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Estate Sale

Representatives from the nation's most successful land bank meet with local leaders.

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Several weeks after it was approved by the Shelby County Commission, media outlets were still receiving letters about Harold Buehler's $12 million proposal to build 125 rental homes in North Memphis.

The developer acquired the land through the county's Homestead program, which lets people buy tax-foreclosed property for a small application fee. Buehler argued that the development would get the vacant property back onto the tax rolls, but members of the community wanted a more comprehensive plan for the parcels.

The controversy could be a textbook case for a national discussion: Is it better to get vacant property back on the tax rolls as quickly as possible or is it better to dispose of it strategically?

"Most urban areas are having this problem, whether it's because of the foreclosure crisis or aging infrastructure," says Beth Flanagan, director of the Memphis Medical Center. "Everyone realizes that blighted property is an issue."

Last week, the Memphis Medical Center brought members of the Genesee Institute to Memphis for meetings with Memphis mayor A C Wharton, Memphis housing and community development director Robert Lipscomb, environmental court judge Larry Potter, Memphis City Council chair Harold Collins, County Commissioner Henri Brooks, and Shelby County land bank administrator Tom Moss, among others.

The Genesee Institute grew from the nation's premier land bank program in Flint, Michigan, and was established to provide assistance to other jurisdictions interested in establishing land bank programs or reforming their foreclosure process.

"We wanted to give our key leaders a sense of what a robust land bank authority could do for our city and county," says attorney Steve Barlow. "This is an urban problem that is bourgeoning out of control."

Last June, Barlow and Flanagan attended the National Vacant Properties Campaign, an event where Genesee County Land Bank chair Dan Kildee spoke.

"The medical center has nine major goals," Flanagan says. "One is a focus on the neighborhood and dealing with neglect in the medical center on a long-term basis."

The county always has about 3,000 vacant properties at any time that are ready to be sold. That number includes single-family homes, multi-unit dwellings, and commercial property.

Each year, the land bank sells about 200 to 300 properties and generates about $1 million.

In Michigan, a state law gave land-banking authority to cites and counties. They then created separate governmental entities — similar to the local public building authority — to deal with blight.

"The land bank up there is in the driver's seat," Moss says. "They decide where redevelopment opportunities are. They collect the fines and fees that the trustee here collects. They've got the ability to leverage property."

To do so, the Genesee County Land Bank has a variety of programs that deal with brown fields, side lot transfers, foreclosure prevention, and housing renovation.

"So many groups try to take pieces and make a difference, but when you try a piecemeal solution, it doesn't work," Flanagan says.

If one of the problems locally is that there is no comprehensive agency dealing with problem properties, another is that no reputable title company will issue title insurance for a property that has gone through the county's tax-sale process, leaving thousands of lots virtually worthless.

The lots cannot be used in redevelopment projects or sold, because the previous owners can still try to claim them.

"It's a real challenge to our community to have so many thousands of lots locked into limbo because of their title status," Barlow says. "If a property had a tax sale in its title history, I would advise my clients against purchasing it."

Based on the response to the Genesee meetings, vacant property doesn't mean worthless property.

Barlow says one of the encouraging things was that the area already has many of the tools needed to address the issue. It just has to use them.

And though the sheer volume of vacant property can be somewhat overwhelming, Barlow says it's a finite — and solvable — problem.

"You can identify all the vacant properties, put them on a chart, and work it down," he says. "The biggest challenge is the volume."

The first steps are already being taken. The Genesee Institute is expected to issue a report with recommendations from their visit, and the Shelby County Commission's upcoming legislative agenda includes lobbying the state government for a better way to clear the titles of tax-sale property.

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