«Land Banks as Revitalization Tools: The example of Genesee County and the City of Flint, Michigan Teresa Gillotti, Genesee Institute1 Research Fellow ...»
Teresa Gillotti, Daniel Kildee: Land Banks as Revitalization Tools
Land Banks as Revitalization Tools: The example of Genesee County and the City of Flint,
Teresa Gillotti, Genesee Institute1 Research Fellow &
Daniel Kildee, Genesee County Treasurer
Genesee Institute, Flint, MI
Flint, Michigan is a quintessential shrinking city. Based around not just a single industry but a
single corporation, Flint’s fortunes still mirror those of General Motors. Like the company, the city peaked in the 1960s with a population reaching nearly 200,000. Currently the population of Flint hovers just below 120,000. During the last twenty years, the issues of property abandonment and vacancy reached a tipping point, when they stopped being symptoms and instead became part of the problem.
Compounding the abandonment problem was the state’s tax foreclosure system. Under Michigan's former system of tax foreclosure, abandoned properties were either transferred to private speculators through tax lien sales or became state-owned property through foreclosure.
The former system encouraged low-end reuse of tax-reverted land due to the length of time between abandonment and reuse – often more than five years. A series of changes to Michigan law have provided an opportunity for Michigan’s counties. The time it takes to foreclose on a property has been cut in half, and clear title can be passed to the county or the state.
Formed in 2002, the Genesee County Land Bank is a leading example of the role land banks can play in preventing tax foreclosure and finding the opportunities in reusing tax-reverted property.
The Land Bank provides a series of programs to the community including a Brownfield Redevelopment Plan for the entire inventory of tax-foreclosed property under the control of the Land Bank. This has allowed for financing of demolition, redevelopment projects, and cleanup efforts.
The Land Bank’s role continues to evolve. Currently, the Land Bank owns nearly 3,800 properties, of which about 70% is vacant land2. The continuing increase in the vacant property The Genesee Institute was created in 2004 as the research and technical assistance branch of the Genesee County Land Bank. The institute’s mission is three-fold: to provide planning assistance within the community, to provide technical assistance to other jurisdictions interested in developing their own land bank, and to initiate research on issues related to vacant properties, stabilizing neighborhoods, urban sprawl, inner city revitalization, and other topics relevant to weak market cities.
While there are many definitions for vacancy and abandonment, in this article, vacant land refers to parcels with no structures.
Teresa Gillotti, Daniel Kildee: Land Banks as Revitalization Tools inventory and rising maintenance costs has resulted in development of a “greening” strategy for the Land Bank that will augment the current redevelopment strategy. The goal is to turn an abandoned building or vacant lot from a nuisance into an economic, ecological, and community opportunity.
Boom and Bust
The city’s population peaked in 1960 at 196,000 (U.S. Census Bureau, 1990). It was around this time that the city completed its last approved, comprehensive planning effort. The future for Flint looked bright, and the plan prepared for continued growth of the population, projecting up to 250,000 residents in the near future.
This story was repeated with few differences in the majority of mid-sized cities in Great Lakes states. Born under similar circumstances, these cities provided abundant natural resources, excellent land for farming, transportation links, and ready commercial markets, and they eventually grew to become key industrial and manufacturing hubs for the entire United States (Teaford, 1994, 48-71).
Just as their rise has been parallel, so has their decline. While each city has its own story, many factors repeat themselves in these communities, such as dependence upon a single industry, changes in manufacturing (automation in particular), suburbanization and its multiple causes, globalization, and other forces. As a result, many post-industrial cities in Great Lakes States are plagued by population decline and major changes to their built environment.
Figure 1 illustrates recent population trends for mid-sized cities from 1990 to 2005. Cities between 50,000 and 500,000 are more vulnerable than larger cities, as they are less likely to attract immigrants and often have a less diverse economy than their larger counterparts.3 Of the 114 cities included, 32 percent have what would be considered an acceptable to good growth rate (6 to 29%). Another 14 percent are technically growing, but not at a conventionally acceptable rate (1 to 5%). More than 16 percent are stagnating or declining slightly (0 to 5 %). The largest group of cities – 39 percent – have had more than a 6% decline in population from 1990 to 2005.
Topping the list of those with the greatest decline during that period are Saginaw and Flint in Michigan; Gary, Indiana; Cincinnati, Ohio; and Buffalo and Niagara Falls in New York.
Additionally, the eastern Great Lakes cities seem to be struggling more than their western counterparts. With growth rates like these, fiscal problems have followed in many of these areas, whith cities and states supporting an infrastructure much too large for the current population at the same time that there is increased need for social services.
U.S. Census population estimates for metropolitan statistical areas released in April 2007 show that the decline is not over for cities in Great Lakes States. According to this recent data, 63 percent of all MSAs experiencing population decline between 2000 and 2006 are located in Great Lakes states (U.S. Census, 2007).
Flint and the Region
Flint’s story of decline picks up in the 1970s with major changes at General Motors. Fewer car sales, changes in production (including automation), and development of plants in areas with fewer labor costs led to reductions in the labor force. Ultimately, 60,000 GM jobs left Flint, and the 2005 American Community Survey counts fewer than 112,000 residents within the city limits.
For many years, the fate of General Motors has been the fate of Flint. That is not exactly the case for the county. While Flint has steadily lost population over the last 30 to 40 years, Genesee County has experienced little to no population decline. Much of the population of Flint has relocated outside of the city, creating a problem with sprawl. This is not uncommon in this area of mid and southeast Michigan. As you can see in Figure 2, the central cities within all the adjacent counties to Genesee County have lost large percentages of their population, while the out-county Detroit is the notable exception to the argument that cities in Great Lakes States with a population over 500,000 are faring relatively well. Other cities in this class are Milwaukee, Chicago, Columbus, Indianapolis, Philadelphia, and New York City.
Teresa Gillotti, Daniel Kildee: Land Banks as Revitalization Tools
areas, especially in the southeast, have grown exponentially. Flint, like so many other older cities, was unable to annex the adjacent townships or smaller municipalities to capture some of the growth. And the process of depopulation for these central cities is expected to continue.
With such rapid population loss, neighborhoods have borne the brunt of abandonment: arson, dumping in vacant lots, continued patterns of disinvestment, and ultimately, decline. Property abandonment and vacancy have reached the tipping point, and are now more than just a symptom
of disinvestment in many of these communities. Rather, they have become chronic problems. In Flint, more than a quarter of the parcels in the city limits are vacant lots without structures.
Within residential areas, 16 percent of these parcels are vacant lots.
Tax Foreclosure System as Part of the Problem Compounding the abandonment problem was the state’s tax foreclosure system. Under Michigan's former system of tax foreclosure, abandoned properties were either transferred to private speculators through tax lien sales or became state-owned property through foreclosure.
Under both scenarios, local leaders lacked authority to interrupt the decline of tax-reverted land.
In fact, the former system encouraged low-end reuse of tax reverted land due to the length of time between abandonment and reuse – often more than five years.
The system contributed to contagious blight as one property infected the next, as property after property passed through tax foreclosure and rarely resulted in significant redevelopment because the tax lien sales resulted in countless different owners without marketable title. Thousands of properties not sold at a tax lien sale were titled to the state — the "death penalty" for property.
Worst of all, the system was heartless. The former law provided no way for local officials to intervene to help a family facing the loss of their home. A family facing tax foreclosure was at the mercy of a tax lien holder, usually an out-of-state investor with a personal financial interest in the property being foreclosed. Even valuable properties lost in tax foreclosure were destined to tumble through the predictable devolution of use: a family home became a decent rental house, then a dilapidated rental house, then an abandoned house, until the property became a valueless lot scattered among other properties falling through the same pernicious process.
Since the passage of PA 123 in 1999, followed in 2003 by the enactment of the nation’s most progressive land banking law, the State of Michigan and county governments have greater authority to gain control of vacant abandoned land. Property is delivered to new ownership much more quickly and typically in far better condition than the former system.
In Flint, however, although the new procedure was a significant improvement, a more aggressive approach would be required to use this new law to its maximum potential in dealing with the high volume of vacant and abandoned land.
With funding from the C.S. Mott Foundation, Genesee County engaged a local consulting team and a number of national partners to develop a more creative approach to use tax foreclosure as a community development tool. This research, with the help of The Brookings Institution, Local Initiatives Support Corporation, ICMA, the Urban Land Institute, and others led to the creation of
Teresa Gillotti, Daniel Kildee: Land Banks as Revitalization Tools
the Genesee County Land Bank. The Land Bank is funded with proceeds from the tax foreclosure process, allowing the county to acquire land through foreclosure and determine the best use of land with the community's needs in mind, rather than simply selling the land at auction to the highest bidder with no control of its ultimate use.
In 2003, the Michigan legislature used the work of Genesee County as a model in enacting the most progressive Land Banking law in the nation. The new land bank law, PA 258 of 2003, along with amendments to the Michigan Brownfield Redevelopment Act, has enabled Genesee County to adopt a Brownfield Redevelopment Plan for the entire inventory of tax-foreclosed property under the control of the Land Bank. This plan utilizes a unique Tax Increment Financing (TIF) strategy that has enabled the Land Bank to finance a much more aggressive clean-up and redevelopment plan for Land Bank properties.
The financing relies upon taxes generated by the redevelopment of tax-foreclosed properties to support bond payments funding aggressive demolition, clean up, and rehabilitation of forgotten land. The unique feature of the TIF plan is that the taxes from the entire inventory is crosscollateralized to support clean-up of tax-foreclosed property; the tax captured from more valuable properties supports improvements for all properties, whether or not those properties are ever redeveloped or generate any significant tax collections. By relying upon taxes generated by a county-wide inventory of land through this single TIF plan, the county utilizes the more diverse and stable regional real estate market to support cleanup of the worst neighborhoods in the city.
The Land Bank uses a variety of programs to help prevent tax foreclosure, and when it does receive tax-foreclosed properties, it works to find productive uses that put the properties back on the tax role. In holding land, the Land Bank is able to do some strategic planning around the reuse of the significant number of parcels it holds rather than rely on speculators and landowners to try to profit from neighborhood disinvestment. Land Bank programs include tax-foreclosure prevention, a housing program that includes promoting home ownership, rehabilitating housing in an effort to stabilize local housing markets, a rental program for those properties that come to the land bank with tenants, and a demolition program for the removal of dangerous structures.
A recent hedonic study by the Michigan State University Land Policy Institute measured the effectiveness of land bank interventions. For one, the study shows that abandoned property within 500 feet of a residential unit reduces the sale price for that home by 2.3 percent, while a vacant lot within the same distance has a less detrimental effect (Griswold, 2007).4 The demolition program and the greening of vacant lots are offering a stabilizing effect to neighborhood property values.
Opportunities of Vacant Land