responsible for managing and overseeing its operations. This authority is usually a separate entity from the government itself.

The landbank authority is responsible for setting the landbank's goals and objectives, which may include providing affordable housing, promoting economic development, or preserving natural resources. These goals are often outlined in a landbank's charter or enabling legislation.

The landbank authority also oversees the landbank's finances, which may include managing a budget, securing funding, and reporting on financial performance.

In 2011, New York State passed a land bank statute allowing nonprofits to take title to vacant abandoned homes for rehabilitation, sale, or demolition.

Many counties upstate, including Erie County, Onondaga County, Schenectady County, and Albany County, have abandoned homes due to people moving to the suburbs.

The state of Michigan also has a land bank program.

Ohio passed land bank legislation in 2009.

The recent robo-signing settlement provided funding for land banks in Schenectady and Albany through Attorney General Eric Schneiderman.

A land bank is distinct from a redevelopment authority in several key ways.

Land banks have more flexibility in implementing disposition policies, allowing for greater freedom in choosing transferees and consideration.

However, they lack the power of eminent domain and the ability to tax.

Land banks focus on acquiring and stabilizing blighted properties in their communities, with the goal of returning them to productive use.

On the other hand, redevelopment authorities typically work with properties that have near-term redevelopment potential, aligning with long-term economic development goals.

In contrast to land banks, redevelopment authorities have more extensive powers, but their mission is more focused on immediate economic development.

A land bank's activities should complement other community strategies, such as strategic code enforcement and effective tax collection. This ensures a cohesive approach to revitalizing neighborhoods.

A vacant property inventory can be a valuable resource for a land bank, serving as a starting list of properties that could be considered for acquisition.

In communities with diverse housing submarkets, a land bank and a Community Land Trust (CLT) can work together to achieve complementary goals. For example, a land bank can obtain tax-delinquent properties and transfer them to a CLT, which can ensure long-term affordability.

Land banks can also play a crucial role in promoting racial equity and reducing disparities. Enterprise Community Partners has awarded funding to land banks in New York that are integrating a racial equity lens into their work.

Here are some strategies land banks can adopt to reduce racial inequities: