Policy Considerations
In the booklet, "Restoring Properties, Rebuilding Communities," Jennifer Leonard and Allan Mallach emphasize that laws and public policies do make a difference. “To address the scale of the challenge we face today, we need to look more closely at the political and legal systems that govern property and land reuse….(for example) Local governments that sell tax liens and tax-foreclosed properties to speculators rather than holding them for future use are mortgaging their future for short-term gain.” At the very least, if speculators are permitted to bid, there should be covenants that require that the properties be brought up to code within a reasonable time after sale. It’s essential that local government keeps the big picture in mind when dealing with vacant/dilapidated properties and their re-utilization.
Other policy ideas:
1. Registration of Rental Properties
The following is a proposed ordinance and is not currently in force. Besides the proposed ordinance, there is a proposed inspection form and guide for landlords.
Coming soon: Sample Proposed Ordinance
2. Reinstatement of the WV Housing Development Fund's program to encourage the development of code enforcement officials. This involved a grant to local governments that voted to adopt the International Code Council’s “International Property and Maintenance Code” and establish a Code Enforcement Agency. This seed money enabled many municipalities to start their code enforcement program as it build revenues from Building permits and fees to sustain the operation over the long run.
3. A number of municipalities are raising fees on out-of-state owners of vacant properties. One city official estimated that as much as 60% of the vacant property in his town was owned by people who lived out of state. A low tax rate does not provide incentive for these owners to sell the property or do something with it. In some places, these out-of-state owners are charged triple the usual property tax.
Some localities are also charging a $100 a day fine to property owners who do not abate the problems with their property in the allotted time.
4. While waiting for other policies to be debated such as “receiverships” and “land banks”, the WV legislature could consider giving local governments the authority to transfer appropriate tax foreclosed properties to housing authorities through an inter-governmental agreement. These properties can be improved by the housing agency and sold to homebuyers.
5. A new policy is needed to require lenders to become responsible for a vacant property when a foreclosure is initiated rather than when it is completed. During the foreclosure process, a vacant property can deteriorate quickly and increase blight.
6. Receiverships, Conservatorships and Land Banks: Two tools for dealing with vacant, dilapidated and/or abandoned buildings are “Receiverships” and Land Banks. A recent law passed in Pennsylvania uses the term “conservatorship” but the meaning is essentially the same. Using this tool, a local government can make sure that someone rehabilitates a vacant property when the owner cannot or will not do so. Nearly half of the states have receivership legislation and there are many variables such as the criteria for a property to be in the program, eligibility of the receiver, and lien control. Some programs let the receiver have a priority lien.
The Worcester Community Housing Resources, Inc. compiled information on how to set up a receivership program in Massachusetts and that is available here.
How to Set Up a Receivership Program
- Pennsylvania’s Abandoned and Blighted Property Conservatorship Act Implementation Manual
http://www.rhls.org/documents/ConservatorshipManualDec09Draft.pdf
- Chapter 9, Receivership in Texas Problem Properties Toolkit
http://www.texascbar.org/content/legal_library/real_estate/downloads/ProblemPropertiesTexasToolkit10web.pdf
Land Banks are a tool used successfully in many states. Most recently Ohio authorized an additional 41 municipalities/counties to start a land bank. The Local Initiatives Support Corporation (LISC) defines a Land Bank as “a government entity that focuses on the conversion of vacant, abandoned and tax delinquent properties into productive use.” It concentrates on surplus public property, abandoned property, tax delinquent property and “below water” property. It is a vehicle for acquisition, management and disposition of these properties. Laws in each state vary on the types of property, what can be held and for how long as well as details for disposition. Some of the advantages of a land bank is that it provides for the protection of vacant property, allows land to be held for development and it can be a vehicle for clearing a title. Additional information can be found at the following sites:
- A Guide for the Creation and Operation of Local Land Banks
(a power-point presentation sponsored by LISC and Fannie Mae)
www.lisc.org/content/publications/detail/944
- The Federal Reserve Bank of Cleveland released this article written by Thomas J. Fitzpatrick IV on the Ohio Land Bank Legislation:
http://www.clevelandfed.org/Research/PolicyDis/pdp25.pdf
