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U.S. Department of Housing and Urban Development

Land Banking and NSPStrategies and Actions

April 10, 20122pm – 4pm

Community Planning and Development

Webinar Series• Developed as a series that builds upon previous

webinar content

• Webinar #1: Marketing & Disposition

• Webinar #2 – April 5: Scattered Site Rental

• Webinar #3 – April 10: NSP and Land Banking

• Webinar #4 – April 17: Best Practices Peer to Peer and Experts Roundtable

2U.S. Department of Housing and Urban Development • Community Planning and Development

NSP Problem Solving Clinics• HUD will be hosting 8 NSP Problem Solving

Clinics, with the first scheduled for:– April 24th-25th: Stockton, CA

• At each workshop, HUD will present two tracks of workshops, for new and old grantees, and one-on-one meeting sessions

• If interested in more training on ‘Disposition Strategies’, there will be a workshop diving deeper into the topics of this webinar series at each of the 8 Clinics.


Moderators and Presenters• Moderator: Kent Buhl, KB Consulting• Presenters:

David Noguera, U.S. [email protected] Freeman, Center for Community Progress, [email protected] Do, Enterprise Community Partners, [email protected] Whitney, CCLRC Land [email protected]


mailto:[email protected]




Definition of a Land Bank for NSP

• A land bank is a governmental or nongovernmental nonprofit entity established, at least in part, to assemble, temporarily manage, and dispose of vacant land for the purpose of stabilizing neighborhoods and encouraging re-use or redevelopment of urban property. [NSP1 and NSP3 Notice]

• Land Banks are considered subrecipients.


What is a Land Bank?

If a land bank is a governmental entity:• It may maintain a foreclosed property that it does

not own, provided it charges the owner of the property the full cost of the service or places a lien on the property for the full cost of the service. [FR-5321-N-02]

• For-profit entities are excluded from NSP-assisted land banking activities.


Elements of an Effective Land Bank• Connected to the tax collection and foreclosure

process• Scaled at the metropolitan level, or most

diverse real estate market possible• Policy driven – transparent in policies and

transactions• Markets that are targeted by the community for

redevelopment• Emphasis on community engagement and

participation


What Can an NSP Land Bank Do?• For the purposes of NSP, a land bank will operate in a

specific, defined geographic area. It will purchase

properties that have been foreclosed upon and

maintain, assemble, facilitate redevelopment of,

market, and dispose of the land-banked properties. [NSP1 and NSP3 Notice]

• Eligible Use (C): Establish and operate land banks for homes and residential properties that have been foreclosed upon. [NSP1 and NSP3 Notice]


Land Banking and NSPEligible Activities (in approved geographic areas):• Acquisition of foreclosed properties (A)

• Disposition of foreclosed properties (D)

Including:– Due diligence

– Purchase price

– Closing costs

– Property maintenance (between A&D) and management

– Resale closing costs/disposition-related costs


NSP Land Bank Life Cycle - Overview


Key NSP Provisions for Land Banks• Acquisition:

– Properties directly acquired for NSP land banking must be foreclosed and residential• Foreclosed property acquisition must meet

the 1% purchase discount requirement – Properties must be within NSP target areas,

or defined land bank operation areas within NSP targets


Acquisition and Other Federal RequirementsUniform Relocation Act (URA):• Although properties are to be vacant prior to

entry to the land bank, URA applies to acquisition.– Notices for Owner/Seller and Tenants (as applicable)

– Services and Payments for relocation

Tenant Protections under ARRA• Foreclosed after Feb. 17, 2009

• Bona fide tenant


Acquisition and Other Federal Requirements

Environmental Review:• Part 58 Environmental Review (ER) process

must be completed prior to committing NSP funds for any activity.

• “Neighborhood Target Review” is helping to expedite the ER process for land banks in targeted geographic areas.


Key NSP Provisions for Land Banks

• Assembling Properties:– Properties that are not directly acquired for

NSP land banking:• Demolished, foreclosed residential

properties (eligible use D activities)• Foreclosed property donations• Tax foreclosures


Key NSP Provisions for Land Banks

• Re-Use / Redevelopment – Redevelopment for Housing– Side-Lot Disposition– Public Facilities (NSP1 Only)

• Land banked properties must meet a National Objective with end use


End Uses for Land Banked Properties• Redevelopment for Housing

– Once land banked properties are conveyed for redevelopment, no longer Eligible Use C activities

– Rental or Homeownership Units, depending on community needs and the market• Sales price for Ownership units = lesser of

FMV or TDC– Housing must meet all affordability and

tenant/owner income requirements to meet LMMH National Objective


Redevelopment for HousingRental Financing

– NSP Program Income

– HOME

– Low Income Housing Tax Credits

– Brownfield Incentives (qualifying)

– Historic Tax Credits will require that

the property meets Secretary of

Interior Standards for Historic

Properties

– Developer Equity

Homeownership Financing– NSP Program income may be a

source for the redevelopment of the

property.

– HOME funds can be used to

redevelop the property, however

HOME rules will supersede NSP

(80% AMI and below requirement.

This can be helpful for meeting the

Low Income Set-Aside

Requirement.

– Developer Equity


End Uses for Land Banked Properties

• Side Lot Disposition– Selling a vacant land banked lot to an adjacent

property owner that meets NSP income requirements

– Establish Local Policies

• Sales Prices, Disposition Goals and Preferences, etc.


End Use of Land Banked Properties• Public Facilities

– NSP1 Only• Activities must support local NSP Program

goals• NSP2 and 3 must result in a housing

benefit (LMMH)– Examples include parks, open space,

community gardens• Must meet all CDBG Public Facility

eligibility, including LMMA area benefit [24 CFR Part 270.201(c) and 24 CFR Part 570.208]


Holding and Maintenance• 10-year maximum holding period

• Land banking is an interim use• Must obligate for re-use/redevelopment

• NSP may pay for boarding, taxes and maintenance costs

• “Static” holding costs not considered part of TDC for properties that are redeveloped

• Procure boarding and maintenance contractors if using 3rd party entities


Re-use/Redevelopment Planning• Timeframe (within maximum 10 year hold)?

– Consider availability of funding sources for longer term holds

• What are the characteristics of the neighborhood/submarket and redevelopment opportunities?

•Will land bank entity act as developer or dispose of properties for re-use?− Marketability of land banked properties?


Temporary/Interim Uses(The following interim/temporary uses include activities that are not eligible costs for NSP)

• Mothball buildings – stabilize and secure higher value buildings. Costly and includes risks, e.g. fire, safety

• Vacant land – stabilize and secure for future redevelopment

• “Clean and Green” – use vacant land as beautification projects, e.g. community gardens. Produce interim benefits for the community and improve marketability


Temporary/Interim UsesAdopt-a-Lot • Neighborhood associations and individuals are allowed

to ‘adopt’ and maintain properties until such time that they are prepared for redevelopment.

Urban Garden• Environmentally clean vacant lots can be made available

for urban gardening and agriculture.


Temporary/Interim Uses

Environmental Remediation• Localities have partnered with academic and

research institutions to use vacant property (with low levels of contamination) to experiment with phytoremediation. This involves using plant matter to clean properties. It has the benefit of being a low cost activity and can have a positive aesthetic impact.


Temporary/Interim UsesPublic Art• Localities have used vacant lots, and even parcels with

structures, as opportunities for public art. It can contribute to neighborhood identity, market the property, as well as mitigate the perception that the parcel is abandoned.

Neighborhood Signage• Neighborhood associations and other community based

initiatives can be allowed to install temporary signage for promotion of the area and quality of life issues. This also helps with the perception of the parcel being vacant or abandoned.


HUD Guidance• Q: “How did the Bridge Notice impact the use of land

banks under NSP?”

• A: The October 6, 2008 NSP1 Federal Register Notice limited the use of land banks with the following language “establish land banks for homes that have been foreclosed upon.”

The June 19, 2009 NSP1 Federal Register Bridge Notice expands the use of land banks with the following language “establish and operate land banks for homes and residential properties that have been foreclosed upon.”


HUD Guidance• Q: “Can land banking include purchasing a foreclosed or

abandoned property that has a structure on it or does the property have to be vacant land?”

• A: As stated in the NSP1 Bridge Notice “[NSP funds can be used to] establish and operate land banks for homes and residential properties that have been foreclosed upon;” abandoned homes and residential properties are not eligible.


HUD Guidance• Q: “How does a land bank differ from a land trust?”

• A: The basic differences are timing and land use. A land bank is a short-term (10 years maximum) means of managing land that may not have a defined purpose and cannot be immediately used (e.g., market conditions), while a land trust is a long-term land management technique with a defined purpose and benefit for another party.


HUD Guidance• Q: “Can NSP1 funds be used to support land trusts?”

• A: Yes. Land trusts could be classified as financing mechanisms permissible under eligible use (A) of NSP. For example, the land trust could acquire homes or residential land with NSP funds, then build new or rehabilitate existing homes and sell them to NSP-eligible homebuyers while retaining ownership of the land. The occupant would own the structure and lease the land. The exclusion of the price of land keeps the overall cost lower, allowing the home to remain affordable long-term.


HUD GuidanceQ: “If the grantee buys property for the purposes of a land

bank under eligible use (C), and allows tenants to move into the units on a temporary basis, would those tenants be entitled to relocation assistance if they are later required to move out?” The issue with this eligible activity is that grantees have 10 years to re-use the property, so it could presumably be many years later that someone would be asked to move out once a final use is determined.


HUD GuidanceA: If no person was displaced by the acquisition of the

property for the land bank, then the URA is not applicable at the time of the acquisition. If the grantee allows a tenant to move into the acquired property prior to a planned federally-funded re-use project, the tenant-occupant is not eligible for relocation assistance as a result of the original acquisition (see 49 CFR 24.2(a)(9)(ii)(B)). However, the tenant-occupant may be eligible for relocation assistance if they are made to move for a planned re-use project that is funded with federal financial assistance.


The Resurrection ProjectIssues:• Funding for acquisition and demolition only

• High cost of acquisition and construction

• Lack of funding to meet eligible end use

• Uncertain of market and projections of program income

• New to land banking

• Costs of land banking if it is longer than the grant period

• Need a interim maintenance strategy


The Resurrection ProjectStrategies:• Developing policies and procedures for land banking

• Creating a strategy for each lot

• Maintenance strategy will include community gardens

• Exploring contingency plans for each property

– Program Income

– Side Lot

– Partner Redevelopment


Marketing and DispositionCommunity Partnerships - Partner organizations can be of significant assistance in the marketing and disposition of properties, as well as interim maintenance. Bringing them into the planning process early on will help mitigate the challenges of maintenance, marketing and disposition. Make sure to involve:

– Neighborhood Associations– Community Development Corporations– Civic Groups– Faith-Based Institutions– Universities– Other (i.e. Artist Collectives, Gardening Groups, etc.)


Marketing and DispositionUse media for public relations, community awareness, increase partnerships, engage volunteers, and in the end, dispose of properties. Explore local resources and technology. Examples are:

– Community News letters

– Website

– Social Media (i.e. Blogs, Facebook, and Twitter)

– Public database

– News papers and television


Marketing and DispositionIn order to develop a market for completed units, and expedite the process of development and disposition.

• Procure the services of real estate development professionals to provide sales support, and to brainstorm market opportunities in the area.

• Identify opportunities to attend public events and engage partners to participate in housing fairs in target areas

• Meet with local employers to determine if there is interest in Employer-Assisted Housing programs

• Work with local Homeownership Counseling programs and providers to develop a pipeline of purchasers.


Case Study: Cuyahoga County Land Reutilization Corporation (CCLRC)• Non-Profit “Government Purposed” Corporation Under

ORC Section 115.

• Quasi Governmental Corporation

– Incorporated by the County Treasurer

– Stand-Alone Independent Corporation

– $7 Million annually from delinquent tax penalties and interest

– Governmental Powers (Land Banking)

– Private Enterprise Transactional Capabilities/Powers (buy, sell, lend, borrow, issue bonds, etc)


Intake Capabilities


BANK REO’s

RESPONSIBLE FOR MOTHBALL REHABILITATION

RESALE TO RESPONSIBLE QUALIFIED BUYER/REHABBER

HOLD FOR STRATEGIC ASSEMBLY & ECONOMIC DEVELOPMENT

DEMOLISH

HUD GSE’s TAX FORECLOSEDDEED IN LIEU

PROGRAMS:

• SIDE YARD• INFILL HOUSING• GREEN SPACE• URBAN GARDENS

CCLRC Activities to Date


• Acquisition – 1,650• Additional pending transfers to CCLRC – 200• Demolitions – 825 (including 115 nuisance

abatements)• Vacant lots transferred – 530• Renovations complete/in process – 275• Other current inventory waiting demo; possible

renovation, vacant lots, etc. – 550

NSP2 Consortium Budget


Activity Budget

Cuyahoga Metropolitan Housing

AuthorityCuyahoga County

City of Cleveland

Cuyahoga County Land

Reutilization Corporation

Investor Loans for Housing Rehabilitation $19,158,890 $4,554,547 $13,604,343 $1,000,000

Demolition $5,371,250 $3,645,000 $1,726,250

Deconstruction $825,000 $615,000 $210,000

Acquisition; Mothball for Future Development $502,940 $502,940

Land Reutilization $1,088,819 $1,088,819

Homebuyer Assistance

Rental Housing Development $10,210,348 $5,300,000 $4,910,348

Administration $3,684,143 $450,000 $500,000 $1,600,000 $1,134,143

TOTAL: $40,841,390 $5,750,000 $5,054,547 $25,463,510 $4,573,333

Land Bank Information Systems

• Analytical– NEO CANDO/NST and The Eye

• Finance and Accounting• Property and Project Management

– Property Profile System– NSP2 Consortium Reporting System


Conclusion

Strategic Thinking on Acquisitions• Does the property have strategic importance?

• Who is making the determination? Part of a planned development?

• Is the property being strategically banked, or just parked?

• What is the best and highest future use of the property?

• How complicated or speculative is the future use?

• How will the property be maintained past the grant period?


ConclusionImplications of Long Term Land Banking• Tracking properties - Organizations must maintain all files and records on

each property that benefits from NSP funding. Assume that there may be transition in the organization, and that future staff will be able to track properties and expenses incurred with NSP funding, as well as understand end use requirements and timelines for meeting them.

• What is your ‘Plan B’? Until the eligible end use requirement is met, the grant cannot be closed out. While there are ten years for the eligible end use requirement to be met, conditions can and will change. It is recommended to have multiple compliance strategies for meeting the end use (e.g. LISA, additional funding, partner development, side-lot)


ConclusionResource: Land Banking ToolkitProvides examples of items such as:

• Acquisition and Disposition Process Maps

• Legal Forms

• Financing Techniques

• Policies and Procedures

• Boarding and Maintenance Specifications

http://hudnsphelp.info/index.cfm?do=viewToolkitsHome&programtypeid=7


http://hudnsphelp.info/index.cfm?do=viewToolkitsHome&programtypeid=7


NSP Resource Exchange Links

U.S. Department of Housing and Urban Development • Community Planning and Development

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Documents

NSP Webinar: Land Banking and NSP Strategies and Actions › resources › documents › ... · not own, provided it charges the owner of the property the full cost of the service