Land Banking Case Studies: Cuyahoga County Land Reutilization Corporation (The Connector)

Cities and counties across the country and in our region are exploring land banks as a promising strategy for addressing vacant properties. This five-part series on land banking on MPC’s blog, The Connector, is intended to inform policymakers and practitioners in northeastern Illinois and other regions—most notably in Cook Countyas they explore options for addressing the vacant and abandoned buildings crisis.

Each time a new post is added, we will update this homepage, www.metroplanning.org/landbanks. Please bookmark this page as a resource.

Case Study 1: Cuyahoga County Land Reutilization Corporation 

The Cuyahoga County Land Reutilization Corporation, also known as the Cuyahoga Land Bank, is located in Cuyahoga County Ohio and was authorized in 2009 by state statute SB 343 to address a growing number of foreclosed properties and a shrinking population in the county. They often partner with the City of Cleveland and other municipalities and maintain a Memoranda of Understanding (MOU) with more than half the jurisdictions in the county. Abandoned properties are acquired from many sources including, banks, government sponsored enterprises such as Fannie Mae, federal and state agencies such as the U.S. Dept. of Housing and Urban Development, and donated properties. Most significantly, properties are acquired through an expedited tax foreclosure process. As of February 2012, there were 26,000 vacant properties located in Cuyahoga County and the City of Cleveland. Only 7,300 of these properties are bank owned.

Programs
The land bank acquires and maintains blighted properties and returns them to productive use through several strategies. It assembles smaller parcels of land together, creating larger lots that can be more easily utilized by developers or as green space. The land bank also accelerates the demolition of buildings identified as abandoned nuisance properties. During this process, it prioritizes the re-use and recycling of building materials to decrease waste and provide low-cost materials to contractors and developers. The land bank also collaborates with individuals and organizations seeking to renovate and rehab existing homes by selling available properties to responsible private rehabbers and allowing for in-house renovations. However, it only sells to homeowners, landlords, and rehabbers that are deemed responsible, meet professional standards and submit detailed rehabilitation plans. Properties that do not get demolished, rehabbed, or sold are maintained by the land bank through the employment of field service contractors who continuously work to secure the properties and perform general maintenance. The Land Bank also maintains a listing of all properties acquired by the land bank, details of which include the PIN, address, and current status of the property. The city in which the property is located has first refusal of sale, which expires 30 days after the property is posted. 

Operations
The Cuyahoga Land Bank is funded by the collective penalties and interest on delinquent real estate taxes and assessments. This is further augmented by grants from partner organizations, the sale of acquired properties to rehabbers and housing developers, as well as donations and fund recoupment from banks. Its Board of Directors consists of nine members and is comprised of the Cuyahoga County Executive or designee, Cuyahoga County Treasurer or designee, County Council appointment, and two representatives from Cleveland. The four remaining members are selected by the County Executive, County Treasurer, and County Council representatives.

The Cuyahoga Land Bank is a nonprofit community improvement corporation governed under Chapter 17 of the Ohio Revised Code. In August 2009, the organization developed a six-month business plan that focused on determining criteria to create its acquisition policy and process. The initial goal for the first year was to acquire a total of 120 properties. Thirty of these properties contained structures with half slated for demolition and half for rehabilitation. Funding was initially received via the federal Neighborhood Stabilization Program (NSP) program, which provided for limited acquisition and demolition in particular municipalities. From August 2009 through March 2010, the land bank acquired 64 properties and by the end of March had 98 properties pending acquisition. This was in line with their goal to acquire 120 properties by the end of the first year. By March 2010, the 2010-2011 business plan was developed, which sought to begin scaling and stabilizing its process with an emphasis on demolition.

Targets for the second year were as follows: 612 acquisitions, 33 self-funded rehabs, 22 NSP rehabs, 496 demolitions, and four to ten NSP deconstructions. It also received 41 million in NSP funding from HUD and increased staff to 18 people by the end of 2010. Independent from NSP funding, by November 2010, the land bank had achieved revenues of $6,749,697. Of this total, $6,128,349 was acquired from penalties and interest collected by the County Treasurer on delinquent real estate taxes and provided to the land bank to fund operations and programs. The remainder of the money came from recoupment for demolition fees from Fannie Mae property sales and other sources.

In December 2010, the land bank managed the sale of a tax exempt bond of $9 million through private placement with a term of seven years and an interest rate of 3.75 percent to be serviced from annual collection of penalties and interest. By the end of 2010, 495 properties had been acquired, mostly from Fannie Mae, HUD and major lenders like JP Morgan Chase, through agreed upon deals with both HUD and Fannie Mae to sell bulk properties for a nominal fee. In 2010, the land bank forged an agreement with HUD to transfer the low-value, vacant, and abandoned properties the agency possessed as a result of mortgage foreclosures in 2010 to the land bank for $100.

This agreement was renewed in 2011. In addition, in 2011 the land bank struck deals with lenders such as Bank of America, Citibank, and Wells Fargo to acquire the distressed vacant properties in exchange for having the lenders pay the demolition costs. The land bank demolished 167 properties with 140 contracts outstanding.  80 properties had been transferred to cities and developers.

By summer 2011, the land bank had an inventory of 900 properties with a total of 279 properties demolished and 138 under contract. 91 properties were being redeveloped through NSP-2 program, in-house rehabilitation, or sales to qualified private investors. In March 2012, the land bank reached two important milestones, acquiring more than 1500 properties and demolishing 750 properties since it began in 2009.  On average, approximately, 80 to 140 acquisitions occur monthly so the number of land bank properties is constantly changing.

Read it from the source.

Share on FacebookTweet about this on TwitterShare on LinkedInShare on Google+Pin on Pinterest

Comments are closed.