LAND BANKS WRONG SOLUTION FOR URBAN BLIGHT

NTF Issue Paper: ccwatch127.doc. 6-14.
NEBRASKA TAXPAYERS FOR FREEDOM ISSUE PAPER:
LAND BANKS WRONG SOLUTION FOR URBAN BLIGHT.

BACKGROUND. Over 770 houses remain on the City of Omaha demolition list, a mere fraction of over 3,600 sites labeled unfit or unsafe. Our NTF issue paper on Urban Homesteading explains why urban homesteading is the best solution to restore and redevelop deteriorating neighborhoods, restore properties to the tax rolls, enhance the area economy, and help eradicate crime and poverty. However, liberals are promoting land banks as the solution to these same problems. Comparing urban homesteading, whereby individuals and private enterprises manage most of the process, with land banks, whereby government dictates the greater proportion of the process, should evidence that urban homesteading is the better, in fact best solution.

LAND BANKS. The 2014 session of the legislature passed LB 97, which allowed creation of land banks via city ordinances or interlocal agreements. These entities can borrow money, issue bonds, buy insurance, and make private and public contracts to sell property and collect 50% of the collected property tax amount for 5 years after a sale. These banks will have priority over other bids in tax foreclosure proceedings but cannot use eminent domain to acquire private properties. A volunteer board, appointed by the mayor, would purchase vacant properties and decrepit houses. The legislation requires members from each city council district. The city will inject funding. Other options considered are reserving a percentage of property taxes from land bank properties rehabilitated, together with proceeds from the sale of those properties, and redeeming tax certificates. Land banks could apply for state and federal grants. Omaha and cities in Sarpy County could interlocally create this new government entity. Parcels sold by the land banks could not only provide new housing but also provide sites for new businesses and public areas.

LAND BANK PROMOTERS. Liberal nonprofit groups, Omaha City Councilman Ben Gray, and liberal state senators like Sen. Heath Mello from South Omaha.

OPPOSITION ARGUMENTS. This legislation grants priority to bids by land banks over private developers. These banks can hold property for an undetermined time for future development instead of selling to prospective homeowners, thus acting as land speculators, keeping property off the tax rolls and competing with private enterprises. This unelected government agency, a new layer of government, could buy commercial properties also and again compete with the private sector. Land banks and their governing bodies are not accountable to voters who may disagree with their policies. Cities establishing these entities will bypass public hearings through which a normal acquisition of land would pass. Though land banks must retain an inventory of sites for public scrutiny, their buying land is NOT subject to public review, violating the intent of transparent government. The intent of land banks is to provide several NE cities with a means to purchase foreclosed and tax delinquent properties and sell the properties, proceeds reverting into the land bank revolving fund, not necessarily adding to the city tax base. LB 97 also allows a city the ability to create several uses for land banks to extend beyond their original intent, used for only public spaces and places, like youth recreation centers and welfare sites unwanted by local residents. Moreover, land banks would compete against private developers for profits and actually use tax dollars to do such. Land banks really are city real estate companies that will sell, rent, and develop private properties, using tax dollars to compete with private real estate entities. They will shrivel the city property tax base by retaining properties for lease profits. Land banks in other localities have not produced the favorable results promised by promoters. An Atlanta land bank lacked sufficient acquisition funding. Cleveland saw tough challenges in capitalizing projects. Genesee County, Michigan witnessed tax delinquent properties bought by its land bank with insufficient value to become marketable, questionable if enough revenue would accrue by the sale of properties to pay administrative costs.1 Land banks seeking state and federal grants will see that such funding is evaporating rapidly. If Omaha land banks suffer reverses, the load lands on local property taxpayers to fill the gap. Monies collected by land banks otherwise could funnel directly into city general funds, avoiding property tax hikes. Local governments must not have the right to establish a monopoly on an investment detrimental to free enterprise. Automatic winning bids would permit a land bank to become a virulent lien speculator able to buy any property to gain profits to finance its own bureaucracy. These banks could determine unilaterally the best use for a property parcel and refuse to sell the land for another purpose, a definite abuse of authority. One bill amendment allows a land bank to submit an automatic bid, if paint is faded on a house with a yard filled with tall grass, a loose criterion. Homeowners living in substandard homes would rightly fear eviction, if somewhat in arrears paying property taxes, homes taken without their consultation, a process as bad as eminent domain. Urban homesteading would allow homeowners and nearby residents to object to such a sale.

TAKE ACTION NOW. Immediately contact your city council member and mayor and urge them to vote against and oppose land banks in Omaha and other NE cities. Local residents do not need another unelected government bureaucracy making decisions with our tax dollars. Urge officials instead to implement urban homesteading (see NTF issue paper).

Research, documentation, and analysis for this issue paper done by Nebraska Taxpayers for Freedom. This material copyrighted by Nebraska Taxpayers for Freedom, with express prior permission granted for its use by other groups in the Nebraska Conservative Coalition Network. 6-14. C

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