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Opposed to Land Banks in Nebraska (LB1137) – Feb. 7, 2012

The Lincoln Independent Business Association opposes LB1137. While the bill has been introduced to help municipalities by giving them a tool to clean up problem properties, LB1137, if passed, would likely lead to several unintended consequences.

First, by giving cities the authority to create a land bank, the legislature would allow cities to establish a political subdivision of the State that is not answerable to the people. By establishing a land bank, the city essentially circumvents the public hearing system through which a normal acquisition of land would pass. While the bill requires the land bank to keep an inventory for public review, the acquisition of such property is not subject to public review. This is not the kind of system of transparency that Lincoln needs.

Second, LB1137 is drafted far beyond its stated intent. The intent behind LB1137 is to provide cities with a tool to buy up foreclosed and tax delinquent properties and flip the property with the proceeds going back into the land bank’s revolving fund, adding to the cities property tax base and at the same time helping to clean up the city.

However, the bill permits the city enough wiggle room to create a hierarchy of uses for the land bank to extend beyond its stated intent to be used for purely public spaces and places, wildlife conservation areas and such other uses as determined by the city. This language is very broad and extends the land bank’s use beyond what would be beneficial to Lincoln’s taxpayers.

Third, a land bank would be competing against the private sector for profits and potentially using taxpayer dollars to do it. This bill allows the city to  create a government-run real estate company through which it can, among other things, sell, lease, rent and develop properties. The city will determine how to fund the land bank initially, which could mean taxpayer dollars. This would allow the city to use taxpayer dollars to upstart a government-run real estate company to compete with the private sector, shrink the city’s tax base by holding onto properties for lease profits, and fuel another debate as to why the city needs to raise taxes because its revenues are down.

Finally, land banks have been started in other cities or counties and they have not produced the desired results. Atlanta’s land bank lacks sufficient acquisition funds.[1] Cleveland has had challenges with the capitalization of projects, the limited capacity to rehab land, and the time consuming administrative procedures involved in such land transactions.[2] Genesee County, Mich., has been challenged because tax-delinquent properties purchased by its land bank do not have enough value to go to market, which has them concerned whether enough revenue will be generated by the sale of there properties to pay the related administrative costs.[3] This should be testimony enough to keep land banks out of Nebraska. 

LIBA respectfully requests that you do not pass LB1137 on to general file. While it is intended to be a tool for cities, it would likely do much more harm than good.

[1] Michigan Society of Planning, Smart Growth Tactics (January 2005); see also http://www.umich.edu/~econdev/landbank/.

[2] Id.

[3] Id.