Fighting Blight: County Land Bank Program Kicks Into Gear

by / Jun. 1, 2015 10am EST

Erie County Executive Mark Poloncarz stood in the living room of a newly refurbished house in his hometown of Lackawanna late last week to announce that the yellow-brick ranch on Abbott Road was set to hit the market.

The house, which just months earlier was a mess, with heavy water damage and a basement cluttered with boxes, blankets and bags of the former owners possessions, is one of the first homes to be fixed up by the Buffalo Erie Niagara Land Improvement Corporation, Western New York’s land bank established in 2012 as part of a statewide push.

Acquired through a foreclosure on back taxes, the home was refurbished by local trades workers contracted by the land bank at a cost of around $45,000. Now the home is ready to go to market, to be sold to a low-to-moderate-income family as part of the program, and county officials expect to get upwards of $90,000 back.

Before the land bank was established the home would have likely seen a wrecking ball—paid for with tax dollars—and would have left an empty lot, devaluing the properties of neighbors, Poloncarz said.

“This is not the type of building you want to see demolished,“ Poloncarz said, flanked by his Deputy County Executive Maria Whyte, who chairs the land bank’s board of directors, the land bank’s Executive Director Jocelyn Gordon and Lackawanna Mayor Geoffrey Szymanski.

Buffalo and other upstate cities have for years struggled with issues related to vacant, abandoned homes, a result of steady population loss with many people moving to the suburbs and other parts of the country over the decades. The city of Buffalo, despite demolition policies that have seen hundreds of homes coming down year after year, much of it paid for with state and federal money, still has thousands of vacant and abandoned properties.

The problems also plague many first-ring suburbs, like Lackawanna, where 37 homes have been demolished on the taxpayer’s dime since Szymanski took office in 2012. 

A major stressor with abandoned homes is the lengthy timetable for banks to complete the foreclosure process, with some homes sitting in limbo for years, often left to be pillaged for scrap metal and falling into serious disrepair with neither the banks initiating foreclosure proceedings or those being foreclosed upon, who often are under the impression that they have already lost the home, claiming responsibility for upkeep.

In addition, banks will often cut their losses, vacating the foreclosure in what is known as an abandoned foreclosure, reverting ownership of the property to the original owner. The lending agency is only required by law to send notification of the vacated foreclosure to the address tied to the mortgage, meaning that those owners often do not know that they still own the property until they are tracked down by housing court and stuck with a list of violations or a bill for the demolition.

The land bank, one of eight established across the state, provides a centralized entity that can take distressed properties, through foreclosure or purchase, and decide how best to manage that home or lot to get it back on the tax rolls and stop it from devaluing property in a neighborhood.

Since being established Western New York’s land bank has taken title to 18 homes and vacant lots, funded by $4.5 million from the state as part of the program, with eight homes scheduled to go on the market during this first round of sales and 16 to 20  expected to go out in the next round, officials said.

Whyte, who was instrumental in formulating the land bank’s application to the state, said that as those houses sit in limbo they become magnets for drugs, prostitution and other dangerous activities.

“To be able to take a property like this and reclaim it for the community and reclaim it for the neighborhood and to sell it to a low or moderate-income family consistent with the attorney general’s vision, those are the things that are worth celebrating,” Whyte said.

The state and some municipalities have put in place measures to curb this behavior from banks and Attorney General Eric Schneiderman is again pushing his Abandoned Property Neighborhood Relief Act, aimed at fining banks that fail to take care of properties on which they have started foreclosure proceedings, which the Schneiderman’s office has dubbed “zombie homes.”

The bill, which has the support of Senator Jeff Klein and Assemblywoman Helene Weinstein, failed to get pushed through last year and it remains unclear whether it will be taken up in what promises to be a hectic last few weeks of this year’s legislative session.

While that law still sits idle at the moment other developments have changed the mortgaging landscape in the state, giving prosecutors and politicians more leverage in the fight to get lending institutes to care for properties stuck in the foreclosure process.

Last year’s $16 billion settlement with the state, brought in by Schneiderman’s office, saw Bank of America agree to donate $20 million to land banks in New York, which can come in the form of property.

The state’s Department of Financial Services has also brought in billions of dollars in settlement money from banks, some of which was tied to mortgage practices.

In addition, neighbors have taken to shaming the banks in some instances, putting signs with the foreclosing lender’s name on properties with peeling paint or chest-high grass.

Liz DeBold, deputy press secretary for Schneiderman’s office, said she couldn’t speak to other banks, but that the Bank of America settlement was one example of the ways that the attorney general’s office is going about tackling this issue.

And Schneiderman remains hopeful that his legislation will be taken up before the end of session, she added.

“That would ensure that the banks can take responsibility for abandoned homes earlier in the foreclosure process,” DeBold said. “That’s the way in which we are trying to deal with this problem from a multi-faceted angle. Making settlements with the banks, using that money to support land banks and also trying to pass legislation that could basically ensure that communities are less on the hook for abandoned properties.”

Meantime, land banks like the one in Western New York provide another tool for legislators, prosecutors and other officials to fight blight and keep good neighborhoods from turning bad.

Back at the yellow brick ranch Poloncarz said that a few years ago the spot where he stood in the living room could well have ended up a pile of rubble, possibly setting off a chain reaction of neighbors deciding to leave their houses as well.

“Instead of this property becoming a further eyesore and creating further decay in the neighborhood,” Poloncarz said, “this will be a property where people will live, people will enjoy their lives.”

Justin Sondel is the Buffalo reporter for City & State.