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More Cities May Get Control Of Property Through Land Banks

Brad Perkins

Small Indiana cities struggling to fight back against blight and deadbeat landlords may get another tool this legislative session.

Last year, lawmakers allowed the use of so-called “land banks” for medium-size, or Class II, cities. But smaller Class III cities were not afforded the same right. A similar bill this year would change that.

Land banking lets cities scoop up delinquent properties in hopes of selling them to developers who will take care of the land and make it profitable again.

That can mean buying up neighboring properties to sell as a block, or auctioning off individual parcels to people wanting to build or renovate a single-family home.

During Frankfort Mayor Chris McBarnes’ five years in office, the city has razed several unsafe buildings. He says a land bank would give Frankfort more leeway in its clean-up efforts.

“And then we as a local community can seek out good developers that have the best interest of the city in mind and put those properties in their hands so they can be a bright spot in a neighborhood, as opposed to something that brings property values down and adds to crime in neighborhoods,” McBarnes says.

Senate Minority Leader Tim Lanane (D-Anderson) co-sponsored both land banking bills, and says he’s not sure why Class III cities weren’t included last year.

“I guess we weren’t absolutely sure if towns thought that was some sort of a vehicle they would need or not,” Lanane says.

McBarnes says he’d use a land bank to control development, which might help crowd out prospectors who often buy parcels on the cheap.

“Individuals from out-of-state will look at those as investment opportunities, they’ll swoop in, they’ll buy the properties for pennies on the dollar," the mayor says. "But then they won’t invest in the property – they’ll get people to come in and live there in a rental situation and they’ll just look at that home as an ATM machine. And it really doesn’t give the community a way to protect those properties.”

Lanane says he hopes smaller communities can use land banks to combat blight.

“I think this is something that they should take a hard look at as far as it being another possible tool in their toolbox on how to turn these properties around,” he says.

Lanane says the legislation gives cities wide leeway in deciding who can buy banked properties, and for what use – meaning they can pick the best plan for the land and not be forced to sell to the highest bidder.        

The bill is scheduled for a committee vote next week.

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