As city officials weigh the possibility of establishing a land bank in Charleston, the Strong Neighborhoods Task Force learned about efficacy of the only existing land reuse agency in West Virginia.
Christal Perry, chief administrator for Huntington's land bank, gave a presentation to the task force on Wednesday outlining the program's successes and shortcomings.
Land banking has been discussed sporadically among Charleston officials for half a decade now, though it's unclear what the next step will be in making it a reality.
Huntington's land bank, established in August 2009, got off to a rocky start when it sought right of first refusal at annual property tax sales, which would give the entity the power to bid on delinquent properties prior to a public auction through Home Rule.
"We found out county tax sales were one of the major contributors to slum and blight," Perry said.
A group of attorneys promptly filed a lawsuit against the city, and the Cabell County Sheriff's Office refused to accommodate the land bank.
Despite being required to compete with investors at tax sales - many of whom have no intention of renovating the properties they buy - Huntington's land bank has made a noticeable impact on the city's derelict structures.
Land banks are tax-exempt and don't have the power of eminent domain, but once they take a property title after giving the owner 18 months to redeem, there's no requirement to put a property out to bid or hold another auction.
"When a land bank has the property, it's in the city and county's best interest that we turn it over to a tax-paying individual as soon as possible," Perry explained. "But we also have to make sure they're going to do the right thing with the property ... we can deny a bid if it doesn't fit within the scope of what we want to see in the city [as] being productive, or if we know the property owner has seven other properties on our condemned [building] list."
To date, the Huntington Land Bank has bought more than 1,000 delinquent tax liens.
It currently maintains 132 properties and has returned another 137 back into use through selling and renovations, demolitions and other tools such as side yard expansions for neighboring homeowners.
Properties that were once neighborhood blights are being transformed into single family homes, senior housing developments, housing for homeless veterans and urban gardens for local youth, Perry said.
The land bank has overseen more than 40 demolitions of structures that were unfit for renovation.
"In one year, we put an estimated $45,000 back into property tax revenues," Perry said.
But Charleston's challenges slightly differ from Huntington when it comes to tax sales.
Perry said she sees a high number of investors from other states who purchase liens at Cabell County tax sales, sometimes paying 10 times more than the taxes due on a property.
"They have really deep pockets ... and the other local flippers - guys we know that do good - they can't compete," she said.
In West Virginia, an investor who buys a lien can collect up to 18 percent interest if the owner redeems the property. The high rate of return makes the sales an easy way to make a profit.
"Last year, one of our big outside investors purchased $330,000 worth of tax liens at an auction," Perry said. "They took deed to three properties. So they made out quite well on that sale."
Shawn Means, executive director for Habitat for Humanity of Kanawha and Putnam Counties, said that's not been the case at the tax sales he's attended in Kanawha County.
"At the sales I've been to, there isn't a lot of competitive bidding except for select properties people have their eyes on. Most of them are sold for taxes, and people just buy them sight unseen," Means said.
If a land bank was established beneath the umbrella of Charleston's Urban Renewal Authority, it could also be limited to operating within the authority's established boundaries, which are far more limited than Huntington's urban renewal boundaries.
Huntington's land bank isn't self-sustaining, which raises questions about how Charleston would fund such an entity.
When it was being formed, First Century Bank granted Huntington's land bank a $1.5 million line of credit to purchase tax liens. It also receives $30,000 annually from Community Development Block Grants, Perry said.
The land bank funds two full-time employees.
"What we need now is a funding source," Perry said. "We rely solely on our assets...it's hard to do anything when you're constantly going back and forth."
While the land bank doesn't always make a profit off the properties it sells, "it's more important for us to see the property get reused than making a lot of money off of it," Perry said.
The task force will continue discussions on how to proceed with establishing a land bank in Charleston at its July meeting.
Reach Elaina Sauber at elaina.sauber@wvgazettemail.com, 304-348-3051 or follow
@ElainaSauber on Twitter.