This is the first in a two-part series exploring how strong working partnerships between practitioners and attorneys can give rise to innovation in the work to reclaim and revitalize blighted properties. After reading below, check out Part II —Milwaukee right here >>
“Lawyers can paralyze you for sure. They’ll scare you to death,” says John Sidd, an attorney with Menter, Rudin, & Trivelpiece, P.C. and legal counsel to the Greater Syracuse Property Development Corporation (dba Greater Syracuse Land Bank) in Syracuse, New York.
As a lawyer himself, Sidd can get away with saying it. One suspects, however, that he may be giving voice to quiet multitudes of hamstrung public servants.
In years since the foreclosure crisis, many cities well equipped to deal with a trickle of problem properties continue to find themselves standing beneath Niagara Falls with scarcely an umbrella. Cities grappling with decades of disinvestment have watched as their remaining homeownership base has dwindled. For many who work on these challenges day in and day out, the “recovery” talked about in headlines continues to feel far away indeed.
In this context, perhaps more than at any other point in living memory, getting a handle on growing numbers of abandoned or foreclosed properties demands – nay, forces – innovation. But innovation, in local government, typically requires the vetting of an attorney. And for some, the attorney’s office can feel like the place that innovators go to be, well, scared to death.
It doesn’t have to be that way. Despite perceptions to the contrary, “in our business, there’s usually some way to get it done,” says Sidd. The key lies in developing a strong partnership based on trust and open lines of communication.
Slumlords are not a protected class
The Greater Syracuse Land Bank is a relatively young land bank that got off the ground in 2012 after the passage of New York State’s land bank legislation in 2011. It’s off and running, and scaling up. To date, the land bank has acquired 875 properties and sold 233 to a mix of private investors and local nonprofit affordable housing developers. This is leveraging $7.9 million in private investment and $3.25 million in renovation subsidy, according to Katelyn Wright, the land bank’s executive director.
Getting to that point, however, required a strong partnership between Sidd and Wright – which gave rise to more than a little creativity. While land banks exist in more than a dozen different states, New York’s existing legal framework, and the land bank law itself, required breaking new ground.
New York State’s Land Bank Act was passed as part of the state’s not-for-profit corporation law. Therefore, lands banks in the state are, in one sense, considered nonprofits. In another section of state law, however, land banks are described as public authorities. “So we’re trying to straddle two different kinds of laws intended for very different types of organizations,” explains Wright. “We’ve been assuming that the more restrictive of the two sets of rules will be the one that rules, but we’ve been navigating that.”
In practice, for example, Sidd and Wright navigated this gray area when developing policies to guide the sale of land bank properties.
They knew that the land bank needed to sell properties only to responsible purchasers who wouldn’t allow the properties to fall back into decline. After all, the land bank is tasked with helping to stabilize and revitalize Syracuse neighborhoods. Ensuring positive outcomes for the properties it sells is core to its mission. Wright developed a stringent application process for would-be purchasers to vet their interest in and ability to renovate the homes. Each applicant is screened based on his or her past track record as a property owner.
“I can’t get rid of all the slumlords in town, but I certainly don’t have to sell to them. Slumlords are not a protected class,” she explains.
But how could the land bank hold a buyer accountable for renovation promises made in their applications?
“A lot of what we’re doing, because it’s new and we’re trying to craft new legal tools, it takes some intellectual curiosity. If your attorney doesn’t share your passion for this work, they won’t put in the time that innovation takes,” Wright says. “[John Sidd] is passionate about what we’re trying to accomplish here and sees the value in it.”
Initially, Wright proposed the idea of a deed in escrow, a tool used by Ohio land banks. Sidd researched the tool closely but, for various reasons, it wouldn’t work under New York State law. In its place, however, he came up with the idea of a Development Enforcement Note and Mortgage, a new tool specifically tailored to work within New York State’s legal framework.
On the Development Enforcement Note and Mortgage, Sidd explains:
“It says, look, we both agree that we would not be selling you this piece of property but for your development plan and intention to develop. It’s a material part of the transaction. You’ve got a year to do what you say you’re going to do. If you fail and don’t show good faith, that’s going to trigger a debt obligation from you to the land bank. That amount of money is secured by a lien on the property we sold you. The land bank will work with people, but if someone completely fails [to fulfill their development plan], that triggers the debt…[and] the ability [for the land bank] to foreclose. We have encumbered their title.”
If a buyer does meet their redevelopment obligations – as, so far, all have done – the land bank comes and inspects the home, issues a certificate of completion, and discharges the lien, which cleans up the title to the property.
Wright and Sidd worked together to hammer out the nuances of how the Development Enforcement Note and Mortgage would work in practice. For example, the financial value of the lien had to have a rational basis. In the end, they recommended to the board of directors that it should be the amount that the buyer intended to spend on renovations or the fair market value of the home at the time of sale, whichever was greater.
“We developed [the Development Enforcement Note and Mortgage] specifically for the renovations, but there are other things we’re asking of our buyers now,” says Wright. “We might sell it to [the homebuyer] at a discount because it’s going to be owner-occupied. But if they move, they’ll owe us that money back.”
This sort of innovation is able to happen thanks to Sidd and Wright’s strong working relationship, which is based on open communication and mutual respect. “Katelyn knows when she needs advice on a particular issue and she’s really good at receiving that advice and using it,” Sidd says. “That doesn’t necessarily mean following it, but using that advice appropriately.”
“John has been really great about helping me brainstorm ideas about how we might want to tweak some of our policies to further our mission,” Wright explains, continuing, “He consciously tries to step back and leave the policy decisions to the land bank board and to me. He has suggestions but is careful not to step on our toes in that regard.”
The Syracuse Land Bank was one of the first out of the gate following the passage of New York State’s Land Bank Act. “We’re trying to interpret [the legislation] without a body of case law,” says Wright. And their work has had an impact statewide: “Since there are eleven land banks, we’re trying very hard to make sure we all interpret things the same way.”
Wright and Sidd’s strong partnership and willingness to think creatively has played a major role in driving the Greater Syracuse Land Bank’s early success. Building on their experience in Syracuse, Wright serves as the inaugural president of the New York Land Bank Association and Sidd provides legal counsel to the association and legal opinions for the use of land banks across the state of New York.
Don’t just say no
John Sidd is in private practice, retained by the Greater Syracuse Land Bank as their general counsel, meaning their board of directors had the ability to exercise discretion regarding who to bring on as counsel. For many local government practitioners, however, obtaining legal guidance means reaching out to the city attorney’s office, where city attorneys may be assigned to tackle any number of different municipal issues, with varying levels of expertise on a particular topic and varying amounts of time to invest.
Often, explains Laura Settlemyer, assistant general counsel for Michigan Initiatives at the Center for Community Progress and a former city attorney for New Orleans, the relationship between city attorneys and other city departments can be fraught with miscommunication. This can stymie progress and stall innovation – an unfortunate reality in cities trying to get a handle on the crisis of vacancy and abandonment.
“A city attorney is hearing this innovative idea and they’re thinking, ‘Risk risk, exposure exposure, liability liability,’” says Settlemyer. “They’re trying to protect their client. They do not mean to sound as negative as their audience is hearing it.”
She continues, “Two people, an attorney and a non-attorney, may want the same result. But there’s a breakdown of communication because the attorney is not appreciating just how much he or she is scaring the non-attorney, and the non-attorney may not be appreciating that a lot of what the attorney is saying is said out of the attorney’s duty and responsibility to protect the client, the local government.”
To improve the working relationship, Settlemyer suggests being willing to experiment with what it means to have open lines of communication. Efforts to build in more daily interactions that extend beyond formal requests for legal advice can help. In New Orleans, for example, the city attorney’s office has physically moved attorneys into the code enforcement department.
“If you can ask your attorney questions while you’re both waiting for water in the kitchen, that can feel a lot easier and friendlier than sending an email,” Settlemyer says. “It’s easier to approach someone you see every day, casually, with a new idea than to feel like you have to sit down and compose a thoughtful email.”
Settlemyer also suggests attorneys take the time to explain why the recommendation on a particular idea is “no,” pointing out that when the attorney and practitioner have the opportunity for discussion, a way forward may actually present itself.
“Don’t just say, ‘No,’ when they question is, ‘Can we do X, Y, and Z?’ even if your gut response is no. Don’t just say, ‘No,’” she says. “Explain why the answer is ‘no.’”
For example, is the barrier a local ordinance or a state statute? Is the idea constitutionally invalid? “Sometimes, for the attorney, based on everything that the attorney has been taught, the answer is no, but for the policymaker, a no can actually be a yes,” Settlemyer continues. “If the ordinance restricts it, in the policymaker’s mind, the answer may be yes, the city can do it, as long as it takes care of A, B, and C first.”
In other words, perhaps local ordinances or other rules of the game can be changed. Not all barriers are permanent blockades.
Read on to Part II—Milwaukee >>