Land trusts and land banks are one way to increase stable and affordable housing in the state, according to housing advocates with Prosperity Indiana.
A report done by the National Low Income Housing Coalition said Indiana has a deficit of 120,000 affordable and rental homes and an eviction filing rate of one in ten renter households.
What is a landbank?
A landbank is an entity that buys abandoned or foreclosed properties to convert to productive use in the community.
When a property’s owner dies, leaves town, decides it’s not worth selling, or owes more in taxes than the property is worth, its title can’t always be traced.
John West, a Ball State Urban Planning Professor and founding member of the Muncie Land Bank said this type of abandoned property is detrimental to a neighborhood.
“Properties are just like a banana that you have sitting on your counter at home,” West said. “If you let it sit for too long, it's going to get ruined, and it's going to become worthless.”
Properties sit between 18 to 24 months before they’re put up for auction. It must be delinquent on taxes a couple times, and there’s a one-year redemption period.
Land banks usually buy and maintain a property until a responsible buyer is found, according to the Center for Community Progress.
Michigan and Ohio have more land banks than most states, because they have laws that provide funding for land banks and transferring titles. (Screenshot of Center for Community Progress map)
West said it’s best when landbanks have a vetting strategy and property is sold to a local resident, developer or government agency.
“It is enables people who are in the community to have access to property and land and to do something responsible for with it.”
Land Trusts and affordable housing
A community land trust is a nonprofit organization that buys foreclosed property, then maintains and develops it for the community.
Community land trusts usually develop housing on land it buys, according to Stephanie Guagliardo with the Indianapolis Community Land Trust.
CLTs build homes using a one-time public or private investment. They then sell the home below market rate to a low-income buyer. The CLT maintains ownership of land the home sits on.
When buyers resell the home, they agree it will be to another low-income buyer at a discount. The CLT manages the sale.
Indiana has a few CLTs in development, including in Indianapolis, Hamilton County, Bloomington, South Bend and Evansville.
Guagliardo said community land trusts ensure the affordability of a home not just for the first occupant, but future generations by removing it from the speculative market.
Legislation for land trusts and land banks
Lawmakers proposed a few different pieces of legislation this month that would support land bank and land trust operations.
Prosperity Indiana’s Policy Director Andrew reviewed during a Jan. 12 call.
House Bill 1212 introduced by Rep. Representative Elizabeth Rowray (R-Muncie) has been referred to the committee on local government. It would require county governments to provide local land banks with a list of properties in their territory that are delinquent on their taxes or have been the subject of two public sales.
According to West, this would be helpful because incentives don’t exist currently for local entities to track of foreclosed properties. The bill would help land banks know what is available for purchase and improve government awareness of what land is sitting unused.
House Bill 1029 and Senate Bill 207 both address land trusts. Both bills propose that property tax assessments consider the price the homeowner would receive if they sold it — since homeowners on land trusts are required to sell at a discounted rate.
Both bills have been assigned to committees — the House Ways and Means Committee and Senate Tax and Fiscal Policy Committee.
