$20 million worth of fines against Morgan Stanley and Goldman Sachs for illegal and unethical banking practices that helped cause the economic collapse of 2008 are now available to purchase, renovate, and reuse vacant and blighted properties around New York state.
On November 2, 2016, New York State Attorney General Eric Schneiderman said that $20 million will be offered to community land banks to acquire and rehabilitate vacant buildings.
The new funding will be administered by Local Initiatives Support Corporation (LISC) and Enterprise Community Partners, Inc. (Enterprise), for New York State land banks that are working to protect homeowners and neighborhoods across the state by acquiring blighted homes and transforming them into community assets.
Since 2013, A.G. Schneiderman has provided more than $33 million to land banks with funding secured through settlements with the nation’s largest banks over misconduct that contributed to the housing crisis. This latest funding, made possible by settlements announced earlier this year with Morgan Stanley and Goldman Sachs, will be offered through a competitive Request for Proposals to the state’s original 10 land banks, as well as the newest eight land banks which have formed in the last year and which are located primarily in rural communities throughout upstate New York.
This latest round of funding comes as a new report from the A.G.’s office finds that the $33 million invested in the state’s original 10 land banks since 2013 has resulted in substantial benefits for homeowners and communities. In the past three years alone, these land banks have:
- Reclaimed 1,995 properties from abandonment and blight;
- Returned 701 properties to the market and put them back in productive use;
- Demolished 409 unstable structures.
By stabilizing, renovating, or demolishing formerly blighted properties, the New York State land banks are saving an estimated $19 million in property value for surrounding homes, according to estimates by the A.G.’s office. This estimation is based on the average housing density and property values for the counties covered by each land bank, and on a study of property value loss for homes within 500 feet of blighted properties.
“New York’s land banks have successfully empowered communities across the state to rebuild and revitalize neighborhoods hit hard by the foreclosure crisis,” said Attorney General Schneiderman. “I’m proud that the funding my office helped secure this year in settlements with Morgan Stanley and Goldman Sachs will now make it possible to support nearly double the number of land banks across the state, and deliver much-needed support to homeowners in New York.”
“The Land Bank Community Revitalization Initiative is a critical tool to revitalize distressed communities, and Enterprise is proud to be a partner to the New York State Office of the Attorney General on this important program,” said Judi Kende, Vice President and New York Market Leader, Enterprise. “These revitalization efforts will not only create and preserve vital housing, but will also bring growth and opportunity to areas that have been most heavily affected by the foreclosure crisis, breathing new life into communities across New York State.”
“Attorney General Schneiderman should be commended for funding land banks that made formerly blighted homes available to New Yorkers who need them,” said Denise Scott, LISC’s executive vice president for programs. “And now we’re excited to be part of the next phase of distributing $20 million for repurposing more distressed housing.”
“The efforts of every level of government are necessary if we are going to overcome blight in the Capital Region,” said Albany Mayor Kathy M. Sheehan. “This additional $20 million in statewide funding from Attorney General Schneiderman’s Office will help us to continue combatting the negative impact of vacant and abandoned properties in Albany and across the state.”
“Block by block and street by street, Albany County is working closely with Attorney General Schneiderman to rebuild our communities,” said Albany County Executive Daniel P. McCoy. “I want to commend him for working with the Albany County Land Bank to transform blight into thriving neighborhoods. The county has invested $1.5 million into the Land Bank so far and together we can bring new life and hope into the county.”
“Attorney General Schneiderman continues to help fight blight in Binghamton neighborhoods and across the State of New York,” said Binghamton Mayor Richard C. David. “His support of land banks has created key partnerships to focus resources and assist community revitalization. We are thankful for A.G. Schniederman’s commitment to the City of Binghamton and Southern Tier. The impacts are clear.”
“The Community Revitalization Initiative has given a significant boost to our Land Bank’s efforts to combat abandoned, blighted houses in communities across Erie County,” said Erie County Executive Mark Poloncarz. “With Attorney General Schneiderman’s help, more such houses are being rehabilitated and returned to the tax rolls, improving our neighborhoods and boosting property values. Our successes are building every year, with more communities seeing the positive effects of the Land Bank and how it can turn around neighborhoods one house at a time.”
“The Rochester Land Bank is a win-win for our community,” said Rochester Mayor Lovely Warren. “Thanks to Attorney General Schneiderman’s commitment to our communities, we have been able to return 74 abandoned properties to productive use, making our neighborhoods safer and more vibrant and helping our residents gain access to jobs and educational opportunities.”
“I want to thank Attorney General Schneiderman for his help in Schenectady and other communities across the state deal with blighted and distressed properties,” said Schenectady Mayor Gary McCarthy. “These buildings drive up municipal costs and have such a detrimental effect on our neighborhoods. His leadership is helping remove blight and creating homeownership opportunities that create real value in our neighborhoods.”
“We are grateful to Attorney General Schneiderman for funding the important work of the Suffolk County Landbank Corporation,” said Suffolk County Executive Steve Ballone. “This has enabled the County to work with the Land Bank to ensure that tax delinquent and environmentally contaminated brownfield properties are cleaned up and re-developed to boost the local economy. The Land Bank is also helping to create affordable homeownership opportunities in the county by acquiring and rehabilitating vacant, bank foreclosed homes.”
“The Syracuse Land Bank has made a demonstrable difference in the City of Syracuse,” said Syracuse Mayor Stephanie A. Miner. “Where neighborhoods once had blight, they now have hope. I appreciate the work of the staff of the Syracuse Land Bank and the commitment of Attorney General Eric Schneiderman to supporting the quality of life in cities across New York.”
During the decade of the housing boom and bust, from 2000 to 2010, the number of vacant properties in New York State increased 27%. Following the collapse of the housing market, the New York State Legislature passed a law in 2011 establishing land banks — nonprofit organizations that can acquire vacant, abandoned, or foreclosed properties and 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 local economies.
However, the legislation that authorized land banks in New York did not provide funding for them. Attorney General Schneiderman launched the Land Bank Community Revitalization Initiative to fill that gap and allow land banks to fulfill their purpose. Since 2013, the A.G.’s office has dedicated $33 million to fund that initiative. In 2014, the Attorney General’s bill to expand the number of land banks from 10 to 20 was passed by the Legislature and signed into law by the Governor.
Abandoned and vacant properties depress property values, discourage property ownership, and attract criminal activity, but land banks provide 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 distressed 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, such as mowing and snow removal. In addition, local governments benefit from increased revenue because the new owners pay taxes on the properties. In turn, local schools benefit because they receive more funding when there is an increase in the number of 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 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.
The Attorney General’s office has partnered with Enterprise Community Partners to assist with the oversight and management of the Land Bank Community Revitalization Initiative. Enterprise is a national affordable housing nonprofit with more than 30 years of experience creating and advocating for affordable homes in thriving communities.
Applications are due on November 30, 2016, and award notifications will be made by December 2016.