Senator Mello’s LB 97 Not Yet Ready for Prime Time

March 20, 2013

From our friends at the Lincoln Independent Business Association (LIBA)

LIBA Senator Mellos LB 97 Not Yet Ready for Prime Time

Dear Senators,

Two months ago, the Lincoln Independent Business Association (LIBA) wrote a letter to Senator Mello in an effort to improve LB 97 by reducing the inherit conflict between the Nebraska Municipal Land Bank Act and private business. LIBA opposed the Act in 2012, as legislation which would expand government and compete with the private sector.

Although the Act has been amended to affect only Omaha, LIBA continues to oppose this bill because the City of Lincoln has expressed interest in expanding the bill to include other cities. After traveling to Omaha to speak with community leaders, however, LIBA realized that Omaha does have a real and persistent problem with abandoned properties. The LIBA board of directors has voted to support the Nebraska Municipal Land Bank Act if the Act is amended in the following three ways:

– Remove the Land Bank’s authority to tender an “automatic bid.” Allowing government to establish a monopoly on any investment is directly contrary to American principals of free enterprise. The ability to tender an automatic bid picks the government entity as a winner and designates its citizens as clear losers. This power is unnecessary to accomplish the land bank’s mission to acquire and revitalize properties abandoned by the market. The “automatic bid” would allow a land bank to become an out-of-control lien speculator that could purchase ANY property in search of profits to finance its own bureaucracy. Thus, because the automatic bid enables a public entity to prosper at the expense of citizens and investors LIBA requests the land bank’s authority to tender an automatic bid be removed from the Municipal Land Bank Act.

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– Define a subset of “problem properties” to which the Land Bank’s authority would be limited. As proposed, the act has a narrow purpose but broad powers. The purpose of the land bank is to “facilitate the return of vacant, abandoned, and tax-delinquent properties to productive use.1” However, under the current version of the Act, a land bank may acquire property by virtually any means except eminent domain2, has unlimited power to make improvements on the property3, may determine the highest and best use for a piece of property and refuse to sell the land for any other purpose4, and if its stated powers are not enough, it is free to “do all other things necessary or convenient to achieve [its] objectives.5”

These broad and flexible powers could achieve great good for a community but if they are not limited, they have potential to be
disastrously abused.  This is why LIBA requests that the land bank’s power be limited to achievement of its stated purpose, to return problem properties to productive use.

– Limit a Land Bank’s authority so it may only purchase those properties passed over by the private sector. As stated by Professor Frank Alexander who helped draft the Nebraska Municipal Land Bank Act, “a land bank is to deal with those properties that the market itself has abandoned… where no one wants them6.” Therefore, LIBA proposes that the purpose of the land bank be written into statute. We propose the land bank’s acquisition authority be limited so it has power only to purchase those parcels passed over by the private sector.

This amendment would in no way inhibit a land bank’s authority to acquire and demolish properties abandoned by the market while allowing private businesses to carry on free from public encroachment.

The Revenue committee attempted to mitigate the potential damage of the automatic bid with AM 527. The attempt was commendable; however, the amendment falls short. AM 527 would allow a land bank to tender an automatic bid if the paint is faded on a home with a yard of tall native grasses. The amendment’s attempt to constrain the automatic bid through enumeration of specific criteria is subject to manipulation, does nothing to reduce the bureaucracy created by the Act and cannot protect businesses from the interloping of government speculation.

Thank you for your consideration and we look forward to discussing these amendments with you and your office.
Respectfully,
Coby Mach, President
On Behalf of the LIBA Board of Directors

1 LB 97 §1(4)
2 LB 97 §8(1)
3 LB 97 §7(1)(m)
4 LB 97 §9(5)
5 LB 97 §7(r)
6 Frank Alexander, Urban Affairs Committee, testimony on LB 1137/AM1750, 7 Feb. 2012

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