Stark County officials were on the verge this summer of starting a county land bank that would have the authority to take over abandoned, decaying properties and fix them up or transfer them to someone who would rehabilitate them. But the Ohio Supreme Court’s reinstatement of Gary Zeigler to the county treasurer’s job has derailed the project.
Stark County has more than 14,000 vacant homes, or nearly 1 in 12. That’s up nearly two-thirds since 2000, according to census data.
The number of foreclosure filings has more than doubled in the last decade, to about 2,500 a year.
And Canton city officials estimate that the number of abandoned or neglected properties that city workers mow has grown more than five-fold in the past five years — to 4,800.
The numbers describe deteriorating neighborhoods. It was fear of spreading blight that prompted former county Treasurer Alexander Zumbar and officials at the nonprofit Community Building Partnership of Stark County to embrace a relatively new concept in Ohio.
A county land bank.
A Stark County land bank, modeled after the one in Cuyahoga County, could take over tax-foreclosed properties whose owners could not be found. It also could receive nearly worthless foreclosed parcels from lenders at little or no cost. It could demolish or rehabilitate homes to revitalize crumbling neighborhoods and transfer properties to nonprofits and developers.
The Community Building Partnership started working last spring with Zumbar to establish a land bank.
By June, after getting positive feedback from county commissioners, Zumbar was preparing paperwork to set up a land bank. Then the Ohio Supreme Court made a ruling that derailed the project.
The court said commissioners acted improperly last year in removing Democrat Gary Zeigler as county treasurer after his chief deputy stole nearly $3 million from the county treasury. Zumbar, elected in a special election after Zeigler’s ouster, was no longer treasurer.
“It could have been up and running by now,” Zumbar said of a land bank. “Does this benefit the county at a time when we need every single tool in our arsenal to engage economic development?”
Now at least one county commissioner, Janet Weir Creighton, is “hesitant” to approve establishing a land bank.
“It’s really been put on the back burner,” said Creighton, who, like Zumbar, is a Republican. “I like the concept, but I have to have confidence in those involved.”
Even if Zeigler weren’t an issue, the land bank idea faces other obstacles. Commissioners are consumed with county financial problems and show little appetite for pushing the land bank. School districts, the biggest recipients of property taxes, may oppose it.
It’s also unclear if commissioners would approve a key funding source: diverting 5 percent of revenue from delinquent property tax payments, as is permitted by law, to a land bank. That money would be on top of the 5 percent that already goes to the county treasurer and prosecutor to pay for collecting back taxes. It’s money that now goes to school districts and local governments.
LAND BANK HISTORY
In late 2008, as the number of foreclosures and abandoned properties in Cuyahoga County climbed, the Ohio General Assembly passed Senate Bill 353.
Page 2 of 4 - The new law allowed Cuyahoga County to establish a land bank to acquire properties for up to two years and transfer them clear of all tax liens to other owners to develop them. The Legislature later extended land bank authority to the state’s bigger counties, including Stark, and lifted the two-year limit.
Then-Cuyahoga County Treasurer Jim Rokakis, who lobbied for the measure, said the concept was based on a land bank established in 2002 in Genesee County, Mich.
The new law sought to address the problem of abandoned parcels with decades of accumulated back taxes that exceeded the properties’ value. Generally, by law, a buyer has to pay all back taxes and assessments.
Here’s how the land bank works:
When the county forecloses on a property due to unpaid taxes, and if no owner contests the foreclosure judgment within 45 days, the county board of revision can quickly transfer the property to the land bank without a sheriff’s sale. All owed taxes and liens on the property are eliminated, and the land bank does not have to pay property taxes while it holds the property.
Cities, villages and townships may claim a tax-foreclosed property for themselves, claiming priority over the land bank.
Rokakis said by being just behind municipalities and townships in line to take tax-foreclosed properties, the Cuyahoga County land bank virtually stopped speculators from buying abandoned, foreclosed properties for a few hundred dollars and then selling them for slightly more.
The speculators, or flippers, usually did not pay property taxes or maintain or rehabilitate the properties, which sank the value of neighboring properties and attracted vandals and other criminal activity, resulting in more foreclosures and abandonment, Rokakis said.
The Cuyahoga land bank also got foreclosed properties worth less than $25,000 that were donated or sold for a nominal fee by federal loan guarantors such as Fannie Mae and the U.S. Department of Housing and Urban Development, as well as banks. The lenders were eager to avoid the tax and maintenance expenses from worthless properties.
Fannie Mae has reimbursed the land bank $3,500 per property for demolition, which can cost $7,500, while some banks have paid part or all of the cost, said the land bank’s president, Gus Frangos, who heads a staff of about 20.
Frangos said the land bank has acquired more than 1,000 mostly residential properties in Cuyahoga County, demolished structures on about 400, rehabilitated some homes and given or sold a few hundred properties to cities, developers, individuals and nonprofits. The land bank gets about $7 million a year in revenue, most of it from delinquent property tax interest and penalties.
Because it can cost $3,500 a year to mow and maintain the properties, the land bank tries to dispose of the properties quickly, said Frangos. But buyers have to agree to upgrades as specified in a written agreement or ownership reverts to the land bank.
Page 3 of 4 - The land bank has given properties to churches to be used as parking lots, South Euclid to use as a community garden, the Cleveland Clinic for expansion and Cuyahoga County for a segment of the Towpath Trail.
Proponents say it’s easier to market properties for development if they’re clear of tax liens and if the land bank holds many adjoining parcels.
Frangos said it could be 10 to 20 years before the Cuyahoga land bank can fully restore to productive use the county’s estimated 30,000 low-value residential and commercial properties.
“This is going to take a real root canal,” he said.
LAND BANK IN STARK?
Cuyahoga County’s new charter government eliminated Rokakis’ job as the elected treasurer at the end of 2010. Since then, he has advised Ohio counties — for a fee — on how to set up land banks.
So far, Lucas, Trumbull and Mahoning have started them, he said, while Erie, Montgomery and Hamilton counties are in the process of doing so.
In April, a Canton-area nonprofit, the Community Building Partnership, spent $7,500 to hire Rokakis. He has made multiple presentations in the county, including to Stark County Commissioners Creighton and Thomas Bernabei.
“This is a way for the community to ... retake the property and clean it of its tax liens and make it available so it can eventually make it onto the (tax) rolls as an income-producing property ... rather than just sitting there in the neighborhoods, continuing to decline, being a source of criminal activities,” said Joel Owens, the nonprofit’s director.
He said the group’s board plans to urge commissioners to establish the land bank in spite of Zeigler’s reinstatement.
Stark County has about 1,400 residential parcels whose owners owe more in delinquent property taxes and assessments than the parcels are worth, according to the Stark County Auditor’s Office. Zumbar said some properties have back-taxes dating to the 1940s.
To save expenses, Zumbar had envisioned himself, treasurer’s office employees and volunteers running the land bank’s day-to-day operations. But Creighton said she would not support Zeigler having such a role. His term as treasurer ends in September 2013.
Bernabei, in a statement, said that land banking is a “program worth exploring,” and that the “Treasurer’s office is the logical place in County government to administer this program.”
But, Bernabei wrote, all work on the proposal had stopped due to Zeigler’s reinstatement and the commissioners’ preoccupation with the county’s precarious financial situation.
“Land banking is not an immediate priority,” he wrote. “Land banking does not provide a solution to any of Stark County’s very deep financial problems.”
Stark County Commissioner Peter Ferguson said he was out of town on the day of the presentation. He declined to comment on whether he would want Zeigler to run it.
Page 4 of 4 - Zeigler declined to be interviewed but emailed a statement: “The Treasurers office will do everything we can to help this project succeed, but we also need the help of other officials, Auditor, Prosecutors, Sheriff, Clerk and Commissioners.”
Zeigler said he would speak with officials in counties that have land banks and then would present a plan to commissioners.
In response to Creighton’s comments about him, Zeigler wrote that she should look at the millions in delinquent taxes his office had collected and that a land bank is about obtaining more tax revenue for the county, schools and subdivisions.
Rokakis said the law allows commissioners to set up a land bank where the treasurer doesn’t run it. While the treasurer gets a seat on the land bank’s board, the commissioners and other members on the board could out-vote him.
In Hamilton County, Rokakis said, the Port Authority staff will run the land bank because the treasurer didn’t want to.
However, state law says it’s up to the treasurer to incorporate the land bank and request that commissioners approve using interest and penalties on late tax payments to fund it.
Because a land bank takes properties off the tax rolls at least temporarily and wipes out tax debts, some school districts have initially been skeptical about the concept.
Mary Jo Shannon Slick, attorney for the Stark County Educational Service Center representing local school districts, said her clients would not welcome the possible loss of revenue.
“Whoever buys the property will eventually have to pay the taxes,” she said. “One day, someone will buy that piece of property.”
Owens’ counter: “It’s unrealistic to think that all those back taxes are going to be paid.”
Slick, again: “Perhaps if someone could explain this to us, we could change our minds. ... If it makes sense for the kids, then my clients may well agree to it.”