Land Bank Turning Around Properties

Fay’s Point sits on an eight-acre stretch in Blue Island on the Little Calumet River, just a few hundred yards from the Cal-Sag Channel. The site includes a marina with more than 80 boat slips and is surrounded by wetlands. This piece of land is owned by the South Suburban Land Bank and Development Authority, which acquired and maintains the marina and has helped restore the wetlands.

The Land Bank works to turn around residential, industrial and other properties in the south suburbs. The process often involves managing, rehabbing and selling of properties. The need is great: For example, in 2015 alone, there were 4,996 residential foreclosures in Millennium Reserve, according to data analyzed by the South Suburban Mayors and Managers Association (SSMMA). Almost all of the homes the Land Bank sells have at one time been foreclosed. Many buildings the Land Bank works on are distressed properties with serious tax problems.

Based in Hazel Crest, the Land Bank was formed in 2012 through an intergovernmental agreement passed by the Village of Park Forest, City of Oak Forest and City of Blue Island. Now, 19 communities in the region are members of the Land Bank.

The Land Bank was also the first entity of its kind in the Chicago region. (Now, Cook County also operates a land bank.) In 2011, the Land Bank was made possible by a U.S. Housing and Urban Development (HUD) Sustainable Communities Grant that was awarded to SSMMA, which then helped establish and provide technical assistance to the Land Bank.

“In a nutshell, we’re kind of a toolbox that banks, municipalities, developers and sometimes individuals use to turn around or redevelop properties,” says Russell Rydin, executive director of the Land Bank.

Once it owns a property, the Land Bank can maintain the site and hold it for future development or sell it.

The Land Bank can be an especially valuable tool for municipalities that lack the financial resources or manpower to deal with troubled properties. Through its intergovernmental agreement, the Land Bank may be able to clear or extinguish delinquent, back and forfeited real estate taxes. The Land Bank is also able to exempt real estate taxes while it owns a property.

 “A typical municipality isn’t set up to acquire a property with big tax problems in a quick and efficient manner,” says Rydin. “In many cases, we are able to do that quickly.” Cities that do develop these properties, Rydin adds, are also often required by state or local law to go through a time-consuming process of posting public notice and being considered in a committee. In addition, cities may not want to develop troubled properties because of costs associated with maintenance, liability and public safety concerns.

The Land Bank currently has an inventory of about 125 projects (these are properties it has already acquired). Most of this inventory is for sale or will be for sale.

In the last two years, the Land Bank has worked on numerous projects in Millennium Reserve. In Midlothian, Chicago Heights and other communities, the Land Bank is exploring ways to acquire and take care of wetland areas that communities and developers do not have the capacity to purchase and/or interest in managing these sites. Flood mitigation is probably the biggest priority when discussing wetlands in the south suburbs, Rydin says. “Figuring out what to do with wetland areas has become a national issue,” he adds. “My feeling is that, in the future, there’s going to be more of a need to take these projects on. We want to be one of the organizations that has answers.”

Meanwhile, housing projects include a recently renovated home in Sauk Village and another home that is almost rehabbed in Hazel Crest. Some home projects, Rydin says, are completed through a deed agreement between the Land Bank and a buyer; in order to get the deed, the buyer must complete agreed-upon repairs. A homebuyer or small developer with limited resources may prefer a deed agreement. Through a deed agreement, homebuyers get the property at a discount and the Land Bank is able to monitor the rehab progress before transferring the deed, Rydin says.

On the housing side, banks in the area can donate unwanted tax-delinquent properties to the Land Bank (and can claim the donation to potentially offset income tax). “There’s a steady pipeline of properties that banks are donating to us or discounting heavily,” says Rydin. “When they do, we can fix them up and sell them to homeowners.” (The Land Bank may make a small profit or break even from sales, which are often made at a below-market rate).

About half of the Land Bank’s work is commercial, and much of that involves industrial properties. But what the Land Bank works on really depends on what’s happening in specific communities. For example, the City of Blue Island has expressed interest in opening up a rowing center at Fay’s Point.

With a little more funding, the South Suburban Land Bank could help turn around more properties. Rydin says that “states with the most effective land banks have legislation that carves out funds for land banks.” Illinois does not currently have this kind of legislation.

“This is a long-term kind of program, and there’s always going to be more for us to do,” says Rydin. “I like the fact that there’s always a challenge in front of us – and a chance to turn a property around.”

Curious about what distressed properties are available through the South Suburban Land Bank and Development Authority? Check out its map and list of available properties at http://www.sslbda.org/

 

February 2016