Commentary by State Senator Heath Mello 7/23/14 07/22/14 11:51:30 PM
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Land Bank a Common Sense,
Consensus Solution to Vacant
Property Problem in Omaha
Editor’s Note: This response to a June 9, 2014, op-ed piece by John Chatelain, president of the Metropolitan Omaha Property Owners Association, is written by Nebraska State Senator Heath Mello, who sponsored the bill to create a Nebraska land bank. In his commentary, Chatelain questioned whether the creation of a land bank was just another layer of government with a “serious, unfair advantage over the private property investor.”
By State Senator Heath Mello
A recent commentary in The Daily Record by John Chatelain (“Are Liberty and Private Property Rights Old Fashioned?,” 6/9/14) gave the impression that the proposed land bank ordinance in the City of Omaha was somehow an affront to private property rights and would interfere with private sector businesses. Unfortunately, Mr. Chatelain’s criticisms appear to be based off a fundamental misunderstanding of what a land bank is and what it is designed to do.
With more than 770 houses on the demolition list and more than 3,600 deemed “unfit and unsafe,” the City of Omaha’s vacant and abandoned property problems are well documented.
Land banks, which are public authorities designed to efficiently acquire, hold, manage, and develop vacant, abandoned, and tax-delinquent properties, are a growing trend in the United States for communities like Omaha seeking new solutions to address problem properties. Land banking is also a concept that transcends party lines, with my 2013 bill in the Nebraska Legislature that authorized land banks passing 47-0 before being signed into law by Governor Dave Heineman. Of the four states besides Nebraska which passed land bank enabling legislation in recent years, the legislation was carried by Republican legislators and signed by Republican governors in three (Georgia, Missouri, and Pennsylvania).
The primary goal of the proposed land bank is to facilitate the return of vacant, abandoned, and tax-delinquent properties to productive use, or put another way, to provide communities with the tools to address those properties which the market has left behind. While a land bank can acquire property much in the way that other public and private entities can – by purchase, by donation, by inheritance, and through the foreclosure system – land banks do not have the power of eminent domain.
One of the major drivers of the vacant and abandoned property crisis in Omaha is our tax-foreclosure system. When a property owner fails to pay his or her property taxes, those unpaid taxes are sold in the form of a tax-sale certificate, which gives the purchaser a lien against the underlying property if the back taxes are not repaid within three years.
Increasingly, out-of-state investors will buy up large quantities of tax-sale certificates with the hope of collecting the interest on the property taxes, only to walk away at the end of the three-year period after discovering that they won’t recover their investment by foreclosing on the lien. Another investor will then purchase either the same certificate or another certificate on the same property, creating a situation where properties sit vacant and in tax-foreclosure limbo for 10 or 12 years. Under state law, a land bank can exercise an “automatic bid” that takes priority in certain narrow circumstances, which allows the land bank to identify a problem property up front through the tax-sale certificate process, preventing this ongoing cycle of tax-delinquent properties stuck in the tax-foreclosure system.
While it is easy to make claims like Mr. Chatelain’s, land banks have been successfully operating in states like Michigan, Ohio, and Georgia for more than a decade without creating a threat to free enterprise. If this were not the case, then the proposed ordinance would not be receiving the broad support that it has received from the Greater Omaha Chamber of Commerce and others in the business and philanthropic community. Simply put, the land bank is not the boogeyman that some perceive it to be – it is a critical next step to help rebuild Omaha neighborhoods.