Land Bank 2.0: An Empirical Evaluation
|WP 12-30||Revisions: WP 12-30R|
In 2009, Cuyahoga County, Ohio, which contains Cleveland and 58 other municipalities, created the Cuyahoga County Land Reutilization Corporation. This land bank was established to acquire low-value properties, mitigate blighted housing, help stabilize neighborhoods, and slow the decline of property values. As of September 2013, the land bank had acquired 3,405 properties and demolished 1,853 structures. This empirical study evaluates the effectiveness of the land bank by estimating spatially corrected hedonic price models using sales near the land bank homes. In the six months before they are purchased by the land bank, the distressed properties are estimated to lower the sale price of nearby homes (within 500 feet) by 5.2 percent. The negative externality from the distressed properties decreases to 4.4 percent once the land bank takes possession. A vacant lot created by a land-bank house demolition reduces the values of nearby homes by 2.4 percent. By reducing the negative externalities of distressed properties, the land bank has recovered about $3.8 million in value for homes sold during the study period. We estimate that tax collections were $3.2 million higher than they otherwise would have been. The land bank?s largest impact takes the form of preserved value for homes that did not sell during the study period, and we estimate this to be approximately $156 million.
Keywords: Land Bank, Distressed Property, Property Values, Spatially Correlated Hedonic Price Models.
JEL Codes: R1 R2 R3.
Suggested citation: Fitzpatrick, Thomas J. and Stephan Whitaker, 2012. "Land Bank 2.0: An Empirical Evaluation," Federal Reserve Bank of Cleveland, Working Paper no. 12-30R.