Local governments can invest in this strategy using State and Local Fiscal Recovery Funds (SLFRF) from the American Rescue Plan Act (ARPA).
- This strategy can help facilitate investments in housing. The U.S. Department of Treasury has indicated that strategies that help achieve this outcome are eligible for the use of Fiscal Recovery Funds.
- Investments in this strategy are SLFRF-eligible as long as they are made in qualified census tracts or are designed to assist populations or communities disproportionately impacted by COVID-19.
Managing properties to advance community goals: Land banks are public or nonprofit organizations that acquire, hold, and distribute property to advance community goals. Most often, land banks are created to repurpose vacant, abandoned, or tax-delinquent properties in localities with low or declining housing costs.
Setting up a land bank: Land banks may be formed as government entities led by a local redevelopment or housing department, independent public corporations governed by a board appointed by a local legislature, or as private nonprofit corporations. Structure is often dictated by state laws. Regardless of structure, land banks work closely with city and county officials to identify priorities, set procedures for property acquisition and disposition, and identify funding streams.
Acquiring properties: The most common mechanism through which land banks acquire properties is the tax foreclosure and auction process. Other mechanisms include transfers from local governments, private donations, and purchases on the open market.
Managing, rehabilitating, and selling properties: After acquiring properties, land banks manage and maintain those properties (e.g., cleaning up vacant lots, securing structures). Typically, land banks then seek to sell or transfer properties to new owners, such as developers, management companies, or individuals. This process may involve bundling multiple adjacent parcels to make the properties attractive to a developer, renovating existing properties for sale to individual homebuyers, or demolishing blighted properties for redevelopment by a community land trust.
- Issue Areas
Housing and community development
Creating affordable housingIncreasing overall housing supplyAddressing vacant or abandoned propertiesAccessing private market housing
- Target Population
- Cost per Participant
Evidence and impacts
Ranked as having the second-highest level of evidence by County Health Rankings and Roadmaps
Multiple studies with rigorous designs provide some evidence for land banks as a strategy for addressing vacant or abandoned properties.
- This assessment is based off of evidence from a 2022 research synthesis.
Best practices in implementation
Note: This content is under review
Set focused goals: When working to reutilize vacant, abandoned, or tax-delinquent properties, land banks work with a broad range of stakeholders, including tax foreclosure entities (e.g., county treasurer and auditor), community development organizations, and city and county law and planning departments. Land banks can avoid becoming a site of conflict over stakeholders’ competing land use goals by identifying a narrow set of objectives and articulating what role each stakeholder plays in achieving them.
Create a management information system: Land banks face administrative barriers to identifying, acquiring, and clearing titles on properties. To streamline these processes, land banks should develop a management information system that links municipal real estate records to GIS software, allowing the land bank access to information on property size, owner, tax delinquency, code violations, and more.
Allow for flexible disposition criteria: A land bank may wish to sell a property for less than its full appraised value in order to meet a community’s short- and long-term goals (e.g., creating affordable housing). Local governments can enable land banks to take community interest into account when transferring properties to new owners by setting broad pricing policies for property disposition.
Identify multiple funding streams: To operate at scale, land banks require significant and ongoing funding. Municipalities have multiple options to fund land banks, including bonds, tax increment financing, federal funding sources (e.g., HUD HOME program), and set-asides for property tax revenue. Land banks may also raise funds themselves through property sales and by pursuing grants from philanthropic partners.