There is a lot of value in legitimate land banking programs. In simple terms, land banking consists of aggregating parcels of land or distressed properties that will be developed or sold sometime in the future. With programs in the United States, eradicating underused, foreclosed, or abandoned properties to a productive state can be done quickly.
Unfortunately, land banking has been used as part of scams in some countries, whereby underdeveloped land is sold for a price above current market value with a promise that the parcel’s worth will increase dramatically thanks to local development. However, in the United States, there are viable programs that oversee properties with the goal of boosting revitalization in city neighborhoods that were at one time prosperous.
Many U.S. cities went through a period of deindustrialization coupled with increased suburbanization that resulted in a large inventory of vacant and abandoned residential, commercial, and industrial properties. In trying to come up with solutions, the first Land Bank was established in St. Louis, Missouri, in 1971, followed by others that have achieved great success.
The Real Value of Land Banking
By 2009, the value of land banking programs was accepted by the Department of Housing and Urban Development (HUD) and deemed a best-practice model for dealing with the collapse of the real estate market and abundance of foreclosures. The value of land banking programs is evident in many ways.
- A reputable land bank is a one-stop-shop that offers all the necessary tools and resources for dealing with distressed properties.
- A bona fide land bank has the ability to shorten current foreclosure processes, thereby speeding up the return of abandoned, vacant, and tax-delinquent properties to appropriate use.
- The cost of adding emergency protection, inspections, law enforcement services, and others required in land banking neighborhoods is reduced by local governments.
- Maintenance services for abandoned/foreclosed properties and vacant lots are another value of land banking programs.