In 2003, the Texas legislature created an Urban Land Bank Demonstration Program to enable cities to more effectively pursue tax foreclosure on unproductive vacant properties in return for assembling the acquired property for affordable housing development. The Act applies only to home-rule cities with a population of 1.8 million or more and are located predominantly in a county that has a total area of less than 1,000 square miles (at the time that this legislation was passed that would be Houston ). Generally, property ordered sold pursuant to foreclosure of a tax lien may be sold at a public auction, such as a sheriff's sale, to the highest bidder for a bid sufficient to pay the lesser of the aggregate amount of the judgment against the property or the market value of the property as specified in the judgment. This legislation provides the means for direct sale of tax-foreclosed property by the officer making the sale to a land bank created by a municipality for the purpose of assembling property for affordable housing development. The process requires development of a local plan by the municipality, coordination with participating taxing entities, public notice, public participation, local accountability, and ultimately, the creation of new housing affordable to lower income households. 78R, HB 2801 (2003), Bill Analysis http://www.capitol.state.tx.us/tlodocs/78R/analysis/html/HB02801E.htm, now codified at Chapter 379C of the Local Government Code.

TX Case Study: Dallas - After the Texas Urban Land Bank Demonstration Act of 2003, Dallas took the opportunity to “stabilize distressed communities,” targeting southern and western portions of the city. As of August 2007, 965 titles had been cleared for sale to the land bank with an estimated 6,000 more vacant lots that could become eligible for sale to the land bank. The land bank relies on large donations of time from several local law firms, as a typical parcel takes about two years to go from public acquisition to private sale. This leaves the court system saturated and able to process only about 300 cases a year, limiting the potential progress of development in the area and potential tax revenues. Another obstruction to the progress of the land bank program is a shortage of homebuyers in the area with the targeted incomes. This is partly related to the recent subprime mortgage crisis and predatory lending. Because of this, the land bank relies on the efforts of numerous non-profit organizations and other government programs that offer services like financial counseling, debt management and mortgage assistance to ease clients through the process. Vandalism of properties has also proven to be a drain on municipal resources. One structural flaw with the current land banking program is that the 15 year affordability requirement creates an incentive towards building detached single-family units while shortages affect all types and tenures of housing. This issue has been addressed in the most recent comprehensive plan. While program officials describe progress as real and promising, the program’s geographical scope will not be expanded in order to focus enough attention and investment into targeted areas to make them economically competitive and structurally sound in community terms. The program benefits greatly from a high level of cooperation among local non-profit organizations, local businesses and various extensions of the municipal government. Sources/References: Graduate student paper on file with Dr. Robert Paterson of UT Austin, Lytle, Stewart. (July 30, 2007). ”Urban Land Bank - putting Humpty Dumpty together again.” The Dallas Morning News.

National Case Study: Cleveland, OH - The Cleveland land banking program serves as a model to many cities. The City of Cleveland and Cuyahoga County won an Innovations in American Government Award in 1993 for the success their land banking program had in reinvigorating neighborhoods and increasing the tax base. Much of Cleveland’s success is due to the program’s maturity, which allowed the program to address urban exodus, homeownership inequities, and economic instability before these issues reached a crisis point. The Cleveland planning department began pursuing changes to Ohio state law that would permit land banking and foreclosure for tax delinquency in 1974. By 1988, a city program was in place that could more quickly process foreclosed properties in order to rebuild depleted neighborhoods. By 2001, About 90 percent of new residential construction involved land bank lots. This ability to quickly acquire and process target properties highlights the deficiencies in the Dallas program. Another strength of the program is a clear mission statement that has been consistently followed. Through a strong collaborative process, cheap and predictable pricing, transparent administration, accurate database management, and political support, the program has consistently pursued eliminating blight, providing affordable housing, preserving existing affordable stock and encouraging investment. Cleveland’s land bank emphasizes development of detached single family homes, as in Dallas, but has been able to create more diverse housing options with the support of the Cleveland Housing Network (CHN). The CHN is an umbrella organization of community development corporations(CDCs), and frequent buyer of land bank parcels, that promotes a broader spectrum of housing options than traditional city-contracted developers would provide. By 2001, CDH’s member CDCs had produced 2,700 single-family homes in the city of Cleveland. One-third of the houses were sold and the remaining two-thirds became part of a lease-purchase model through which renters are given title to the home after 15 years of renting. Despite these successes, complementary city and county economic policies do not generate housing funds. This has resulted in a push towards wealth building strategies that threaten the expansion of rental housing development, open space and other projects that do not inject immediate tax-base relief into the city coffers. Some also worry that Cleveland may be closing off avenues of innovation because of the perception that the program is running fine. Sources/References: Graduate student paper on file with Dr. Robert Paterson of UT Austin, Rosan, Christina. “Cleveland's Land Bank: Catalyzing a Renaissance in Affordable Housing.” Housing Facts and Findings: 3.1 (2001).