Land Bank 2.0: Aligning the Redevelopment Tools Michigan Land Bank Authority 10 March 2020
State Land Bank Inventory Mission: Create positive economic impact to Michigan communities by recycling land to productive use.
Redevelopment Economics Redevelopment Cost $ Normal Revenue Cost Offset via Incentives Normal Cost Time
State-Supported (Re)Development Assistance Readiness Facilitation Developing • Policies • Due Diligence • Approach • Plans • Preparation • Organize • Processes • Marketing • Task-Lining • Partner • Manufacture MEDC Redevelopment-Ready Redevelopment TM Communities Land Bank 2.0 Services
Manufacturing Developers
Land Bank as Land Agent • Surplus Properties County • Unused Properties • Donated Properties • State-Owned Properties Land Land Banking Agreements Bank • ‘Escrow’ Titleholding • Process for In/Out City Township Conveyance
‘Bright’ Fields
Statutes Collaborating for Redevelopment Land Bank Act (PA 258 – 2003) Brownfield Act (PA 381 – 1996) • Authorizes counties to establish • Authorizes counties to establish land banks. brownfield authorities. • Prescribes LB powers to operate, • Prescribes BRA powers to own, manage/maintain & operate, own & finance. improve. Legislative history clearly demonstrates intent to link these statutory powers to broaden and promote economic development.
Land Banks & Brownfied-Eligible Properties Blighted - MCL 125.2652(c)(vi) Is property owned by or under the control of a land bank fast track authority, whether or not located within a qualified local governmental unit. Tax Reverted – MCL 125.2652(p)(iii) Is tax reverted owned by or under the control of a land bank fast track authority . * Includes parcels that are adjacent or contiguous to that property if their development is estimated to increase the captured taxable value of that property.
Land Banks & Brownfield-Eligible Activities ALL Eligible Properties: Eligible properties owned by or under the control of a land 1. Environmental Assessment/Due Care bank or qualified local unit of government or authority: 2. Relocation of Public Buildings/Operations for Economic 12. Those described above Development Purposes 13. Assistance to a land bank fast track authority in clearing 3. Environmental Insurance or quieting title to, or selling or otherwise conveying, 4. Plan Preparation property owned by or under the control of a land bank 5. Plan Implementation fast track authority or the acquisition of property by the 6. Demolition land bank fast track authority if the acquisition of the 7. Lead/Asbestos/Mold Abatement property is for economic development purposes. 8. Reimbursement of Principal & Interest 14. Assistance to a qualified local governmental unit or authority in clearing or quieting title to, or selling or otherwise conveying, property owned by or under the Eligible properties in a qualified local unit of government, economic opportunity zone, or a former mill: control of a qualified local governmental unit or 9. Those described above authority or the acquisition of property by a qualified 10. Infrastructure improvements that directly benefit local governmental unit or authority if the acquisition of eligible property the property is for economic development purposes. 11. Site preparation that is not a response activity
What Does This Mean for Your Land Bank? • Land Bank properties may Typical Land Bank actions necessary for successful property recycling are undertake ALL eligible Act 381 eligible for reimbursement from Act activities . 381 tax increment capture: 1. Phase I/II ESAs • Land Bank properties are by 2. Blight removal/demolition definition Act 381 eligible properties. 3. Site preparation 4. Acquisition • Land Bank-sponsored Act 381 5. Title clearance/QTAs projects may include adjacent and 6. Selling/Conveyance contiguous parcels.
Land Banks & Act 381 – Revenue Streams 1. Reimbursement of principal – and interest 2. Land Bank 5/50 Specific Tax 3. Reserve Fund (use on other insufficient-revenue sites) 4. Administrative/Operating expenses These streams can be harnessed to meet needs of distressed properties AND provide revenues to your Land Bank…
Housing Subsidy as TIF-Eligible Activity • “Assistance… in selling or otherwise conveying …property owned or under control of a land bank fast track authority…” Cost of unit Construction/Rehabilitation $140,000 Qualified Purchaser – First Mortgage 120,000 ------------- Unfunded Gap $20,000 • To sell the unit, a concession of value (subsidy) is required. • The Concession is “assistance in selling” and therefore TIFable.
How Might This Work? Purchase Price $140,000 Gap Purchase Capacity $20,000 $120,000 Source – 2 nd Loan Source – 1st Mortgage The future property taxes paid by owner are ‘captured’ by the approved TIF plan and re-directed to make payment to this source .
TIF Financing Mechanics Land Bank Developer Property $$$ $$$ Land Bank Builder Eligible Costs Acquisition QTA Demolition Admin/Operating Approved Costs Remediation Site Preparation Reserve Interest Infrastructure Selling Scattered-Site Redevelopment TIF Plan(s)
Example Project
Current & Proposed Plans
Redevelopment Costs Phase I ESA $3,000 Demolition $4,500 Utilities $3,500 Site Excavation/Grading $4,500 Site Engineering* $3,500 Contingency (15%+) $1,000 -------------- Subtotal $20,000 Seller Concession $15,000 Plan Preparation $5,000 -------------- TOTAL $40,000
Act 381 Redevelopment TIF Projections 40,000 Principal amount to be reimbursed from Table One As-Built Value (TC): $372,000 Annual YEAR RATE PMT INT PRIN BALANCE Assessed Value (50%) $186,000 Payment 40,000 Local Millage (2018): 19.0846 2020 3.00% 4,007 1,200 2,807 37,193 2021 3.00% 3,550 1,116 2,434 34,759 2022 3.00% 3,603 1,043 2,560 32,199 2023 3.00% 3,657 966 2,691 29,508 County/Local BRA TIF 2024 3.00% 3,712 885 2,827 26,681 2025 3.00% 2,768 800 1,967 24,714 Local-Only Capture 2026 3.00% 2,824 741 2,083 22,632 2027 3.00% 2,881 679 2,202 20,429 2028 3.00% 2,940 613 2,327 18,102 Payoff in 15 Years 2029 3.00% 2,999 543 2,456 15,647 2030 3.00% 3,059 469 2,589 13,057 ADD 5 Years Reserve - 20 Years 2031 3.00% 3,120 392 2,728 10,329 2032 3.00% 3,181 310 2,872 7,458 2033 3.00% 3,244 224 3,020 4,437 2034 3.00% 3,308 133 3,175 1,263 2035 3.00% 3,372 38 3,335 -2,072
Building a Redevelopment Business Model Redevelopment Authority Project #1: EA P&I Admin/Op Reserve Project #2: EA P&I Admin/Op Reserve Project #3: EA P&I Admin/Op Reserve Project #5 Project #4: EA P&I Admin/Op Reserve Project #4 Project #5: EA P&I Admin/Op Reserve Project #3 Project #5 Expanding Number of Projects Project #4 Project #2 Project #3 Project X: EA P&I Admin/Op Reserve Project #2 Project #1 Project #1 Grow Revenue by Growing Projects… Admin/Op Reserve
What Does This Mean for Your BRA & Land Bank? Brownfield cost reimbursement & revenue generation is a known, standard practice which can easily transfer to land banking! Relationship with your County/local brownfield authority can produce a similar standard cost reimbursement/revenue generation practice 1. Develop/build a blight-demolition funding source 2. Reimburse common LB activities to recycle property 3. Generate 5/50 revenue and (potentially) additional admin revenue
Active Exploring Intrigued Boyne City Adrian Alger County Land Bank Charlevoix County Land BankAlpena Ecorse Harrisville Bay City Huron County Land Bank Kalamazoo (city) Bay County Ionia Manistee Beaverton Mancelona Marquette Bessemer Marlette Muskegon Calhoun County Munising Muskegon Heights Cheboygan County Oscoda Township Owosso Emmet County Otsego County Romulus Grayling River Rouge West Branch Ingham County Land Bank Three Rivers Marquette Land Bank Kalamazoo County Ionia County Land Bank Lansing Flint Leelanau County Newaygo Missaukee County Oscoda County Monroe East Tawas Traverse City Muskegon County Land Bank Wayne County Land Bank Ottawa County Ionia Grand Rapids Manistee County Benzie County Land Bank Detroit Land Bank Crawford County Presque Ile Land Bank Houghton County Land Bank Onaway Shiawassee County
Recycling Land to Productive Reuse Jeff Huntington Jim Tischler HuntingtonJ@Michigan.gov TischlerJ2@Michigan.gov 517-335-8430 517-242-4376
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