When Urban Renewal Comes Up Short
Flint, Michigan, isn't a name often associated with fads or trends, unless you're thinking about urban decline or crime (by some rankings it is America's most dangerous city).
But when heavy machinery ripped apart a derelict home yesterday, the first of 1,600 slated for demolition, Flint took its place as one of more than two dozen cities turning to a legal device known as a public land bank, with the aim of sparking a rebirth.
Yet if the record of past land banks holds true, Flint -- along with Macon, Georgia and Philadelphia and Syracuse, New York, to name a few -- should keep their expectations in check.
The land bank idea sounds appealing. Abandoned houses are like Miracle-Gro for blight. They drag down property values of nearby homes; are magnets for criminals and arsonists; and require cities to spend money on policing and fire-fighting at a time when the properties no longer generate tax revenue. By removing the fuel for urban rot, the decay is slowed or stopped. That opens up the opportunities for redevelopment.
A land bank, a legal authority usually created by a city once the state passes enabling legislating, is seen as a central tool in the process. It acquires the properties, usually through foreclosure for failure to keep up with tax payments. Then it tries to resolve any issues concerning titles and liens and assembles parcels into larger blocks that might appeal to real estate developers.
Makes sense, right? So why have public land banks in the past produced so little in terms of urban renewal?
The simplest answer is, of course, demographics. The cities that have turned to land banks are fighting inexorable population flight. Flint, the birthplace of General Motors Co. 105 years ago, has lost almost half its population since 1970. Philadelphia, which is getting a land bank up and running, has lost 21 percent in the same period. Today the city has 500,000 fewer people than it did in 1950.
Perhaps no city has endured a more crushing population loss than St. Louis -- down 63 percent since 1950 and still falling. The city also is home to one of the older land banks in the country. And since its land bank was created in 1971, what does St. Louis have to show for it? The bank now owns about 1/10th of the city's roughly 100,000 tracts of land, almost all of it vacant.
What's puzzling is that the city, over the decades, decided not to list as many as 5,000 of the land bank's parcels for sale, according to research by Audrey Spaulding, a scholar who studied St. Louis's redevelopment efforts and now works at the Mackinac Center in Midland, Michigan, which advocates free-market policy solutions. Even more bizarre is that offers on as many as 2,200 plots were rejected. Many were being held off the market in hopes of attracting large-scale redevelopment projects, according to Spaulding.
Spaulding sees evidence that political favoritism played a part in some instances when parcels were sold. And why should anyone be surprised? St. Louis's land bank, like those now being set up in other states, allows the local city council to have a role in how property is disposed of. As for the large-scale redevelopment plans, one or two projects -- including the city's famed Gaslight Square district -- are still works in progress. Of a larger possible project on St. Louis's north side, local wags joke that the city has simply found someone else to cut the grass and weeds on the empty lots.
If land banks are going to work, and it's far from certain they will, they should be committed to replicating the organic development that created the country's once-great industrial cities. Most cities grew piece by piece, with population and businesses expanding hand in hand, and expansion of one leading to gains in the other.
As for trophy redevelopment schemes -- be skeptical. They may never come to fruition. A corollary of that is when a buyer makes an offer, take it, even if it's a low-ball price. A higher bid may never arrive. And if the buyer can't make a go of it and the land reverts to the land bank, what's the loss? If the land is cheap enough, people and businesses might follow.
Perhaps most of all, deny elected officials veto power over who can buy a parcel. The potential for trading favors can't be eliminated, but it can be held in check.
(James Greiff is a Bloomberg View editorial board member. Follow him on Twitter.)