Related Links

• Housing and Housing Finance, Richmond Fed
• West Virginia Land Stewardship Corporation
• Nitro Land Reuse Authority
• Abandoned Properties Coalition

Transcript

Tim Sablik: My guests today are Taylor Bennett and Kim Reed. Taylor is the executive director of the West Virginia Land Stewardship Corporation and Kim is the executive director of the land reuse authority and city planner for Nitro, West Virginia. Taylor and Kim, thank you for joining me.

Taylor Bennett: Thanks for having us.

Kim Reed: Yes, thank you for having us.

Sablik: One of the Richmond Fed's key areas of research is housing and trying to understand all the factors that go into making housing affordable. A common challenge many communities face is how to redevelop abandoned or dilapidated properties to return them to productive use, which is where both of you come in.

I'm excited to have you on the show today to talk about your work in West Virginia to redevelop properties through land banks. To start, Taylor, could you talk more about what a land bank is and what it does?

Bennett: In different states, because of the enabling legislation that allows for these kinds of entities to exist, you might get a little bit of variation. But this is how it works in West Virginia.

The term land bank is any quasi-governmental organization that is allowed to hold property and then sell property. Different types of land banks have different sorts of powers. In West Virginia, we have two primary types of land banks: we've got urban renewal authorities and land reuse agencies. Typically, when we're encouraging folks to set up an organization like this as a tool for their community, we are encouraging them to set up a land reuse agency.

Because they have the power of eminent domain, urban renewal authorities have a pretty long history of being associated with some fairly negative, racially driven activities. The idea behind a land reuse agency that makes it a little bit more equitable is that we're creating a group of people that is more connected to and driven by the land reuse goals of the community that they're serving.

A land reuse agency is governed by a board and those board members are appointed by the local government. There are provisions in our state law that say at least one of those people has to be a community member that's plugged into the service area.

We do still see some urban renewal authorities across West Virginia. Most of the time, at least for us, those urban renewal authorities are functioning in much the same way that a land reuse agency is.

Land reuse agencies have powers that allow them to step into the tax sale process — our process of dealing with what happens when you don't pay your property taxes and property abandonment that happens as a result of that — in a way that urban renewal authorities really don't. Also, urban renewal authorities typically focus on aggregating larger scale property for more commercial uses. The land reuse agency will focus on meeting a broader set of community needs and can often choose to focus on addressing concerns regarding residential property, which I think are really pressing concerns for many, many people across the country, and especially where we are working in West Virginia.

Sablik: Kim, maybe you can tell us a bit more about what are the specific problems or issues in Nitro that the land reuse authority is trying to solve.

Reed: Our primary issue was a lot of abandoned properties. We have a lot of property owners who had passed away and left their property to their heirs and their heirs don't care. They don't live here. They sometimes don't even pay property taxes.

Once we created a land bank, we decided that we needed to not only address the vacant residential properties that were a problem. Some of our houses were built in 1917 and have had no substantial improvements since then, so we had a lot of dilapidated, depressed properties.

Nitro was so built upon mixed-use, business-residential [development] along our downtown footprint that we would have absolutely terrible looking houses right beside a business that brings a couple hundred people in a day. So, we decided that, not just for the residents but for the people who patronize here, we wanted to really dig down and invest our money into getting those properties. We used every tool in our tool belt to try to gain access so that we could force redevelopment here.

We knew that if people were going to invest in our community, they would be doing it already. We decided to do some planning and to make sites shovel ready so that we could interest new development. [The land bank] is going to redefine what our downtown footprint looks like.

Bennett: I think that what Kim is noticing in Nitro is situationally unique, right? Nitro has its own geography. But a lot of the struggles that Kim has noted are struggles that are shared by small communities across the state — the need for downtown revitalization as an economic stabilization mechanism, the need to address older, crumbling housing stock. Honestly, I think that's why we've seen such an increase in the number of land banks across the state.

Sablik: How are these land banks that function on a community level, how are they typically created?

Bennett: Kim and I are both part of an advocacy group called the Abandoned Properties Coalition. The coalition is a statewide group of technical assistance providers and land reuse professionals, folks that are busy engaging with land reuse as an issue or problem properties generally. We've got funders, folks from the Preservation Alliance [of West Virginia].

This group of people noticed that in other states in the country, land banks were having some pretty good success in terms of dealing with economic downturn, housing market crashes, the gaps in the real estate market that folks were experiencing — particularly in Ohio which, as a neighboring state to us, we were looking really closely at that and be like, "Hey, if they can do that there, I bet you we can do something like that here." Prior to advocacy efforts by the Abandoned Properties Coalition, land banks were only allowable through a home rule application.

Basically, what we did through the Abandoned Properties Coalition is we put together a body of research. Some of it was experiential research and some of it was a little bit more numbers driven — we have over 20,000 buildings that are in need of immediate demolition in West Virginia. We brought these numbers to the sustainable land use law clinic at WVU. They did some research on the state code and said, "Hey, we could have land banks here. That is allowable." We took that to the [state] capitol and, with some advocacy work, we were able to get enabling legislation for land banks across the state.

Locally, the code is very specific about what you need to do to set up a land bank. You have to pass an ordinance, you have to appoint your board [and] you have to adopt bylaws. One of the things that the Land Stewardship Corporation does, as part of our support for local land banks and for folks that would like to start a local land bank, is we'll provide people with a sample ordinance that has already been written and has already been passed in a bunch of communities around the state. We'll provide you with coaching on what a good board will look like, and then we provide them with a sample set of bylaws, which actually came from Kim in Nitro.

Once the local government goes through all of those steps, you've got your land bank. I always recommend that folks then do a little bit of strategic planning about where in their community they would like to focus their efforts, that kind of thing.

Sablik: Kim, maybe you can mention a little bit specifically about that process in Nitro.

Reed: We used an ordinance that was provided to us from Morgantown. We had City Council approval and support going into it, so we knew there was no opposition to doing this. The ordinance passed unanimously.

The mayor appointed the board members, which were five individuals — one of which who has to live here, one of which has to have experience in economic development, one that had to have Realtor experience. We appointed a local businessman, we appointed a council member, someone involved in the community economic or the community development in Nitro.

We appointed a board of five members that were very invested in the success of the program. We made sure that they were all on the same page on our mission statement of what we wanted to accomplish. And we shared our city planning strategies with that board.

City Council was supportive not only in theory, but they supported us with funding — $200,000 for the first few years. Then we started utilizing ARPA [Americian Rescue Plan Act] funds when those became available to us in 2023.

Bennett: The funding question overall, from a statewide perspective, is a little bit sticky. There's no clearly outlined funding mechanism in the state code that would provide funding.

In our neighboring Ohio, there's a mechanism where county governments can allocate some of their property taxes to the land bank and then the land bank can use those to do their work. Then, property values rise and then taxes rise and then there's more money for everybody to be doing their work. In Ohio, that mechanism has been wildly successful.

We have that in West Virginia, but it's optional. Also, most of our local land banks — like the one in Nitro, like the one in Morgantown or Charleston or some of our smaller communities — are all attached to the municipal unit of government. We had our first county land bank created in 2023. So, when we see land banks being successful, like Kim's land bank is being successful, it's because their local government is allocating funds directly to the land bank.

Theoretically, it should be possible for land banks to take property into their inventory, and then sell that property and be able to cover the costs of their work. That's just not possible in the real estate market that we're working in right now. It's not reliable to expect a broken real estate market to be covering the cost of the public service that these organizations are offering.

Sablik: You mentioned the problems that these land banks are trying to fix. When should a community consider creating a land bank?

Bennett: A land bank is not the right choice for every community.

Appointing people to the board of an LRA [land reuse authority] is a big deal for people in a small community. Folks are often doing multiple things. You may not have a broad pool of people with real estate experience or economic development experience or what have you to appoint to a board like this. And the code is really specific about how many people need to be serving on the board. So, if folks don't have enough people in their community who are willing and able to do it, that's a consideration.

My other consideration is how many properties are you trying to deal with, and how long do you think it's going to take you to deal with those. Is the order of magnitude [in the] hundreds or thousands? A land bank might be a great choice. Is the order of magnitude four? Maybe not. Maybe we can figure out a way to get you through four properties where you don't have to set up a whole extra organization and do public notices and all of this stuff.

The third thing that I would say is what are your goals long term. Is this a consistent problem that continues to grow in your community? Are there many properties that continue to be abandoned due to nonpayment of property taxes? Are you experiencing a significant drop in population number that is going to make this problem continue over years? A land bank might be the right choice.

Reed: Ultimately, the underlying issue is funding, and it will always be funding in West Virginia. But I will say this, and it is a direct correlation to funding but it is a specific topic.

You have to have a dedicated staff member if you are going to have a successful, productive, state-registered land bank. If you do not have someone who can sit down at times, especially during the tax sales, and devote almost undivided attention to what you have to do to get in front of a lot of these problems and the legislative requirements and the funding, making sure you have the right funding allocated and you're following all the rules, you are going to have a significant uphill battle. Had it not been for the dedicated funding which allowed us to have the dedicated staffing, I'm not sure that we would even be a fourth successful that we are today because it's just so time consuming.

I don't think [a land bank] is a short-term solution to a problem. If you don't have long-term planning to go with what you're going to do in the disposition of those properties and the intended reuse for those properties, then you're just going to have a bunch of vacant lots sitting around your city. Yeah, there's no blight. But there's also nothing there.

Sablik: Taylor and Kim, thanks so much for joining me today to talk about all of this exciting work that land banks are doing in West Virginia.

Bennett: Absolutely. Any time.

Reed: Yeah, you're welcome.