Municipal land banks clear first round

Senators revisited a bill April 10 that would allow the establishment of land banks in metropolitan class cities or counties that have at least three first class cities–currently only Douglas and Sarpy. Land banks are tax-exempt political subdivisions that acquire, manage and develop vacant and tax-delinquent properties.

Under LB97, introduced by Omaha Sen. Heath Mello, the land banks would be created by passing a city ordinance or by way of interlocal agreements. They would be allowed to borrow money, issue bonds, procure insurance, enter into both private and public contracts and sell property to private entities in which they would receive 50 percent of the collected property tax amount for five years after the sale.

Additionally, land banks would have priority over other bidders in tax foreclosure proceedings and be prohibited from exercising eminent domain rights to acquire private property.

During general file debate conducted March 27, lawmakers adopted a clarifying Revenue Committee amendment, as well as one by Omaha Sen. Ernie Chambers that removed from the bill racial and ethnic diversity requirements of the land bank boards, which he said were unrealistic.

Mello offered an amendment April 10 that he said was a compromise to address concerns that arose in previous debate. The amendment, adopted 28-0, would require each land bank to have a seven-member board of directors appointed by the mayor and confirmed by a two-thirds vote of the governing body.

Under the new amendment, the board members must:
• be residents of the land bank’s municipality;
• include the planning director of the municipality that created the land bank or his or her designee, as a nonvoting, ex officio member;
• be appointed from each district or ward whose governing body members are elected by district or ward. Such members must represent, to the greatest extent possible, the racial and ethnic diversity of the municipality that created the land bank;
• have verifiable skills and knowledge in the areas of law, financing, asset management, purchasing and sales, economic and community development and market-rate and affordable residential, commercial, industrial and mixed-use real estate development; and
• must include at least one member representing realtors, the banking industry, real estate developers, chamber of commerce, a nonprofit corporation involved in affordable housing and owners of multiple residential or commercial properties. Such representation must collectively include verifiable skills and knowledge in the areas of law, financing, asset management, purchasing and sales, economic and community development and market­ rate and affordable residential, commercial, industrial and mixed-use real estate development.

The amendment also would require that land banks created by way of interlocal agreements have at least seven voting members.

Papillion Sen. Jim Smith had opposed the bill during debate March 27, saying he was concerned about creating governmental agencies that could purchase commercial properties and become competitive with private entities.

Mello said the amendment would address such concerns by capping a land bank’s legal title holdings at 7 percent of the total number of parcels of real property located in the municipality.

The amendment also would prohibit a land bank from collecting property taxes on a property that has been redeveloped under the Community Development Law, unless the authority enters into an agreement for the remittance of such funds to the land bank.

The bill was advanced from general file on a 32-0 vote.