County land bank shifts into acquisition mode
Thursday, June 26, 2014
Crain's Chicago Business
by Micah Maidenberg
Eighteen months after its creation, the Cook County Land Bank Authority took title to its first two properties, with deals for 14 more in the works, the next big step in its campaign to fix the area's vacant home crisis.
The land bank earlier this month acquired a single-family home at 5706 S. Wolcott Ave. in the city's West Englewood neighborhood and a two-flat at 1110 E. 93rd St. in Burnside, according to Cook County Commissioner Bridget Gainer, the authority's chairwoman.
The deals served as test cases to measure the land bank's capacity to find and buy property, Ms. Gainer said.
“We needed to know we could walk before we ran,” she said. And both homes offer an exit strategy, since the group believes it can find an investor or group to take them over, she said.
DONATED BY BANK
U.S. Bank N.A., a trustee for investors who own bonds backed by the buildings, foreclosed on both properties, according to Cook County land records. A loan servicer donated the properties to the land bank.
The land bank was created last year to address the abandoned-home crisis that has devastated neighborhoods across the city and suburbs following the real estate crash several years ago. Cook County had around 55,000 vacant homes as of mid-year 2013, concentrated in economically distressed areas on Chicago's South and West sides.
The agency will buy empty homes and vacant land, clear liens from their titles and try to turn them over to public and private entities for reuse. Buildings it acquires could be demolished.
As it moves into acquisition mode, the land bank must figure out which potential deals will made a significant impact on areas in the city and suburbs set back by blight.
“We're looking at projects at scale,” such as portfolio deals, said Brian White, the land bank's executive director.
FOCUS ON DISTRESSED AREAS
The agency doesn't have a specific numerical target for acquiring blighted property, he said.
Deals will be concentrated in distressed neighborhoods, such as the city's South Side, since “those are the areas where there's opportunity but also where there's a real need to address the failure of the market,” Mr. White said.
To build up its capacity, the land bank hired an acquisitions manager and an administrator and expects to add three or four more staffers by the end of the summer.
In addition to the first two deals, the land bank is in talks to acquire another 14 properties, according to Ms. Gainer. She declined to disclose addresses, but the acquisitions include six properties on the city's South Side, one on the West Side and seven in southern and western Cook County communities, according to a map provided by her office.
The land bank is seeking properties that have been seized by banks and government-sponsored housing enterprises (GSEs) like mortgage giant Fannie Mae.
“You're starting to see some of these large holders of property — both GSEs and banks — start to say, 'OK, I'm not going to recoup my mortgage. We need to start moving these things along because we are not in the real estate management business,'” Ms. Gainer said.