The worst repercussions of the housing crisis are apparently behind us, at least in some communities. Fewer homeowners owe more on their mortgages than their homes are worth. Many are still underwater but have a sense, at least, that they're catching up. Home sales in some neighborhoods have been remarkably brisk.
But some of the Chicago area's most struggling neighborhoods were devastated by the collapse in home prices, and they're a long, long way from recovering. Blocks of empty lots and unkempt, abandoned buildings pose a huge obstacle to recovery. They're a threat to public safety. They erode the value of other properties. They put financial pressure on cities to keep up with maintenance and services. They prompt an exodus of people and an exodus of investors.
One promising answer to this: The Cook County Land Bank Authority is preparing to open for business this fall. It's modeled after land banks in communities such as Flint, Mich., that have acquired and returned to the tax rolls thousands of unwanted properties.
Land banks operate as an independent authority to identify and acquire residential or commercial real estate eyesores. The land banks buy properties, sometimes through tax foreclosures, sometimes through lenders or private purchases. Properties that have value are fixed up; others are bulldozed. The properties can be sold or repurposed for a public use such as green space.
Bureaucratic roadblocks to private development get cleared away. The land bank resolves the headaches that would discourage investors from bothering with a marginal real estate project - from title problems and tax liens to unpaid water bills.
That takes money, of course. The Cook County Land Bank has no taxing power or county budget appropriation. It and another land bank set up solely for Cook County's south suburbs will share $6 million of $70 million the state allocated for housing revitalization from the settlement of a national lawsuit over mortgage and foreclosure fraud at big banks.
The seed money won't buy much, even in depressed areas. The county has tens of thousands of properties that would qualify as distressed. The new agency will need to make smart investments and carefully weigh offers of property donations. The idea is that as it returns properties to the tax rolls, it can capture a portion of the property tax receipts to fund its operations and become at least close to self-sustaining. More broadly, the hope is that as properties are repaired or cleared by the land bank, private developers will see more reason to take a risk on investments in a neighborhood.
County Commissioner Bridget Gainer, chairwoman of the land bank's board, sees pent-up demand from investors who would be interested in projects if they could avoid the red tape - including a foreclosure process that ties up Illinois properties in court for upward of two years.
Yes, there's risk involved. Some land banks have succeeded; others have had problems. In Indianapolis, two city officials and three other men connected with a land bank have pleaded not guilty to federal fraud charges that allege that properties were steered to favored buyers at discounted prices.
Transparency will be key. Gainer said the Cook County land bank will be subject to the open-meetings and ethics requirements that govern county government. All its business will be conducted in public and audited, she said.
This project is no sure thing, but it is one of the better ideas in some time to take on the massive obstacles to private investment in the Chicago area's most economically depressed neighborhoods. Done right, the land bank can make a difference.
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