Land Banking Is No Miracle

On Wednesday, Julie Porter wrote in the Kansas City Star that a land bank could help return vacant city property to private, productive use. Porter points to the Genesee County Land Bank, which has existed since 2002, as a shining example of land banking in Michigan.

Unfortunately, Porter fails to consider the 40-year-old land bank in her home state. Saint Louis has had a land bank, also known as the Land Reutilization Authority (LRA), since 1972. The LRA owns about 10,000 parcels, making it the largest land holder in the City of Saint Louis. The Saint Louis land bank’s track record should be considered before creating a similar entity in Kansas City.

Show-Me Institute research has found that for eight years, from 2003 through 2010, the Saint Louis land bank authority rejected almost half of all formal offers to purchase its property. The most frequent reason for rejection was that the property was being “held for future development.” Sadly, the hoped-for future development rarely materializes, and in just eight years, the Saint Louis land bank has turned down offers to purchase more than 2,200 different parcels.

Porter also fails to mention that there already is a government entity that deals with vacant land in Kansas City. The Jackson County Land Trust currently takes ownership of tax-delinquent properties that fail to sell at tax auction, and works to sell them.

There does not appear to be any evidence that the Jackson County Land Trust is doing a poor job of getting vacant property back into private, productive use. In fact, it seems to be doing quite well. During the past decade, in the course of acquiring property by default and trying to sell it, the land trust has added about 140 parcels to its inventory. The Saint Louis land bank has added 800.

However, the land bank bill, Missouri House Bill 1659, would be a land and money grab: All land trust properties in Kansas City would be transferred to the land bank, and it could take on an unlimited amount of debt.

Though Porter warns against private speculators, this bill would allow the Kansas City land bank to act as a speculator. The city would establish priorities for vacant land and use those to determine when to sell property. While this may sound innocuous, that is how Saint Louis was able to turn down so many offers to buy vacant property.

Consider this line from a letter of rejection from the Saint Louis land bank: “…her intended use is as rental property, and the alderman has indicated verbally that he will only support the sale to an owner occupant…” Years later, the property remains vacant, and the LRA still owns the land.

This bill would also let a Kansas City land bank bid directly against people who want to purchase vacant property. That certainly would go against the ostensible goal of alleviating vacancy in the city. The land bank would, when bidding against private buyers, be working directly to keep property vacant, and in government ownership.

HB 1659 creates an unnecessary expansion of government power. No strong evidence has been provided to show that the Jackson County Land Trust has failed, nor that a land bank could do a better job of getting vacant, city-owned property back into private, productive use. In fact, if Saint Louis is any example, the contrary will occur.

Audrey Spalding is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.