Thank you.
Thank you to the committee for hearing what I have to say today about land banking.
By way of background, this is a piece of research I did at graduate school, at UBC, back in 2007. That's why I'm reporting to you as an individual today. It's just something that came out from my past and has followed me like a wounded dog for seven years. So here I am before you to talk about some of the highlights of land banking as a tool that's been used throughout North America.
Basically when you think about poverty, it tends to manifest itself in many different ways. When we think about the solutions to it we have to have a holistic approach that involves both the health and education employment components of poverty, but also the built environment and how poverty has struck down a lot of our communities and neighbourhoods.
Poverty in Saint John, like many communities, is concentrated in pockets, which you've probably heard a lot about today. Especially in eastern Canada, these neighbourhoods have a lot of older building stock. CMHC tells us that anything built before 1930 has a very high occurrence of needing repairs, which is basically the entire building stock of the urban core of Saint John. It's not that it all needs repairs, but it certainly falls in the category of being built before 1930.
As some of these communities have experienced decline over the past 50 years, for various reasons, what tends to go down is community pride, tax revenue for cities and provinces, the safety of these communities, and reinvestment in lateral adjacent properties or properties in a similar area because there's no confidence among the private sector. What goes up at the same time is a cost to city resources to send emergency response vehicles to police these neighbourhoods—fire trucks, ambulances, and so on. Future blight also goes on the rise in these communities, as do crime rates. That cycle of decline enters into a very aggressive pattern, and it's hard to turn away from that without strategic thinking.
How does decline typically happen? As we know, for different reasons an owner of a property is not able to pay their mortgage, whether it's an absentee landowner who no longer sees value in the return on investment on their property or it's a landowner who, for whatever personal reasons, is unable to make mortgage payments. Tax accumulates on that property. Eventually it becomes abandoned and begins that cycle of deterioration, if it hasn't already entered that state, and the property is foreclosed. Then it goes to tax sale. This process takes about seven years or longer, and meanwhile there's been no reinvestment in the property. As time goes by, the return on investment on those properties becomes even more bleak.
So what is a land bank and how does it interface with these problems? The mission of a land bank is to restore integrity and community pride to these neighbourhoods and stabilize that process of decline. We'll talk in a bit about how it does that. It is a strategy that deals with the poverty of our built environments that form the physical conditions of poverty around us. It started in Michigan back in 2001, I believe, in a town called Flint, but later was adopted by Detroit, and now has spread across America, from San Francisco to St. Louis to Cincinnati to almost every major urban centre that has some form of abandonment. It's been a very useful and strategic method to return properties and buildings to new uses in the communities and stabilize that process of decline. Although it has not yet been adopted in Canada, I think it looms as a potential new strategy for us to consider.
The structure of a land bank is that typically it is a quasi-governmental organization comprised of about nine or so members; a couple typically are politicians, to build in the transparency of a land bank. It's a not-for-profit body. It looks at real estate properties in the city where it's working and tries to assign value where the regular real estate market has failed to assign value to these properties anymore. Basically it looks at properties that nobody else is looking at.
How does it work? It has three areas of interest. It acquires land sometimes through purchase, sometimes through donation. A lot of times you'd find somebody who doesn't want to actually own a property because they just inherited it, or there's no value to them. Land banks have the unique ability to expropriate land if the right circumstances are present for them to activate that power, which in the States is given to them by the state.
The second area of work it does is it maintains land. It creates green lots. The property building is way beyond feasible repair. It knocks the building down and creates a green lot instead of having blight. It can put community gardens into these spaces to offer food to the community, and it can restore buildings if they've not deteriorated enough to require being knocked down.
The third area of activity of a land bank is to divest itself of land. It's not there to hold land forever; it is there, rather, to repurpose it and reposition it. A land bank could go to affordable housing outfits to offer side lots to adjacent neighbours once the building has been removed and it has become a green lot, or it could go to new development if it's been able to acquire several adjacent properties. You could reposition that for sale.
One of the powers that is needed, typically, by a land bank in the States is the power to clear property taxes. A lot of times, a barrier to reinvestment in property is that the taxes have accumulated for so many years. A land bank has the power to eliminate those taxes. Another power needed is the power to clear the title on land. A lot of times, especially in older cities where there have been estates and inherited lands, the title can get very confusing over time, and that's a barrier to reinvestment. A land bank has the power, as I mentioned, to expropriate land, a power given to them by the state. Decisions are made by the committee when that is an appropriate power to exercise. A land bank can expedite the foreclosure process, so instead of taking seven to eight years, the process goes to about two years. The building in question doesn't reach that critical state of decline. A land bank can also make quick decisions. It doesn't have to vet its decisions through any government body, such as a city council. It's empowered to make decisions on its own by its own governance structure.
The benefits that fall out of a land bank have been robust in a lot of the communities that have them in the States. There's neighbourhood beautification, to start with. Land banks have stabilized the decline of the communities they operate in. There's new tax revenue in a lot of cases for the buildings that have been repurposed. They result in safer streets. They have more affordable housing that has been turned over to outfits that are active in that portfolio. They've retained a lot of old building stock because, instead of buildings going too far down the path of decline, land banks are able to stabilize that process more quickly and return these assets to the community. In some cases, they improve the food supply to the community, as more community gardens tend to operate.
The financing of a land bank has typically come through seed funding that comes from the government or from not-for-profits. They're able to operate because they don't pay taxes on the properties that they own. One revenue stream beneficial to land banks is the increased taxes to any properties repurposed for use in the private sector. For five years after a property is repurposed, the land bank retains the increased taxes. So it goes to the land bank for five years before it's returned entirely to regular format. Land banks are also able to generate revenue from any sales of properties.
Why Saint John? The evidence is clear. I think we have a lot of properties where poverty is concentrated—especially in some neighbourhoods where Kit's group and other groups in our community work in the north end. The real estate market has not been successfully assigning value to a lot of the properties and buildings. If we don't do something soon and the status quo remains our strategy, then demolition and further decline is probably everything but certain.
Thank you.