Capital Region land banks cash in

A construction worker sprays down a vacant, blighted building at 722 Eastern Ave. in Schenectady in August as an excavator tears into its side.

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It was a big day for Capital Region land banks Wednesday.

The state Attorney General’s Office announced more than $7 million in grants Wednesday for three land banks in the region to use in tackling blight in areas across Montgomery, Schenectady, Albany and Rensselaer counties. The grants were part of an overall $20 million pot awarded to 10 land banks statewide.

It was a particularly big win for the Capital Region Land Bank, which was given the largest grant this year — $3 million — after being passed over for a sizeable grant in the first round of funding last year. The land bank encompasses Schenectady County and the cities of Schenectady and Amsterdam and was one of the first to receive state designation in 2012.

The Albany County Land Bank and the Troy Community Land Bank were awarded $2.8 million and $1.25 million, respectively. Both are still young, formed this year. Troy’s land bank was approved by the state just last month.

The two new local land banks have the Capital Region Land Bank mulling a name change to avoid confusion.

“It’s a great day for the land bank,” said Schenectady County Legislator Robert Hoffman, who chairs the Capital Region Land Bank.

Hoffman guessed that the land bank won big this year because it was passed over last year, when the Attorney General’s Office awarded $13 million to six land banks across the state. He also said the application was more focused this time around, encompassing a smaller geographic area and targeting specific projects.

Last year, Albany County had been planning to join the Schenectady-Amsterdam land bank and officials worried they lost out because their application wanted to do too much across too broad an area. Winning land banks last year encompassed just a single city or county, for example. The local land bank did receive $150,000 in “capacity building” funds to build a support staff.

Now, the land bank is planning to leverage about $4.2 million in local funds and up to $2 million in private investments with the $3 million award to target blight in specific neighborhoods in Schenectady County and Amsterdam. Overall, it hopes to demolish 208 housing units and renovate or rebuild 43 others.

The city of Schenectady will use $2.05 million of the grant to demolish, renovate and redevelop buildings along Eastern Avenue, where work has already begun in earnest to tackle blight. The city is also looking at some structures on Foster and Carrie streets in the city’s Goose Hill neighborhood.

The county will tentatively use $200,000 for rehabilitations in Rotterdam Junction, where some properties were abandoned after tropical storms Irene and Lee in 2011.

“The goal is to take what we’ve been doing on a test basis on Eastern Avenue and roll it out across the city,” said Schenectady Metroplex Development Authority Chairman Ray Gillen, who helped with the grant application. “It also gives us resources to attack some problem properties in the towns.”

Amsterdam will use $500,000 to demolish and rehabilitate up to 15 properties it identified over the summer on Division, Forbes, Grand, John, Austin, James, Bunn, Union and Reed streets, as well as Guy Park, Lincoln and Brookside avenues.

Nick Zabawsky, a consultant with the Amsterdam Urban Renewal Agency who helped write the grant application, said it’s unlikely the city will be able to get through all 15 properties with the grant money. A typical demolition runs anywhere from $30,000 to $35,000, he said, and that’s only if there are no issues with asbestos. A typical rehabilitation runs anywhere from $25,000 to $30,000 for a single-family home to $80,000 to $90,000 for a two-family home.

“The goal is to do as many as we can,” he said.

Amsterdam Mayor Ann Thane said the land bank specifically targeted properties in neighborhoods that weren’t too far gone.

“We wanted to tackle properties that are in neighborhoods that have not fully gone into decline,” she said. “What that does is it stops a problem before it becomes an issue on the street, because one abandoned, blighted property is like cancer or tooth decay — it spreads to surrounding properties. So we wanted to start where we could really make an impact and save an entire neighborhood.”

Abandoned properties don’t just result in a loss of tax revenue, Thane said. On average, each abandoned property costs a local municipality $68,000 over a seven-year period.

“The costs start from the first time you get a call about a property,” she said. “It could be for overgrown vegetation or garbage or a window that’s gone out. You have to send out your code enforcement officer. There’s the cost of mailing stuff out, taking things to court, the associated crime and fire calls. It’s a very, very costly situation. And it’s going to take a collaboration between small municipalities and the state to get this under control.”

Some of the funds received by the Capital Region Land Bank will go toward administrative costs.

The state Legislature passed a law in 2011 establishing land banks following the collapse of the housing market. They would be nonprofit organizations that could acquire vacant, abandoned or foreclosed properties and rebuild, demolish or redesign them. To get them up and running, state Attorney General Eric Schneiderman launched the Land Bank Community Revitalization Initiative and dedicated $33 million from a settlement with the nation’s largest banks.

But the overall goal was for the settlement money to be seed money, allowing the land banks to establish themselves and gain some traction before finding a sustainable revenue source. They would clear properties of blight, and then sell the vacant or rehabilitated land to get it back on the tax rolls.

Local municipalities are planning to take advantage of the 5/50 tax recapture program, which gives the land bank half of the income generated by property taxes on these properties for five years. So far, Schenectady County and the city of Schenectady have agreed to this. The land bank still needs to reach an agreement with the school district. In Amsterdam, the 5/50 program will be used on a case-by-case basis, Zabawsky said.

“We can also renovate properties and rent them out if we want to and get some income that way,” said Hoffman. “But the goal is to get them back on the tax rolls and get an income stream going for the land bank.”

Seven other land banks around the state received funding: the Buffalo Erie Niagara Land Bank Investment Corp. ($2.5 million), the Greater Syracuse Land Bank (more than $1.9 million), the Newburgh Community Land Bank (more than $1.9 million), the Suffolk County Land Bank (more than $1.9 million), the Rochester Land Bank (more than $1.8 million) and the Broome County Land Bank ($800,000).