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GroWtH PartnerSHiP land Banks – a new tool for erie redevelopment by Ben Pratt, Executive Director, Growth Partnership Division There are many different tools and best practices used by communities to help economic development organizations make redevelopment and reuse projects feasible. The resources outlined by the International Economic Development Council’s – Real Estate Development & Reuse program are generally split into 3 different categories. The first category -- financing. The most common tools used by communities to provide financial incentives to a business looking to relocate, finance an expansion of an existing structure, or issue incentives to developers to offset the high costs of redevelopment and often remediation; providing the opportunity to resell or lease their redeveloped property at a competitive market price. These tools take the form of bond financing, loan guarantees (both of which helped finance construction on Erie’s Bayfront), revolving loan funds (actively assisting businesses on a regular basis with facility expansions, equipment purchases etc.), tax credits, tax increment financing (TIF) (which helped incentivize Lord Corp. the to stay in Erie), leases/ sale leasebacks, tax abatements, and special improvement districts (like the KOZ).
t Public sector purchase or lease space agreements t Special improvement districts (like the downtown improvement district) t Sandwich lease The greater Erie community had used many of these incentives to effectively grow, expand & attract businesses locally, but this is often difficult to bring to an effective scale. The third category -- land assembly. The public sector can initiate development by facilitating land assembly. This is important because the market for larger, assembled properties is much greater than for small, fragmented properties typically found in older urban areas. By combining smaller sites into larger parcels, a public agency is more likely to attract private investment.
The second category -- other incentives. There are many ways to make a deal more attractive, however they don’t ultimately make them feasible for an investor. The other incentives category includes different techniques and partnerships that are less structured or restrictive as the first category and often bridge financing gaps for the new investor.
Public agencies can acquire land by the following: t Negotiated purchase with a willing seller (often at close to market value, and outside of our redevelopment budgets) t Eminent domain or condemnation (These properties are traditionally in areas of communities that is difficult to attract new investment) t Tax foreclosures (many of these properties currently go up on sheriff sale) t Escheat (properties not claimed by heirs to an estate, which to be honest are hard to track down) t Land Swaps (Similar to the swap that recently took place between Scott Enterprises and Erie County) t Foreclosure of demolition liens.
Examples of these incentives include: t Land write downs (the sale of land for less than its market value) t Zoning incentives (specific areas can be “rezoned” to encourage new or targeted development stimulating redevelopment in an area)
Land Assembly is a critical tool for redevelopment. Before the public sector “assembles” any land it must be determined that the redevelopment serves a greater public purpose whether for elimination of blight, housing (often low and middle income residents), or
Aug/Sept 2015
economic development. This is an exciting time for economic/redevelopment for the Erie community. There has been a great deal of discussion on the development of a new land assembly tool called a Land Bank. Land banking is the public acquisition and holding of land for future use. This acquisition should be based on targeted investment rather than random odd lots. By strategically gathering smaller pieces of land, a city can assemble large parcels of developable land that can attract and retain firms. The redevelopment authority would gain strength if they had the capacity to obtain this land assembly tool. The strengths in land banking include; mitigating speculative landprice increases in areas slated for redevelopment, and retaining control over future uses and design aspects of the property. In some cities the stock of tax delinquent properties includes acres of available land. Cleveland, for example, has managed to aggressively market its stock of tax foreclosed land parcels to residential developers. Some weaknesses of land banking include; the acting agency need to pay the entire land acquisition cost up front (unless they can secure the land through nonpayment measures), the cost to maintain the properties, and community concerns over the use of public dollars. The Erie Neighborhood Growth Partnership facilitated by the redevelopment authority of the City of Erie has taken great strides to weigh the pros & cons of a land bank and is currently reviewing opportunities to evaluate, review and strategically implement a Land Bank business plan; a first step in the pursuit of adding this necessary tool to Erie’s redevelopment tool box.