At its fullest potential, land banking can serve the broad responsibilities of metropolitan planning and development through asset banking, market stabilization, capital reserve formation, and regulation of targeted land use activities.
Local governments are in the best position to create and operate land banking programs, to target them to specific geographic areas of greatest need, and to determine the priorities for short- and long-term reuse of properties. Specifically, local governments need to first assess the volume, location, and condition of vacant and abandoned properties. Second, they need to assess the barriers to bringing these properties to market, such as tax foreclosure status, fractured or divided forms of title, or public nuisance abatement liens. Third, local governments must evaluate the extent of their legal discretion in acquisition and —most importantly—the disposition of property. Fourth, and finally, local governments need to determine the extent of their property management capacities relative to vacant residential units, vacant properties, and structures requiring rehabilitation.
The role of state governments is to authorize localities to engage in flexible land banking programs and to encourage regional and inter-jurisdiction land banking initiatives. At the state level, the first step towards implementing land banking programs is a careful revaluation of existing property tax foreclosure laws and the title problems they may inadvertently create regarding the subsequent marketability of foreclosed properties. In parallel fashion, states should also examine their mortgage foreclosure laws to ensure that there is full transparency at the time of a foreclosure sale as to the identity of the party conducting the foreclosure and the identity of the purchaser. The second step for states is an assessment of the degree of state control over the terms and conditions for local
government transfers of property. The third step is the creation, to the extent necessary, of the authority and incentives required for regional collaboration in land banking programs.
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