NTF Issue Paper: ccwatch128.doc. 7-14.

BACKGROUND. The 2014 Legislature passed a bill to allow the City of Omaha to establish a municipal land bank with a board of directors. Liberals sought this legislation as a solution to disintegrating housing in the city. A City Council majority vote must amend an ordinance to create this new body. Although land banks might appear a prime solution to a problem, closer examination reveals many valid reasons why land banks flunk compared to a free market solution.

CONSERVATIVE POINTS. This ordinance would expand government and compete economically and financially with private enterprises. Such ordinance would create a new, permanent government subdivision, another layer of unelected bureaucrats plus an abundance of new employees, not accountable to taxpayers, who could not vote them out or recall them or repudiate its agents. The board could offer “automatically accepted bids” for tax-delinquent properties or foreclosures, giving it unfair advantage over private businesses in the tax sale marketplace. This bidding would allow a land bank to become a land speculator that could buy any property and use its profits to finance only its own bureaucracy. Automatic bids rank with eminent domain in the power to take property. The board by itself could make rules pertaining to potential conflicts of interest for board members and employees, a definite conflict of interest itself. It would become subject to undue influence from community groups with liberal agendas, like OTOC, that unfairly wage war on property owners who privately rent properties. Land banks could retain properties for any length of time, collecting rent or selling the properties without paying taxes. This advantage would compete with private parties who buy tax certificates on abandoned and tax-delinquent properties and continue to pay property taxes. If the land bank could not successfully resell the property, no property taxes would accrue. After a land bank purchases a tax-delinquent property, it can erase all tax claims and liens on such property, again decreasing property tax revenues. Property taxing government subdivisions in Douglas County now face increasing losses of property tax revenues through expanding tax increment financing, broad exemptions for non-profit properties, and expanding homestead exemptions. Though there are cogent reasons for these exemptions, land bank tax exemptions would shift even more of the property tax burden onto remaining taxpayers. Land banks could designate properties for public uses not desired by neighbors, e.g., youth community centers, which do not return land to the tax rolls. The land bank could designate any use it determined reasonable. Proponents claim that the land bank assuming properties and selling them would accrue monies for future demolitions and rehabilitations, but the bank could reserve monies only for itself. Finally, proponents have produced no compelling evidence that such land banks have succeeded elsewhere.

TAKE ACTION NOW. The intent of this legislation is to offer cities like Omaha the means to alleviate the abandoned, vacant, and dilapidated housing problem and return the properties to economic viability. Actually, implementing an urban homesteading program (see NTF issue paper) would accomplish this objective to revitalize properties with minimal government involvement. Better to streamline regulations at the city planning department, so that resident homeowners and landlords more easily can maintain and improve their properties. Urge your city council member to vote NO on the land bank and instead promote urban homesteading.

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 for its use by other groups in the Nebraska Conservative Coalition Network. 7-14. C

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