QUINCY — In order to cut the number of vacant and deteriorating properties in the Quincy area, representatives of the Two Rivers Regional Council of Public Officials are evaluating a new economic development tool: land banks.
Chad Frederick, deputy director of economic development for Two Rivers, said a land bank would provide the means to strategically acquire blighted properties and return them back to a productive use.
Last year, a feasibility study was performed by Teska Associates, a landscape architecture firm based in Evanston, to evaluate whether the western Illinois region could sustain a land bank. According to the study, there are about 1,900 vacant housing units in Quincy alone.
“Other smaller counties, ratio-wise, have just as big a problem,” Frederick said. “It might make it a bit harder to work in those counties but it’s something worth looking into for sure.”
Rob Rose, executive director of the Cook County Lank Authority, said there are about 170 land banks throughout the country. In Cook County, a land bank was formed due to a need to have an organization composed of representatives of multiple departments affiliated with land acquisition, including a law department, planning and development department and housing authority.
“With high foreclosures or safety issues from abandoned houses, you need an organization that can pull from different disciplines that know how to acquire and deal with vacant properties on a larger scale,” Rose said.
However, land banks are hyperlocal and unique to each region.
“No two land banks look alike because no two local markets look alike,” Rose said. “Every land bank has its own unique area of focus because markets are specific to that area.”
The western Illinois study, which was funded by the Land Bank Capacity Program of the Illinois Housing Development Authority, identified a cyclical tax sale process as a factor in the deterioration of property.
Each year, Illinois counties hold an annual tax certificate sale, where a property tax buyer may pay the tax balance on behalf of a property owner. The county then distributes this money to the affected taxing bodies to make them whole.
The property owner must then pay the tax balance, plus interest to the buyer during the redemption period, which is two years for residential properties and six months for commercial properties. If the debt isn’t payed, the tax buyer could take control of the property.
However, blighted properties not sold during the tax sale go to the county and can cycle through this system multiple times, leaving them to deteriorate beyond a point where rehabilitation is economically feasible.
In Adams County, only 43% of tax certificates up in 2018 were sold to third parties, according to the feasibility study. However, these certificates amounted to 84% of the total value of certificates up for sale that year.
Should a land bank be created, a local circuit court could acquire blighted properties with delinquent property taxes before they deteriorate beyond feasible repair, the study said.
There is also a consideration in the study to have a land bank bid on blighted properties identified by municipal leaders during the tax certificate sale. In this case, the land bank could hold the properties through the redemption period while pursuing disposition strategies if the tax debt is not redeemed.
Rather than interfere with similar land acquisition programs like Quincy’s fix-or-flatten program, Frederick said a land bank would work together with these services.
The study also developed a five-year model based on projected revenues from property disposition, IHDA programs and bank donations. By the fifth year, the study estimates that revenues would reach $460,000.
The proposed land bank is estimated to acquire 14 properties in its first year and 43 units annually by its fifth year. Expenses, including land acquisitions, demolition, maintenance and administrative costs, are estimated to be $92,000 the first year and about $300,000 in the fifth year.
Nicki Fioretti, IHDA Director of Community Affairs, said apart from IHDA providing initial support when possible, the approval of a land bank is all done locally.
“Since COVID has manifested, it has shown what a heat sensor it is in highlighting issues of poverty and the critical need for affordable housing,” Fioretti said. “A program like this can help communities on a different level to keep people in affordable housing.”
Rose said there is no legislation calling for the funding of land bank organizations. Typically, these agencies are funded by grants or seed capital from developers. Municipalities may also contribute money for land acquisition or renovation.
Fioretti said there have been two rounds of limited funding to perform feasibility studies and the IHDA currently is seeking additional resources.
“We’re planting seeds that I think will pay off with future tax revenues by stabilizing housing for vulnerable populations,” Fioretti said.
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