If there is one thing most communities can agree on, it’s that abandoned, derelict buildings are an eyesore and a black mark on a neighborhood.
The Chautauqua County Department of Planning and Economic Development and Chautauqua County Land Bank are in the second year of trying to remedy this. According to Mark Geise, executive director of the Land Bank and deputy director of Chautauqua County Department of Planning and Economic Development, the Land Bank is well on its way to becoming a sustainable model in addition to helping clean up neighborhoods.
In 2008, the county legislature created the Chautauqua County Housing and Neighborhood Trust Fund in the amount of $200,000 in order to address the issue of an increase in the number and concentration of vacant and abandoned properties impacting neighborhoods across the county. It also created the Chautauqua County Housing and Neighborhood Trust Fund Task Force, which was tasked with devising a strategy to utilize the allocated funding to address the property abandonment and dilapidation problem in Chautauqua County.
However, in order to implement the recommendations from the task force, County Executive Greg Edwards handed the job off to the Department of Planning & Economic Development. The department then had to determine the best way to use the trust fund.
“Right about that time is when we were just finishing our comprehensive plan,” Geise said. “In two or three different places in that comprehensive plan, it looks at creating a land bank, because that’s what some of these other, bigger communities are doing that are having a problem abandoned, delinquent, vacant housing. What do you do with it?”
Currently, there are eight land banks located in New York state. Aside from Chautauqua County, they are located in the cities of Buffalo, Lackawanna, Tonawanda and Erie County; city of Syracuse and Onondaga County; city of Schenectady, county of Schenectady and city of Amsterdam; city of Newburgh; Broome County; city of Rochester; and Suffolk County.
According to New York state law, land banks can be established for the purpose of acquiring real property that is tax delinquent, tax foreclosed, vacant or abandoned. Once they establish a land bank, municipalities can then design, develop, construct, demolish, reconstruct, rehabilitate, renovate, relocate and otherwise improve upon banked real property.
In Chautauqua County, homes had gone into foreclosure, gone into auction and been awarded to the highest bidder. However, Geise said after purchasing a home from auction, in some cases, the purchaser realized the home needed more work than they had previously been aware.
“Then they sit on it for a couple years, it languishes, and then it goes back to auction and it’s like this downward spiral,” Geise said. “With the land bank, what we’re really trying to do is change the course of that property.”
In 2012, the Land Bank made its first (purchase) of six properties: Three in Jamestown, two in Dunkirk and one in Fredonia. This past July, it acquired 12 additional properties – three in Dunkirk, five in Jamestown, one in the village of Cassadaga and three in the village of Westfield.
According to Geise, the Land Bank pays all taxes for year one when it purchases a property, as does any entity that acquires properties through the County Foreclosure process with no exceptions. The property is then tax exempt from then on as long as it is owned by the land bank. Once it gets sold, it is no longer tax exempt. Each property is sold to the Land Bank for $1, and the Land Bank pays all closing costs and the annual taxes on the properties. Geise explained taxes come due around the same time the Land Bank takes ownership of a property.
In choosing properties, Geise said the Land Bank follows a “three A, two B, one C” model. He explained it looks for three properties with the most potential to fix up and sell at a high profit, two that will break around even between the cost to fix and the selling price, and one that will be demolished using profits from the higher-end homes.
“We’re not as concerned with how much we’re getting for the properties as we are, ‘What is the total package?'” Geise said. “For example, if somebody came to us and said, ‘I’ll give you $20,000 for this property, and I promise to put $10,000 into it,’ so there’d be a $30,000 deal, that’s less attractive to our Land Bank than if somebody came to us and said, ‘I’ll give you $10,000, but I’ll put $30,000 into the property.’ So, that’s a $40,000 situation, the second one. We’d rather have that. It’s not about who is the highest bidder for us. It’s about, ‘What are you going to do to the property to improve it?'”
Geise said the Land Bank has recently entered a deal with a developer for the two properties in Dunkirk and one in Fredonia from 2012 that will result in around $140,000 in investment between the three properties.
“These properties are going to go from being basically an eyesore to being really, really nice homes,” Geise said.
As for the other three homes in Jamestown from the first year, Geise said one is intended for demolition. Of the other two, one has received some interest, while the other may end up on the demolition list itself, although Geise said it is still too early to tell whether that will definitely happen.
The homes meant to be sold by the Land Bank are all cleaned, appraised and advertised via signage in front of the home and an online listing on www.planningchautauqua.com. Anyone interested in the home can take a virtual tour, fill out an application online and make an appointment to physically tour the property. At that point, interested parties are able to make a formal proposal on the property. And, Geise said one of the questions on the application asks what the purchaser intends to do with the property. Although the Land Bank cannot control the property once it is out of their hands, Geise said it prefers the property to become owner-occupied.
SIDE LOT DISPOSITION PROGRAM
In addition to purchasing properties with homes, the Land Bank is also working on a Side Lot Disposition Program, where it purchases vacant parcels. Geise said members of the Land Bank noticed homeowners were taking care of vacant parcels near their properties, however were not purchasing the parcels when it came time for auction.
“So, we interviewed a couple of them, and the answer was always the same,” Geise said. “Number one is, it’s $310 they have to pay the closing costs on, and they have to pay the first year’s taxes.”
In turn, the Land Bank asked if residents in surrounding parcels would be interested in purchasing the property for $1 and pay the taxes, if the Land Bank would pay the closing costs. Of the seven property owners it approached, six made purchases. In exchange, the land owners had to have the property merged with their current parcel.
“Basically, the Land Bank paid the closing costs, the parcels were merged with their parcels, and now they’re back on the tax role,” Geise said. “Now, it’s something the county doesn’t have to deal with anymore.”
Houses scheduled for demolition could then become a part of the Side Lot Disposition Program, at which point the property would go back onto the tax role. However, there is also potential for the property to become a small park or community garden, Geise said.
“I think the top preference would be to keep it on the tax role,” Geise said.
Two to three months after purchasing a property, Geise said the Land Bank would like it to be marketable. He said he is pleased with the progress it has made in just a year, and anticipates more positive outcomes in the future.
For additional information about the Land Bank and properties, visit www.planningchautauqua.com, click on “Advisory Boards,” and then “Land Bank.”