Relates to land banks, including their powers, exemptions from fee clerks, access to property, liability exemptions, disposition of property and authority to hold title to real property

Summary of Provisions:

Section one of the bill would allow land banks to receive grants and loans facilitate a better stock of land, attract buyers, hold mortgages - all of which are within the enumerated purposes of land banks.

Section two of the bill would waive recording fees for land banks as they transfer property as part of a legitimate State purpose.

Section three of the bill would authorize land banks to inspect the property before taking title, just as municipalities are authorized to do.

Section four of the bill would extend indemnification to land banks in the event of discovery of environmental contamination similar to that of municipalities.

Section five of the bill is a series of technical changes that amelio- rates conflicts of law that were present when the Land Bank Act was enacted.

Section six of the bill would authorize land banks to establish subsid- iaries to hold title to property, a common practice in real property transfers.

Justification: The amendment to the Land Bank Act provides common sense changes to the way land banks operate so that land banks can carry out their enumerated purpose with the authorizations that are common to entities that are like land banks in that they are taking on title of properties in a less than voluntary situation. Further, the public bene- fit provided and demonstrated by land banks justifies the additional authorizations that would allow land banks to better serve the communi- ties in which they operate. Below is a section by section explanation of the benefits of these changes.

I. The Authority Budget Office has taken the position that local public authorities, which include land banks, do not have the power to lend money, make grants or organize subsidiaries unless expressly authorized to do so by enabling legislation, even when such actions are in further- ance of an enumerated purpose. Amendments are proposed to the Land Bank Act granting such additional powers to land banks.

II. Land banks incur substantial fees in the recording of documents with County Clerks which diverts valuable public resources from the mission

and purpose of land banks. An amendment to the Land Bank Act is proposed to exempt land banks from such fees.

III. Land banks typically acquire abandoned or tax delinquent properties from absent or uncooperative owners. Often, they are unable to legally access such properties prior to purchase and therefore cannot perform due diligence into the environmental condition of such parcel prior to ownership. That potentially prevents land banks from asserting statutory defenses and exposes them to liability for the costs of remediation. An amendment to the Land Bank Act is proposed to provide land banks with temporary incidents of ownership sufficient to authorize such access prior to transfer, without incurring liability based upon ownership.

IV. Land banks are tasked with acquiring vacant, abandoned and delin- quent properties to facilitate their return to productive use, In the event a land bank acquires environmentally contaminated real property, the public assets of a land bank are potentially exposed to liability which could include significant remediation costs. An amendment to the Land Bank Act is proposed to provide liability protections to land banks similar to those which are already available to municipalities, as land banks are not typical voluntary buyers.

V. Section 1609 of the Land Bank Act, entitled Disposition of Property, sets forth detailed requirements concerning the disposition of property by land banks. As local public authorities, land banks are simultaneous- ly required to comply with § 2897 of the Public Authorities Law, simi- larly entitled Disposal of public authority property. The public author- ity disposition provisions overlap, contradict and impair the disposition provisions in the Land Bank Act as the public authority provisions are designed to address the sale of property by a public authority which is not regularly engaged in the disposition of property. Inherent in the primary mission and purpose of land banks is the regular disposition of property in the ordinary course of its day to day oper- ations. Section 1609 of the Land Bank Act correctly anticipated such activity and vested a land bank, its board of directors and its fore- closing governmental units with, among other powers, the authority to establish the terms and conditions of the consideration received by a land bank for the transfer of its property, to establish hierarchical rankings of priorities for the use of property conveyed by a land bank and to impose specified voting and approval requirements of its board of directors. The requirement that land banks comply with both disposition statutes impedes the efficient and effective return of vacant, aban- doned, and tax-delinquent properties to productive use and was likely not the intent of the drafters of the Land Bank Act. An amendment to the Land Bank Act is proposed stating that § 1609 is intended to super- sede § 2897 of the Public Authorities Law.

VI. An amendment to the Land Bank Act is proposed to authorize a land bank to hold title to real property in the name of a lawfully organized subsidiary in accordance with Section I above.

Previous Legislation: None.

Fiscal Impact: To be determined.

Effective Date: This bill shall take effect 90 days after enactment.