Fighting Blight: Western New York's Land Bank Program Kicks into Gear

Erie County Executive Mark Poloncarz stood in the living room of a newly-refurbished house in his hometown of Lackawanna late last week to announce that the yellow-brick ranch on Abbott Road was set to hit the market.

The house, which just months earlier was a mess, with heavy water damage and a basement cluttered with boxes, blankets and bags of the former owners possessions, is one of the first homes to be fixed up by the Buffalo Erie Niagara Land Improvement Corporation, Western New York’s land bank established in 2012 as part of a statewide initiative. 

Acquired through a foreclosure on back taxes, the home was refurbished by local trades workers contracted by the land bank at a cost of around $45,000. Now the home is to be sold to a low-to-moderate-income family as part of the program, and county officials expect to get upwards of $90,000 back.

Before the land bank was established the home would likely have seen a wrecking ball—paid for with tax dollars—and would have left an empty lot, devaluing the surrounding properties, Poloncarz said. 

“This is not the type of building you want to see demolished,“ said Poloncarz, flanked by his deputy county executive, Maria Whyte, who chairs the land bank’s board of directors, the land bank’s executive director, Jocelyn Gordon, and Lackawanna Mayor Geoffrey Szymanski.

Buffalo and other upstate cities have for years struggled with issues related to vacant, abandoned homes—a result of steady population loss with many people moving to the suburbs and other parts of the country over the decades. The city of Buffalo, despite demolition policies that have seen hundreds of homes brought down year after year, still has thousands of vacant and abandoned properties.

The problems also plague many first-ring suburbs, like Lackawanna, where 37 homes have been demolished on the taxpayer’s dime since Szymanski took office in 2012.

A major stressor with abandoned homes is the lengthy timetable for banks to complete the foreclosure process, with some homes sitting in limbo for years, often left to be pillaged for scrap metal and falling into serious disrepair, with neither the banks initiating foreclosure proceedings or those being foreclosed upon claiming responsibility for the upkeep.

In addition, banks will often cut their losses in what is known as an abandoned foreclosure, reverting ownership of the property to the original owner. The lending agency is only required by law to send notification of the vacated foreclosure to the address tied to the mortgage, meaning that the owners often do not know that they still own the property until they are tracked down by housing court and stuck with a list of violations or a bill for the demolition.

The land bank, one of eight established across the state, provides a centralized entity that can take distressed properties, through foreclosure or purchase, and decide how best to manage them. 

Since it was established in 2012, Western New York’s land bank has taken title to 18 homes and vacant lots, funded by $4.5 million from the state as part of the program, with eight homes scheduled to go on the market during this first round of sales and 16 to 20 expected to go out in the next round, officials said.

Whyte, who was instrumental to formulating the land bank’s application to the state, said that houses sitting in limbo become magnets for drugs, prostitution and other dangerous activities.

“To be able to take a property like this and reclaim it for the community and reclaim it for the neighborhood and to sell it to a low or moderate-income family consistent with the attorney general’s vision, those are the things that are worth celebrating,” Whyte said.

The state and some municipalities have put in place measures to curb this behavior from banks, and Attorney General Eric Schneiderman is again pushing his Abandoned Property Neighborhood Relief Act in the Legislature, aimed at fining banks that fail to care for properties on which they have started foreclosure proceedings, which the Schneiderman’s office has dubbed “zombie homes.”

The bill, which has the support of Sen. Jeff Klein and Assemblywoman Helene Weinstein, failed to pass last year and it remains unclear whether it will be taken up in what promises to be the hectic final weeks of this year’s legislative session.

Yet other developments have already changed the mortgaging landscape in New York, giving prosecutors and politicians more leverage in the fight to get lending institutions to care for properties stuck in the foreclosure process.

Last year, for example, Bank of America agreed to donate $20 million to land banks in New York, as part of a settlement with Schneiderman’s office.

“That would ensure that the banks can take responsibility for abandoned homes earlier in the foreclosure process,” said Liz DeBold, deputy press secretary for Schneiderman’s office. “That’s the way in which we are trying to deal with this problem from a multi-faceted angle. Making settlements with the banks, using that money to support land banks and also trying to pass legislation that could basically ensure that communities are less on the hook for abandoned properties.” 

The state’s Department of Financial Services has also brought in billions of dollars in settlement money from big banks, some of which has been tied to mortgage practices. 

In addition, some neighbors have taken to shaming the banks, placing signs with the foreclosing lender’s name on properties with peeling paint or chest-high grass.

In the meantime, land banks like the one in Western New York are beginning to provide another tool in the fight against blight.

Back at the yellow brick ranch, Poloncarz said that just a few years ago, the spot where he stood could well have ended up a pile of rubble, possibly setting off a chain reaction of neighbors deciding to leave their homes as well.

“Instead of this property becoming a further eyesore and creating further decay in the neighborhood, this will be a property where people will live, people will enjoy their lives,” Poloncarz said.