Meeting the Needs of Our Communities with Land Banks

Missouri is short of nearly 115,000 affordable and available housing units needed to meet the housing needs of Extremely Low Income Missouri families. Of these 115,000 ELI households, the overwhelming majority, 85%, consist of workers, individuals with disabilities and seniors. These vulnerable households often need to pick between keeping the lights on, keeping their household fed, and paying rent each month. This leaves very little to nothing left for savings. These households should be considered one emergency away from homelessness. 

It may come as a surprise to many then, that amidst Missouri’s severe affordable housing crisis our state also boasts over 370,000 vacant housing units, an analysis of the U.S. Census Bureau’s 2020 American Community Survey reveals. Left unchecked, these properties are allowed to deteriorate, creating public health and safety hazards that severely impact the vitality of our communities. 

One solution to address Missouri’s affordable housing crisis requires the rehabilitation of the glut of vacant and abandoned homes currently found around our state. We can then reserve an adequate amount for the development of affordable housing families of modest means need in order to stay securely housed. 

All of our neighbors need safe and affordable housing to live full, healthy and productive lives. Land Banks are a powerful tool that can enable communities to begin this transformation. For these reasons, Empower Missouri and our state-wide Affordable Housing Coalition supports the creation and use of land banks. 

What are land banks?

Land banks are public authorities or non-profits that acquire, hold, manage, and occasionally redevelop vacant, abandoned and tax-delinquent properties, returning them to productive use. Land banks can support a community’s affordable housing and job creation goals though this process. Currently, there are 17 states that have land banks. In Missouri land banks have been established in St. Louis, Kansas City, St. Joseph and Blue Springs. 

Why is the establishment of land banks necessary to deal with abandoned and neglected properties?

Abandoned, vacant and tax-delinquent properties come with legal and financial barriers that discourage prospective buyers from purchasing them. Because of the bureaucratic and legal hurdles associated with these distressed properties, they stay vacant and are left to deteriorate and decay, becoming a liability for neighborhoods. Vacant, they provide no benefit or use to communities.

How do land banks work?

Once enabled by state legislation, land banks are given special authority to dissolve any delinquent liens or fines so the property can be sold with a clean title to the next owner. By banking land on behalf of the public and devising strategies and priorities for future use, land banks are able to unclog bureaucratic and legal hurdles and are able then put these properties back onto the market with all fees, back taxes and liens cleared.

Who can buy property from a land bank?

Land banks sell to individuals, families, nonprofits, businesses, and developers. Land banks can sell individual parcels or assemble adjacent properties it has acquired into a package appropriate for larger developments. 

Land banks are flexible tools that can be tailored to fit each community’s needs, goals and priorities. 

• Distressed communities with weak housing markets have relatively low or declining housing costs in addition to a sizable inventory of tax-delinquent properties. Land banks in these communities allow for the rehabilitation of abandoned properties while also creating the added benefit of creating new jobs and housing options for working and low income families. While these communities need revitalization efforts, the planning and development of adequate long-term affordable housing must be prioritized to prevent displacement, socioeconomic segregation, and unequal access to amenities when the market rebounds (again).
• Strong housing markets are typically found in high-cost neighborhoods. Land banks in these communities can serve as a vehicle for holding land purchased strategically for future affordable housing development. For example, a community can purchase land in gentrifying neighborhoods to hold for future affordable housing development. Such land bank acquisitions can help to ensure the availability of affordable housing, even as land prices rise.

Best practices for land banks

• A land bank’s strategy and programming should be tied to the priority issues of the community. Land banks should establish transparent and publicly available procedures and priorities around property acquisition, disposition, land transfer, and land donation. Land banks build support and make better informed decisions when they include community members in the decision making process. 
• Land banks and Community Land Trusts (CLT) serve complementary purposes. A land bank could exercise its authority to obtain tax-delinquent properties, clear the title, and transfer the deed to a CLT, which can retain the ownership of the property and ensure that the land held in trust remains a lasting community asset. Communities that coordinate CLT and land banking efforts can make a lasting impact by creating more permanently affordable housing stock. Even as the ownership of the building structure itself changes, the land held in trust is protected from market volatility and serves as housing that can help family after family with modest incomes.
• According to Local Initiatives Support Corporation (LISC), land banks require dedicated, recurring funding that affords land banks the opportunity to carry out meaningful community engagement, pursue long-term strategies, and pilot innovative partnerships and recommends using Delinquent Tax Assessment Collection (DTAC) to accomplish this goal. DTAC sets aside a percentage of the delinquent taxes collected for the Land Bank’s operating budget.  
• According to LISC, Ohio is the only state that has meaningfully solved the land bank funding challenge. Its Delinquent Tax Assessment Collection (DTAC) is the standard of excellence in the field. Included in Ohio’s 2009 land bank enabling legislation, this provision allows a county (land banks can only be created at the county level in Ohio) to annually direct up to 5 percent of delinquent property taxes, interest, and penalties collected to the county’s land bank for dedicated, discretionary use.

HB 587, a bill filed by Representative Bill Owen in the Missouri House legislature, seeks to expand the list of Missouri cities authorized to establish land banks. Empower Missouri sees the incredible potential this bill holds in enabling many more Missouri communities to create appropriate local solutions to our statewide affordable housing crisis. It was passed out of the House and had one successful hearing on the Senate side. Because we are so close to the end of session and there are other things at play in the General Assembly, it is very unlikely that it will get passed this year. So, we will keep advocating for it and look forward to it being reintroduced in 2024.