Land Banks in Illinois
Frequently Asked Questions and Background Information
Where do vacant properties come from?
- Thousands of vacant properties, mostly in municipalities, have no market – no one wants them. Individuals walk away from them, companies will not develop them, and banks may or may not foreclose on them depending on the bank’s own fiscal situation. The properties may be too risky for non-profits to own and manage.
- Many of these properties have been vacant for years, many with broken down structures and infrastructure, and are drains on municipal budgets.
- Land Banks take possession of these vacant properties, ensure they are maintained and secured, and work to return them to productive use.
How do Land Banks return vacant properties to productive use?
- Land Banks employ a variety of creative strategies to turn blighted, troubled properties into community assets by partnering with capital funds and developers.
- Land Banks can clear title, demolish unsafe structures, perform necessary maintenance, and reconfigure parcels.
- Land Banks can return properties to the private market, or to concerned entities or individuals, or to landscaped open space.
Who can create a Land Bank?
- Land Banks can only be created by municipalities.
Who controls Land Banks?
- Land Banks are quasi-governmental entities formed by municipalities and governed by municipal officials.
- Land Banks remain accountable to the municipalities that created and control them.
How do Land Banks get their property?
- Land Banks usually get their property in two ways:
– Municipalities turn over to the Land Bank their already existing inventory of vacant properties which were seized by municipal rights and powers laws;
– Delinquent real estate tax auctions.
How do Land Banks get the money to operate?
- Land Banks can receive operating funds:
– From banks that have foreclosed on properties. For example, Bank of America recently agreed to turn over up to 150 properties to the City of Chicago with a contribution of funds for maintenance expenses;
– From real estate tax collections as a special assessment;
– From existing municipal funds.
Won’t Land Banks take over the private real estate market within an economically depressed area?
- Land Banks only hold properties for which there is no market, where the market has failed, and where real estate taxes are seriously delinquent. Once improved or reconfigured, the property is returned to the private market.
Don’t Land Banks have too much governmental power? Are there limits?
- Land Banks function for a limited purpose in a very limited geography for a limited time. Under proposed legislation in Illinois, Land Banks could only acquire the most troubled properties.
- Land Banks can only acquire property within the geographic boundaries of the municipality that created the Land Bank.
Where are Land Banks currently operating?
- Land banks have been created in a broad range of communities across the United States, including Atlanta, Georgia (and Fulton County); Cleveland, Ohio (and Cuyahoga County); Flint, Michigan (and Genesee County); Indianapolis, Indiana; Louisville, Kentucky; Overland Park, Kansas; Richmond, California; and St. Louis, Missouri.