“We need land banks everywhere.” Nate Howard, the Executive Director of Muncie Land Bank, has seen what positive changes can come from rehabilitating abandoned and vacant properties in his area. An empowered land bank can reduce blight and save taxpayers money, plus contribute to the supply of affordable housing. He noted that in Ohio, most counties have their own land banks. Why not have more in Indiana? Within the state, the closest land banks to Fort Wayne are in Muncie and Indianapolis.
“Where land banks really thrive, they are supported financially by the city, and the inventory they use comes through the county government. Where land bank legislation is more developed, a lot of those things are explicit in state law.”
Land banks acquire property that has become tax-delinquent, and in most US states, the county has jurisdiction over tax-delinquent property. When property in Indiana becomes tax-delinquent, it must go through the tax sale at least once, and this process can create conflict.
While the land bank model requires that buyers meet certain standards, there’s no vetting process for tax sale buyers. Anyone can, and does, buy up huge swaths of property, with serious consequences for the local populace. “You have this transfer of ownership from folks locally to non-local people.” Howard mentioned an out-of state investor whose purchase has had a huge impact on Muncie. “He bought around 140 properties that went unsold in the County deed sale for less than for $20,000 and he’s done nothing with them since 2019. About a third of these properties have become tax-delinquent again. Neighbors and the City have had to maintain them, including mowing. He claimed he was going to build affordable housing, but instead, he has been attempting to sell the properties back to Muncie residents at exorbitant markups.”
Since 2011, about 8,000 properties have cycled through Muncie’s tax sale, and some have gone through it multiple times. “All the while, they continue to deteriorate and lose value. The tax sale has accelerated the process of property that was once part of our affordable housing stock being turned into rentals, and then worse and worse rentals. The last people who are buying these properties from the tax sale are people who have little intention of putting any investment into the property, and they’re generally just trying to extract a little bit of rent, get the last useful life out of the house.”
Howard has suggested a different approach to managing tax-delinquent properties. “What we want to do is have an agreement with the county, basically for whatever property doesn’t sell, for the land bank to have the first right of refusal.”
Land Banks Can Increase the Housing Supply
Land banks aren’t in the business of housing development, though they are connected to housing developers and can play a role in increasing a community’s housing supply. Land banks clean the property, both physically and legally, so that it can be offered for sale. Nate Howard described this process as, “Acquire property, clean it up as best as possible, get rid of encumbrances, liens, civil penalties, and get it into a state where it’s palatable for somebody.”
These rehabilitated properties can be lived in, used, or developed, according to the rules set up by the land bank and the local government. The rules of who can and cannot buy the rehabilitated property are important, especially if a community wants to have more local families and fewer speculators buying them. Ideally, buyers are required to show that they are making a long-term investment, not just in the property, but in the community.
Howard emphasized that land banks also need to provide site control of an area, which starts with obtaining property that other entities, such as area nonprofits and local developers, may want to acquire and develop. Coordinated development happens when the land bank and other housing developers concentrate their work in particular neighborhoods. For example, Muncie Land Bank’s efforts are currently focused on the Old West End neighborhood between Muncie’s downtown and Ball State University.
Site control includes being a responsive owner. The land bank pays taxes that may be owed, takes care of the property, boards it up as needed, and clears encumbrances, liens, and civil penalties. This allows the land bank to maintain a property so it doesn’t further deteriorate, and secure it so that it doesn’t cause problems in the neighborhood. Eventually, with the right inputs, the land bank’s property can become an asset again.
“For the well-being of Muncie, it would be great if we gained site control of certain areas because if we don’t, through the county auction system, those properties are getting into people’s hands that have no interest in the development. They’re speculators. You just have LLCs that have parcels here, parcels there. That tends to be exploitative and chaotic.”
He also emphasized that planning and ground rules set the tone for how, and if, a land bank will thrive, explaining that Muncie Land Bank has been through a few iterations. Muncie’s first attempt was discontinued when a new administration took power, while the second was more of a Band-aid measure that was the incubator for the development of appropriate rules and procedures, but not supported by actual state code. The current third version of Muncie Land Bank, launched in 2017, “was formed under state law under state ordinance,” and it has had more staying power because its policies are protective of the local community. “A professor from Ball State, John West, who is Chairman of the Urban Planning Department, along with collaborators Zane Bishop, Brad King, and Heather Williams, understood what land banks were and did the hard work creating policies and safety measures, with help from other folks.”
Muncie Land Bank’s policies mirror those of other effective land banks in the US. They have rules about who can and cannot purchase property. Their online auctions start at the beginning of each month and end on the last day of the month. Their Acquisition and Disposition Committee reviews the bids and the applicants.
In many cases, the land bank sells property to its adjacent owner. If a potential owner plans to build on the property, they are asked to provide proof of financing and work plans if their bid is considered. The committee considers criteria such as if the bidder lives locally and wants to build a house to live in rather than sell. They aren’t interested in bids from people outside the Muncie area.
The committee also paired houses with do-it-yourselfers to create a winning combination: homeowners who rehab homes. Howard explained, “We acquired seven houses in July 2022. Two were demolished, and the other five we sold to local do-it-yourselfers. People that might not be comfortable seeking a housing loan, but they had a job, and they had skills. They’re not afraid to get in there and work, and it made sense economically because they were going to live in it. They weren’t going to flip it.”
Their efforts to pair local families with homes include PathStone’s Home Acquisition Rehab Program (HARP), which provides down payment assistance and homeownership education to first-time homebuyers. Qualifying buyers earning 80 to 100% of Area Median Income (AMI) can buy a home anywhere in Muncie, while those who earn more than 100% of AMI can buy a home in the low-income tract census area only. These guidelines have been put in place to create mixed income housing.
“We, the land bank, are trying to acquire structurally sound abandoned properties. We acquire a property, secure it, and then do some major improvements to seal it up. Then we hold that property for these HARP buyers. Our goal is to recoup 80% of what we have in it,” Howard explained.
Recently, Muncie Land Bank has partnered with Intend Indiana to increase the supply of affordable housing in Muncie by 25 newly-built homes and 10 rehabs concentrated into a two-block radius in the Old West End neighborhood. The land bank provides site control to the areas Intend Indiana develops there.
Both Muncie Land Bank and Intend Indiana judge their success or failure based on a long-term perspective, because they are investing in housing through a variety of sources. Support from nonprofits, plus local, state, and federal grants, allow them to offer homes for sale for less than those homes cost to build or buy and renovate. The owners receive a lot of equity up-front because of this investment, and that’s why the organizations must ensure that the owners are committed to that home as well as the surrounding neighborhood and community. “Maybe it’s not immediately profitable, but on the larger scale, when you think of the neighborhood, the city, or the county, over time things become very profitable. We’re going to make a huge impact and hopefully that’ll start to work its way into the whole neighborhood.”
Urban planning students at Ball State University are part of this project as they inventory, map, and gain understanding of various Muncie neighborhoods. They are also looking for opportunities to create homeownership opportunities for locals in historically redlined neighborhoods. Nate Howard said, “Land banks have an opportunity to really participate as a tool for racial equity because so many of the areas that have historically dealt with abandoned and distressed property have been systematically neglected.”
Intend Indiana is associated with the Renew Land Bank in Indianapolis, Affordable HomeMatters Housing Development (which helps buyers with low to moderate incomes obtain homeownership), and two lending organizations: Build Fund for small business lending, and Edge Fund for affordable housing lending. They offer homes for sale in Indianapolis.
Renew Land Bank was established in 2014, and they estimate that 33% of their sales were used for affordable housing development between 2014 and 2022. By sharing advice, managing processes, and coordinating other support through partnerships with local governments and community organizations, they work with communities that are interested in setting up land banks throughout Indiana.
Jeb Reece acts as Intend Indiana’s Associate Director of Land Banking and Strategic Planning. “Land banks can create programs and policies that reflect the goals of their local community, including prioritizing homeownership and affordable housing development. Our policies additionally prioritized homeownership and provided preference towards individuals who wanted to rehab a previously abandoned house as their home. To help provide flexible financing to small contractors and local developers, Build Fund, another initiative of Intend Indiana, created a loan product called BuildSmart. BuildSmart was intended to be paired with contractors and developers who purchased property through the Renew Landbank, helping to provide financing, redevelop vacant property, and foster small business growth.” He and his teammates brainstorm with people who run and set up land banks, introduce them to community development corporations and nonprofits who support affordable housing, provide insight into Indiana state laws, and help create land bank policies, procedures, and rules.
Reece emphasized that no two land banks are the same. “Programs are unique because each community has their own challenges and their own goals.” Some land banks privately acquire the properties, while others go through their county. Others acquire properties after tax sale properties are transferred to the city.
State and local laws can empower land banks, and he cited Ohio as an example. “Ohio funds all their land banks. They dedicate anywhere between $75M and $250M for land banking across all Ohio counties. That’s not the case here. It’s very different.”
Reece is familiar with Fort Wayne through his work. “Even though it’s a very strong economy there, there’s still definitely a need for land banking outside of downtown and in other places in Allen County. A land banking program could fix a lot of the challenges that Fort Wayne neighborhoods are facing. For low to moderate income buyers, between 80 to 120 percent AMI, homeownership is out of reach for those people. There are a lot of creative ways for local governments to be involved, whether it be through land banking or other programs.”
Land Bank Considerations in Fort Wayne
The local nonprofit community had the impetus to start researching whether or not, and how, to establish a Fort Wayne land bank, and the City has been part of that conversation.
Though northeast Indiana does not have a formal land bank, the City owns many residential lots. Some have already been used to build Habitat for Humanity and Innovative Housing Showcase homes to increase Fort Wayne’s housing stock.
Creating a land bank in northeast Indiana would formalize an official framework for similar efforts in the future. A local land bank—with rules that favor locals over investors—could provide long-term benefits for our area. Fort Wayne’s local universities could become involved as well, perhaps to review historically redlined neighborhoods and revitalize areas of Fort Wayne without tipping them into gentrification.
With examples like Muncie Land Bank, and help from organizations like Intend Indiana, local nonprofits and officials have a roadmap to follow when and if a local land bank is created.
