How The Cook County Land Bank Works To Streamline Chicago's Foreclosure Logjam
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CORRECTION, DEC. 14, 3:50 P.M.: Cook County Commissioner Bridget Gainer created the Cook County Land Bank Authority.
Real estate values have mostly rebounded from the Great Recession, but it is a different story in Chicago and Cook County. Home values in Chicago have risen, but still lag behind the national average. A contributing factor to this is the length of time properties are stuck in foreclosure. While the overall number of foreclosures has declined, the average time for a property to clear foreclosure increased to 970 days from 654 days in 2012.
Cook County government established the Cook County Land Bank Authority four years ago as a systemic response to the foreclosure crisis and to address the large inventory of vacant residential, commercial and industrial property in Cook County.
Working independently and through partnerships with municipalities and others, the Land Bank acquires properties, liens, notes or deeds through purchase, donation, forfeiture and other transfers. The Land Bank holds title and maintains these properties tax free and clears unpaid taxes and liens on the properties to sell them to prospective homeowners and developers.
Cook County Commissioner Bridget Gainer said there are neighborhoods on the south and west sides of Chicago and Cook County with buildings that were highly desirable, but were stuck in a lengthy court process too complicated for individual homeowners and developers to navigate. Those were falling into disrepair while accruing fines and back taxes.
Gainer, who has backgrounds in finance and community organizing, was chosen to start the Land Bank and immediately worked to streamline the legal process and clear properties. Once the Land Bank identifies a property for reactivation, it takes just under eight months to clear a property of all outstanding liens and bring it to market in a simple manner.
"We’re highly motivated to incentivize people selling homes for homeownership rather than as rental properties," Gainer said.
The Land Bank also works to clear commercial and industrial properties, and find buyers for those sites to spur job growth and tax revenue. Since the majority of the Land Bank's assets are on the South and West Sides, Gainer said the Land Bank has made a concerted effort to recruit smaller black and Hispanic buyers to cycle the money from property sales back into these communities.
While the Land Bank's initial focus was on clearing single-family homes, it has also made inroads to reactivate commercial and industrial sites. Executive Director Rob Rose said the organization targets commercial opportunities through scavenger sales. Approximately one-third of the Land Bank's current inventory is commercial. Gainer said commercial and industrial sites may be easier to reactivate if they are unencumbered from liens and free to acquire without a time-consuming legal process.
Rose said the Land Bank scouts these sites for potential buyers by looking at proximity to highways, rail, water and other public infrastructure. The Land Bank also targets developers who bring energy and imagination to reactivating a site. The Land Bank has completed industrial deals in Harvey, Bellwood and Chicago Heights.
For developers, time is money. The Bellwood deal involved a set of vacant warehouses. Gainer said the property was cleared of encumberances, put out to bid and the warehouses are now fully operational, employing over 100 people. Gainer said the deal would not have happened if the developer had to clear all encumberances on its own.
Four years in, the Land Bank is completely self-sustaining. The organization has generated $12M, and 94% of its operating budget comes from property sales. Rose said the balance comes from the Illinois Housing Development Authority in the form of reimbursable grants for demolitions. The Land Bank is also working with the Cook County Planning and Development Commission and the Metropolitan Water Reclamation District on strategic buyouts of flood-prone houses that involve developer fees.