Funds will be drawn from last year's $25 billion settlement with nation's largest banks to help struggling homeowners
Attorney General Eric T. Schneiderman announced Wednesday that up to $20 million over two years - obtained in last year's settlement with the nation's largest banks - will be made available to communities to rebuild and restore neighborhoods hit hard by the housing crisis. Following the collapse of the housing market, the New York State Legislature passed legislation in 2011 establishing "land banks" that could acquire vacant, abandoned, or foreclosed properties, and choose to rebuild, demolish or redesign them. By restoring vacant or abandoned properties, land banks lower costs for local governments, benefit public schools, reduce crime and boost the local economy.
Since the passage of this legislation, however, no state or federal funds have been dedicated to any of New York's land banks. The attorney general announced the start of a competitive application process for land banks to finally receive funding and fulfill their intended purpose: reviving neighborhoods still recovering from the housing collapse and the ensuing foreclosure crisis.
"Through last year's settlement with five banks that contributed to the collapse of the housing market, we've provided roughly $2 billion in relief to homeowners throughout the state - but it's not nearly enough," Schneiderman said. "By dedicating money from that settlement to land banks across New York, we'll empower local communities to rebuild their own neighborhoods, house by house, block by block. The road to recovery is long, but it will take innovative approaches like this - driven and managed by those who know the community best - to boost local economies and finally put this crisis behind us."
Utilizing funds from the national mortgage settlement, the attorney general's office will invite competitive proposals from land banks to directly address the effects and aftermath of the foreclosure crisis. The eight land banks in New York state are located in:
Funding from the attorney general's office will be awarded in two rounds, which gives the office an opportunity to support land banks next year that may not be eligible this year.
The AG's camp said that, while abandoned and vacant properties depress property values, discourage property ownership, and attract criminal activities in the surrounding area, a land bank provides tools to quickly turn these properties back into assets that reinvest in the community's long-term vision for its neighborhood. Land bank programs act as an economic and community development tool to revitalize blighted neighborhoods and business districts. Land banks can benefit urban schools, improve tax revenues, expand housing opportunities, remove public nuisances, assist in crime prevention and promote economic development.
By transferring vacant and abandoned properties to responsible land owners, local governments benefit because they avoid the significant cost burden of property maintenance, like mowing and snow removal. In addition, local governments benefit from increased revenue because the new property owners pay taxes on the property. In turn, local schools benefit because they receive more funding when there is an increase in property owners in their school districts. Land bank programs can also increase the variety of mixed-income housing offered and provide more opportunities for affordable housing.
Land bank properties that become owner-occupied discourage criminal activity, benefiting public safety and decreasing the cost burden on the local police and fire departments. Finally, the more residents and businesses that occupy property in a neighborhood, the more services and amenities will be needed, which boosts local economic activity.