Land banks: Drastically reinventing communities, even amidst funding crunches


Michigan isn’t exactly a stranger to distressed and blighted properties. Many homes across the state have lain abandoned for years — some serving as decade-old reminders of the Great Recession — frustrating residents and business owners alike. These dilapidated buildings often attract crime, cause property values to plummet and dissuade investments from businesses looking for new locations.

That’s where land banks come in.

Land banks — entities charged with the mighty task of returning foreclosed properties to viability — were set into motion by Gov. Jennifer Granholm about 15 years ago, with the creation of the Michigan Land Bank Fast Track Authority Act.

This legislation, which was the first of its kind in the nation, granted the state’s land banks the legal power to purchase, hold and dispose of abandoned and rundown properties. To date, Michigan’s 40+ land banks have already demolished or rehabbed more than 7,000 of these sites.

But just how much of a difference has land banking made in our communities?

To answer that question for the Michigan Association of Land Banks (MALB), Detroit-based firm Dynamo Metrics recently partnered with Public Sector Consultants (PSC) to conduct an economic analysis of some of the state’s land bank authorities. Using the banks in Kalamazoo, Benzie and Calhoun Counties as the basis for a set of case studies, the research team set out to uncover the impact of these land banks on their cities and neighborhoods.

The study found, for example, that the Kalamazoo County Land Bank alone directly sent a staggering $20 million back into the local economy and brought nearly 270 full-time renovation-related jobs to the area. The Calhoun County Land Bank has rehabbed or demolished nearly 650 homes just in the last seven years. And the Benzie County Land Bank has increased neighboring home values by more than 4 percent, thanks to its intervention in 17 properties since 2002.

“This report validates what we have all known for years,” said Kelly Clarke, executive director of the MALB. “Land banks matter, land banks make a difference and land banks are part of Michigan’s comeback.”

Melissa Gibson, senior consultant
PSC’s Melissa Gibson (above) led the qualitative side of this research.

For another facet of this work, senior consultant Melissa Gibson and the PSC team conducted a statewide survey of MALB members, focus groups in the three counties and key informant interviews with the directors of the land banks in the three counties.

“The focus groups and interviews really contextualized a lot of what we were finding on the quantitative side of things, which is that land banks are enormously valuable to communities,” she said.

But there are areas to work on. The study revealed a lack of knowledge among the general public about the role of land banks.

“People feel so positively about what land banks offer to their neighborhoods, but there’s a need for public education so more people understand how they operate and what they do,” Gibson said.

Clarke agrees.

“We would love to see people rallying behind land banks,” she said. “There is so much potential to be harnessed that can be truly transformative for local communities.”

Also notable was the finding that, while responsible for a large swath of revitalization, land banks are chronically underfunded.

“For most communities, there’s no dedicated funding stream for land banks. Most have to make their own money through the sale of properties, while some get a small appropriation from a local general budget, rental income or grants,” said Gibson. “With more funding, land banks could spend more time with demolition and revitalization instead of working so hard to raise funds.”

Furthermore, current funding sources only cover the short term, making long-term planning difficult. It begs the question — if land banks can lift up entire communities, what could they accomplish if resources weren’t an issue?

“Sometimes even removing the smallest piece of blight feels like removing a scar. When a community looks cleaner and brighter, people care more and interest starts to build among people looking to invest economically,” Gibson said. “It’s very difficult to quantify that much pride and hope.