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Louisville Metro Council Committee Scrutinizes Landbank Authority

A house on West Gaulbert Avenue sits vacant on Sept. 24, 2018. It was sold last December through the city's land bank.
Jacob Ryan
A house on West Gaulbert Avenue sits vacant on Sept. 24, 2018. It was sold last December through the city's land bank.

Some Louisville Metro Council members are calling for changes to how the city’s Landbank Authority sells vacant and abandoned property.

They want more accountability and better planning from land bank staff and some suggest limits on how many properties buyers can purchase.

The council members worry too many properties are being sold below market value to investors and rental property managers -- a practice which they fear could undercut the stability of struggling neighborhoods by reducing opportunities for home ownership.

“It seems to me that they’re taking advantage of the land bank and we’re allowing them to take advantage of it,” said Councilwoman Barbara Shanklin, a Democrat from Newburg.

The council’s Community Affairs and Housing committee spent nearly 40 minutes Wednesday questioning Laura Grabowski, the director of the city’s Vacant and Public Property Administration, about the Landbank Authority program.

The meeting comes three weeks after the Kentucky Center for Investigative Reporting found that nearly a third of the more than 300 properties sold by the land bank since 2010 were vacant and in violation of the city’s property maintenance code.

Some buyers failed to make good on promises to renovate derelict structures, and let grass go uncut and trash pile up on properties purchased for a fraction of the assessed values.

Impact on west Louisville

Many of the properties owned and sold by the land bank are in western Louisville, which includes neighborhoods that are disproportionately plagued with blight and poverty.

The biggest buyer of land bank properties since 2010, Mirage Properties LLC, manages about 800 rental units in western Louisville. The company’s owner purchased some 30 properties from the land bank since 2017 -- all in western Louisville.

Grabowski said the company’s owner intended to rehabilitate vacant structures and rent the units to residents with Section 8 housing vouchers. But a KyCIR review found that many had yet to be renovated as of three weeks ago.

Metro Council president David James, a Democrat from Old Louisville, said the land bank lacks “a holistic point of view” when considering how to manage properties in western Louisville.

“I’m asking that as we go forward and look at different ideas and thoughts, that we actually have some strategic plan,” he said. “West Louisville has a lot of things that they don’t need more of.”

Councilwoman Mary Woolridge, a Democrat from Algonquin, said she’s heard from constituents interested in acquiring vacant property that Landbank Authority staff doesn’t return phone calls. Shanklin, the committee chair, echoed that concern.

Woolridge suggested the Landbank Authority impose limits to how many properties investors and rental property managers can purchase.

She’s worried that well-funded business owners will monopolize neighborhoods by buying from the land bank, which often sells properties for as low as $1.

For instance, Mirage Properties paid about $7,100 total for the properties that, in all, have an assessed value of more than $743,000, according to county property records.

“This is ludicrous,” Woolridge said. “We’re going to have investors buy up all the property in west Louisville.”

[Read more: ‘Good Neighbor?’ Nearly A Third of Former Land Bank Houses Are Vacant]

Councilwoman Marilyn Parker, a Republican from Lyndon, suggested the Landbank Authority do more to hold buyers accountable if they fail to maintain property purchased from the agency.

She questioned “if it would be reasonable” to require buyers to give properties back to the land bank if they fail to meet deed requirements.

In fact, the Landbank Authority can take properties back, but has never done so. Grabowski said doing so would require foreclosing on the property, which can cost up to $6,000.

Last month, instead of taking a property back from a buyer who no longer had interest in rehabilitating a vacant house in Shelby Park, the Landbank Authority approved a request to demolish the house.

Now, neighbors are questioning that decision.

Chip Rogalinski, president of the Shelby Park Neighborhood Association, said in a letter to Metro Councilwoman Barbara Sexton Smith, that the property should be returned to the landbank “with a penalty” and put back up for purchase.

“So that a viable, alternative plan can be arranged so we maintain the architectural integrity of the neighborhood,” Rogalinski said.

Grabowski, when asked Wednesday, said the land bank doesn’t “have any reason to take the property back.”

“So they’re moving on to demolition,” she said.

Grabowski declined to say if she would consider imposing limits on land bank purchases by investors or property managers.

And she said previous buyers who have failed to meet the terms of sales won’t be barred from purchasing property from the land bank in the future.

She said her staff is attempting to be “more proactive” when it comes to monitoring properties sold from the land bank to ensure promised projects are underway -- that includes more staff to field phone calls to buyers to check-up on projects and help buyers through the process of securing permits.

Shanklin said the committee would again call for a meeting with Grabowski, but did not set a date.

“We have lots of questions.”

Contact Jacob Ryan at jryan@kycir.org or (502) 814.6559.

Jacob Ryan is the managing editor of the Kentucky Center for Investigative reporting. He's an award-winning investigative reporter who joined LPM in 2014. Email Jacob at jryan@lpm.org.