Local Land Bank Explained

By Gordon HopkinsQuestions continue to swirl around the South Jefferson Land Bank (SJLB), particularly regarding taxes owed on property acquired by the land bank, so FJN asked SJLB committee chair Michael Gaston for some clarification. Can back taxes owed on any property the land bank takes possession be forgiven?Gaston answered, “Under State Statute 18-3416, the Land Bank board can adopt a resolution to discharge and extinguish all liens or claims for real property taxes or special assessments, except for tax sale certificates, on property the Land Bank acquires. The Land Bank board has done that for the first property it acquired by gift and I expect the board will continue to do that. The discharge for back taxes isn’t self-executing, there has to be a resolution adopted.” Is it true that, as long as the property is owned by the land bank, no property taxes are owed or paid?Gaston said, “Generally, yes. The Land Bank is a political subdivision and is subject to the same rules as Fairbury and Endicott regarding tax on its property.”Once the property is turned over to someone else, will the new owner begin paying property taxes?Gaston said, “Yes, a new owner will begin paying property taxes when they acquire title to a Land Bank property and, generally, 50 percent of the real taxes collected will go to the Land Bank for five years. If there’s a redevelopment project in the area, the taxes collected may be allocated under the Community Development Law and not go to the Land Bank.” Public Officials RespondSix lots out of 22 were sold to bidders at a sheriff’s sale in Jefferson County the morning of Monday, August 12, 2024. The remaining 16 lots will become property of the newly created South Jefferson Land Bank. This was the first sheriff’s sale to be held since the formation of the land bank.The land bank was also gifted an additional plot of land.Fairbury City Councilperson Brad Kuzelka has been a vocal opponent of the land bank since it was first proposed. His concern is that the land bank may be preventing residents from acquiring the properties. He told FJN, “The SJLB can out bid you with a bid they never plan on paying with money they received from the people they are bidding against. Very frustrating.”T he county collects property taxes, which is then used to fund county services. Jefferson County Commissioner Gale Pohlmann expressed some concern that the land bank may be costing the county revenue, “My initial reaction is that since basically the Land Bank had the ‘minimum bid’ on all the properties to at least cover the back taxes, that this probably hindered some of the properties being sold for less and thus the county could have recovered some of the back taxes. Since the Land Bank got the property we get nothing, and as long as the Land Bank owns the property we get nothing.”“Our only hope is that the city (Land Bank) is aggressive and makes the attempt to move these properties to someone as quickly as possible. Getting them into productive use is a must in order for the county to recoup the taxes we lost,” said Pohlmann. “In a nutshell it appears as if the County is on the losing end of these transactions. I hope I’m wrong!” Fairbury Mayor Spencer Brown holds a different view. In an email to FJN, Brown wrote, “I think most people understand that none of these taxes were going to be paid in the current situation they are in. (sheriff sale) The Land Bank can turn these properties back into productive use, which even at it’s most BASIC level, is to be owned by someone who will maintain it, and pay the taxes.” Mow-to-OwnThe SJLB committee meeting on Wednesday, August 14, 2024. The committee voted to establish a mow-to-own program, in which an interested party can gain ownership of a piece of property by maintaining it for a period of time.The committee will create a rubric (a scoring guide) to assign points to potential landowners who wish to participate in the mow-to-own program. Points will be assigned based on a number of factors, including whether or not the applicant has an adjoining property, whether or not the applicant is a resident of Jefferson County, what the applicant intends to do with the land and various other criteria. The rubric will then be used to decide who gets the property.

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