DEL.ICIO.USNew policy for land bank will benefit nonprofits
The Atlanta Journal-Constitution
Thursday, August 21, 2008
Most taxpayers don’t even know it exists. But a small government operation in downtown Atlanta stands to become a key player in the city’s efforts to turn foreclosed properties into affordable housing.
The Fulton County/City of Atlanta Land Bank Authority erases delinquent taxes and other liens so developers can put properties back on the tax rolls.
Ben Gray/bgray@ajc.com
Audrey Akpan, executive director of the Fulton County/City of Atlanta Land Bank Authority Inc., stands on a plot of land in the Mechanicsville neighborhood in southwest Atlanta that was conveyed to the land bank by the city.
The city and the county give tax-delinquent properties to the land bank, which conveys them to affordable-housing developers, usually nonprofits. Or the land bank extinguishes taxes on distressed properties the developers acquire on their own.
But now the land bank is posed to do much more as a result of the housing crisis and a policy change.
Under the new policy, the land bank will take properties purchased by nonprofit groups and bank them for up to three years. The two governments will be able to bank land for up to five years.
The change will allow a developer such as Atlanta Habitat for Humanity to buy quickly before others do, or before prices rise, then work through the development red tape.
Banking also will save the nonprofits considerable money because banked properties will not be taxed. And the maintenance expenses, which the land bank will recoup from the nonprofits, will be comparatively low because of volume discounting.
“It will help keep development costs down for affordable housing, which will translate directly into lower purchase prices,” said Andy Schneggenburger, executive director of the Atlanta Housing Association of Neighborhood-based Developers. “This program is being viewed with a lot of anticipation as a potential tool for helping turn around the foreclosure issue.”
The Beltline, the ambitious redevelopment project along 22 miles of old rail line looping intown Atlanta, also could benefit. The Trust for Public Land, for example, could bank future Beltline green space.
“The new policy … offers a lot of promise. It minimizes our holding costs,” said Helen Tapp, the trust’s director in Georgia.
Atlanta established a five-year goal of creating 10,000 additional affordable housing units by 2009. Affordable housing puts workers closer to their jobs and improves blighted areas.
Some neighborhoods are littered with empty dwellings because of mortgage fraud, homeowners drowning in debt, and tougher credit requirements. Atlanta has seen 27,000 foreclosure filings in the past two years, said Ernestine Garey, managing director of housing finance at the Atlanta Development Authority.
In the battle to improve Atlanta’s neighborhoods, four affordable housing groups already have identified 140 parcels they hope to bank for future development, said Audrey Akpan, the land bank’s executive director. That process should begin no later than the first of the year, she said.
Coupled with that change is the federal government’s approval last month of the federal Housing and Economic Recovery Act of 2008, which includes $3.92 billion to purchase and rehabilitate foreclosed homes.
A portion of that money will come to Atlanta, giving nonprofits and governments the ability to acquire even more properties that can be banked.
Frank Alexander, an Emory University law school professor and housing expert, helped draft the local land bank change.
In May, he testified before a U.S. House of Representatives subcommittee that land banks “are today the best potential models for addressing the sudden increase in the number of vacant and abandoned properties resulting from the mortgage foreclosure crisis.
“They can become managers of market distortions, which create sudden excess supply of properties,” Alexander said. “They can serve as true ‘banks’ in moderating real estate liquidity and capitalization.”
The land bank’s new policy takes a gradual approach so the cost of holding properties doesn’t become overwhelming.
Properties eligible for long-term banking will be limited to unimproved lots and newly built unoccupied houses, provided the houses are never more than 20 percent of the portfolio. That excludes the rundown dwellings that so often are the image of mortgage fraud.
But Akpan and others say that restriction will be loosened when the organization better understands what it can handle.
The authority has just three employees — four if you include the occasional intern — and a budget of $304,000. A consulting firm has been hired to evaluate the organization in light of its expanding role and make recommendations.
Akpan, the executive director since 1994, said she wants to see the staff grow to 12 and the budget to just over $1 million. Most of that new money would be federal funds channeled through a local nonprofit and the city.
“Fifteen years later, I never imagined I’d be looking at vacant, boarded-up new structures,” she said during a driving tour through several Atlanta neighborhoods.
While describing land bank successes in the Martin Luther King Jr. Historic District and south Atlanta, Akpan also talked about a future where the land bank might make its own purchases and partner with big developers.
Cousins Properties recently announced it’s on the lookout for abandoned subdivisions it can buy cheaply.
“I want to be a cousin to Cousins,” Akpan said. “In the family.”
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