Francis Landbankingdevelopment 1975

Lewis & Clark Law School
LAND BANKING: DEVELOPMENT CONTROL THROUGH PUBLIC ACQUISITION AND

MARKETING
Author(s): A.Denise Francis
Source: Environmental Law, Vol. 6, No. 1 (Fall 1975), pp. 191-216
Published by: Lewis & Clark Law School
Stable URL: https://www.jstor.org/stable/43265406
Accessed: 04-12-2023 16:16 +00:00
JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide
range of content in a trusted digital archive. We use information technology and tools to increase productivity and
facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected].
Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at
https://about.jstor.org/terms
Lewis & Clark Law School is collaborating with JSTOR to digitize, preserve and extend access
to Environmental Law
This content downloaded from 213.55.83.49 on Mon, 04 Dec 2023 16:16:06 +00:00
All use subject to https://about.jstor.org/terms
1975] 191
NOTES & COMMENTS
LAND BANKING: DEVELOPMENT

CONTROL THROUGH PUBLIC
ACQUISITION AND MARKETING
By
A. Denise Francis
Zoning, the primary weapon in the arsenal of land planning

techniques for the last 50 years, is increasingly coming under at-
tack for its failure to contribute significantly to orderly planning.1
Some of these attacks are directed at the procedural inadequacies
which surround the administration (or maladministration) of zon-
ing. In response, the Fasano decision2 attempted to remedy some
of the inadequacies and abuses and to inspire confidence in the
zoning process. However, the real dissatisfaction with zoning as a
land use tool goes beyond its procedural inadequacies to its theo-
retical underpinnings.
The main weakness of zoning is its inflexibility.3 Zoning is
designed to separate conflicting or antagonistic uses on the theory
that people prefer to live in residential areas without the threat of
a factory moving in next door. While this may be perfectly true,
this determination to separate basically incompatible districts
(such as residential and industrial) has resulted in a tendency to
overclassify (single family residential, multi-family residential,
light manufacturing, etc.) and prohibit the natural development
of mixed uses in a city.4 People are zoned to live in one part of
* Student, Lewis and Clark Law School -Northwestern School of Law. B.A.,
Smith College 1970.
1. Note, Land Use Control in Metropolitan Areas: The Failure of Zoning and
a Proposed Alternative, 45 S. Cal. L. Rev. 335, 338-50 (1972); Comment, Public
Land Banking: A New Praxis for Urban Growth, 23 Case W. Res. L. Rev. 897, 903-
06 (1972) [hereinafter cited as Public Land Banking]; Nicosan, Land Use Con-
trols: In Search of the Public Interest, Urban Land, vol. 31, Feb., 1972, at 12.
2. Fasano v. Board of County Comm'rs, 264 Ore. 574, 507 P. 2d 23 (1973).
3. See Heyman, Innovative Land Regulation and Comprehensive Planning, in
The New Zoning: Legal, Administrative, and Economic Concepts and Techniques
24-26 (N. Marcus & M. Groves ed. 1970).
4. The tendancy to separate has not stopped with residential/industrial, but
has been carried over to white/black, rich/poor. Zoning can effectively segregate
192 ENVIRONMENTAL LAW [Vol. 6
town, shop in another and work in yet an

into automobiles - another urban anath
"antagonistic" uses zoning interferes wit
which develop naturally within cities.5
fully as a negative control on land develop
hibiting uses but less effective in encour
Zoning is partially based on predictio
trends. These predictions, in turn, rely o
sume that future trends will remain con
accommodations can be made). Subtle ant
at work in the zoning process.8 And even
or demand for change is recognized, the
bersome in its response, requiring per
adjudications, and appeals (i.e., time and m
trends do not develop as forecast, the zo
become out of touch with the reality of
reasons zoning is at best inadequate an
process of orderly land development.
Faced with the inadequacies of the tr
regulating land use, municipal and state g
searching for alternatives to zoning. T
rights,8 incentive bonuses,9 and land b
people according to their economic and racial statu

existence of the central city slums and suburban sp
in Zoning Law , in Proceedings of the 8th Instit
(1970).
5. Heyman, supra note 3, at 24-25. See generally
Racial and Economic Segregation by Zoning: Death
Tol. L. Rev. 65.
6. This anti-change attitude is reflected in a reference by the Oregon Supreme
Court to "[t]he suspicion which is cast upon the approval [by a governing body]
of a change involving an incompatible use." Archdiocese of Portland v. County of
Washington, 254 Ore. 77, 85, 458 P.2d 682, 686 (1969). The incompatible use there
referred to was a request for a zone change from single family residential to duplex
on a lot surrounded by three other lots zoned for apartment residential - hardly a
threatening incompatible use. Such an approach suggests that suspicion is cast
generally upon the approval of any change.
7. For these same reasons zoning is often an obstacle to large-scale land devel-
opment, because developers hesitate to deal with the uncertainty of obtaining zone
changes and approvals and the frustration of time-consuming hearings and filings.
See Nicosan, supra note 1, at 12.
8. See Carmichael, Transferable Development Rights as a Basis for Land Use
Control, 2 Fla. St. U. L. Rev. 35 (1974).
9. See Costonis, The Chicago Plan : Incentive Zoning and the Preservation of
1975] LAND BANKING 193
thought by some to hold the key t

planning. This comment will focus
proposed alternatives to zoning.
At this stage, land banking in A
cept than a workable land use to
range of possibilities: land banking
of a single plot of land for a speci
large scale acquisition of land whic
of future uses. Generally, the term
body of large tracts of land in adv
tracts are later disposed of (in p
development plan. The public body
county or municipal government
corporation.10 Once the land is acq
reserve. Then, when necessary, the
vided, and prepared for developm
or leased to private parties anxious
effect, according to land bank pro
over development of the region
goals.11
The prospective advantages of land banking stem from a be-

lief that a deliberate and thoughtful effort to define and achieve
land planning objectives is more likely through public acquisition
of land. Control over the type of development could address the
particular needs of the region and help insure an adequate supply
of farmland, open space, and housing. Control over the time and
location of development could help curb the excesses of "leapfrog-
ging' ' and land speculation whereby land close to the urban core
is kept vacant by speculators, while less expensive land further
away from the core is bought and sold for immediate development.
Such land must then be provided with the basic services and roads
at a great expense to new residents and the community as a whole.
The land bank agency could prevent such uneven development by
parcelling out only that land near the core and reserving land on
the periphery (or pricing it substantially higher, thus making the
core area more attractive to developers), and so curtail urban
sprawl. Services installed by the land reserve agency may be less
Urban Landmarks, 85 Harv. L. Rev. 574 (1972).

10. Public Land Banking, supra note 1, at 938-44; ALI Model Land Develop-
ment Code § 6-102 (Prop. OfFl Draft, 1975).
11. See Public Land Banking, supra note 1, at 928-31.
expensive to the ultimate user than th

oper.12 Since, theoretically, the land bank
development prices, it can pass savings
reduce costs of land.13 Minimizing or eli
ther reduces prices.14 Finally, planning ag
tively advise and supervise the planning
adding a needed quality of follow-through
All these prospective advantages are ba
the assumption that better planning and
likely through public acquisition of th
means is greater government control; un
ment (local, state or federal) does not hav
The objective of a land bank is control ov
ance with a comprehensive plan, but as
centralized, it becomes further removed
comes increasingly subject to political
There is no assurance that the same local
cumb to political pressures in zoning15 w
in land banking. Land banking agencie
from local governments to sell the land
be on the tax rolls. There will also be cons
12. Canadian developers claim that lack of serv

serviceable land is the crucial factor in Canada's inflated land market. Parsons &
Budke, Canadian Land Banks, ASPO Planning Advisory Service, Report No. 284,
Oct., 1972, at 2.
13. Some commentators emphasize that lowering costs should not be the pri-
mary goal of land banking. The main objective is to facilitate planning, not to
reduce costs of land to private developers below the market level. Fitch & Mack,
Land Banking , in The Good Earth of America 143 (C. Harris ed. 1974).
14. ALI Model Land Development Code, supra note 10, at 255-56. One com-
mentator cautions that in order for the land bank to reduce the attractiveness of
urban speculation by making lower-priced land available, it must be dealing in
large quantities of land. Public Land Banking, supra note 1, at 935-38.
15. That the courts are not unaware of these pressures in zoning matters is
evidenced by the Oregon Supreme Court's reference to the "dangers of the almost
irresistible pressures that can be asserted by private economic interests on local
government." Fasano, 264 Ore. at 588, 507 P. 2d at 30. For a documented exposé of
corruption in local zoning politics see Freilich & Larson, Conflicts of Interest: A
Model Statutory Proposal for the Regulation of Municipal Transactions, 38
U. M.K.C. L. Rev. 373, 390-98 (1970). In 1969, corruption in the N.Y. town of
Babylon was uncovered: local politicans formed a "dummy corporation" which
could buy up land while concealing the interests of the local officials in obtaining
the needed rezonings and variances and then pocket a sizable profit upon the
eventual sale of the land. Id. at 398.
will tire of passing bond issues. P

acceptance of the land bank progr
cial self-sufficiency, but the goal
making may be incompatible with
land-use. For example, imagine
bids for the same parcel of land.
land developer who plans a shoppi
bid from the county park depar
recreation area more suitable to
emphasis is on profit and loss,
tempting. Thus it is imperative th
weighed in terms of financial s
achieve and still retain public su
lems, all that may realistically be
if offers the power to plan and co
lacking under the police power an
Whether such power will be exer
The Foreign Experience
Land banking is not a new concept. Several foreign countries

have successfully operated land banks in different forms for
years.18 In Sweden, municipal ownership of land as means of con-
trolling urban growth has a strong tradition.17 Municipalities ac-
quire and reserve land, and then lease it back to developers. Nego-
tiated purchase is the method most frequently used for acquisition,
but municipalities do have the power to "preempt" any parcels
offered for sale and may also resort to the use of condemnation
power if necessary.18 Long term leases have been preferred to out-
right sale of the land because they give the city maximum control
of development. Leases also reserve to the city the increment value
which accrues to newly developed land and surrounding land.19
The program has worked well in Sweden largely because of a tradi-
tion of extensive public sector involvement, lacking in the United
States. Thus, largely because of the variation in the political and
social institutions in Sweden and the United States, the Swedish
experience is perhaps a weak precedent for American cities.
16. See Fitch & Mack, supra note 13, at 137-38; Cribbett, Some Reflections
on the Law of Land - A View from Scandinavia, 62 Nw. U.L. Rev. 277 (1967) ; Public
Land Banking, supra note 1, at 908-12.
17. Cribbett, supra note 16, at 294.
18. Nicosan, supra note 1, at 14.
19. Cribbett, supra note 16, at 298.
In Canada, several municipalities have s

banking to address problems of urban gro
ferent political and social institutions an
parallels from which the United States ca
gether sound. Nevertheless, the inefficie
ices resulting from haphazard developmen
viding municipal services to new reside
increase in urban land value are problem
dian and American cities.21 Land banking
utilized by the less urbanized provinces
wan;22 both provinces began practicing l
1930's. Left with a large amount of tax-de
depression, municipalities in those prov
veloped some of the land as part of a pub
city developed its tax land, it acquired ne
land banks. This "bank" of publicly-ow
way for a strong municipal role in land d
tive system of municipally assembled and
In Saskatchewan, the city of Saskatoo
"fund" of tax-delinquent lands, mainta
of land for urban development and now p
city's residential sites.24 As a result Sa
creased, an event which has in turn stim
tion.25 The large land holdings have given
over planning activities, avoiding "leapfr
ing the city the ability to set aside land
space needs.26 While the land bank policy
the record is nonetheless impressive.27
Alberta's system, based on the Alberta
sophisticated, emphasizing comprehens
development. The Act calls for regional p
20. Parsons & Budke, supra note 12; Canadian F

ing and Urban Development, Report 40, at 39-43
21. Parsons & Budke, supra note 12, at 17.
22. Id. at 3-12.
23. Id. at 3; Canadian Federal Task Force, supra note 20, at 40.
25. Id. at 10.
26. Id.
27. Id. at 11.
28. Alta. Rev. Stat. ch. 276 (1970).
develop regional plans for specific

pared, must fit within the scheme
is close cooperation between mun
early 1970 Edmonton and Albert
City Extension project to acquire
central city of Edmonton.30 The p
dential land costs and provide qual
at minimum cost. The Alberta Hou
lands with federal financial assi
tional Housing Act.32 The total cos
private, secret negotiations was $9
will take will be to buy land from
over a 15-year period. In the meant
ration can lease back some of the land in the land bank to former
owners or others for residential or agricultural use. The major
objective of the project is to lower housing costs, and it is estimated
that the homeowners (and/or renters) will save approximately $1
billion through the elimination of speculative profit in the land
development process.34 The modest return expected by the city will
be used to establish a land-banking program for additional lands
at the edge of the city.
In 1969, after reviewing the Albertan and Saskatchewan expe-
rience with land banking, the Canadian Task Force on Housing
and Urban Development recommended wholesale public assembly
of land for urbanization.35 The report suggested that municipalities
or regional governments, assisted by direct federal loans, "acquire,
service, and sell all or a substantial portion of the land required
for urban growth within their boundaries."38 Government funds for
land acquisition had been available since 1949, when the National
Housing Act was amended, but were not widely used.37 Between
1949 and 1969 roughly 23,000 acres of land were assembled with
29. Id. §§ 8, 14.

31. The Alberta Housing Corporation was created by the Alberta Housing Act,
Alta. Rev. Stat. ch. 276 (1970), ch. 175 § 3 (1970).
32. National Housing Act, Can. Rev. Stat. c.N-10 (1970).
34. Id. at 7.
35. Canadian Federal Task Force, supra note 20.
36. Id. at 43.
37. Armstrong, Emerging Urban Land Policy in Canada, ASPO Planning 55
(1970).
federal aid in 180 tracts adjoining Canadian cities, which

amounted to only 5% of the total Canadian urban growth for that
period.38 However, since 1969, applications for aid have increased;
and expectations are that Canadian land assembly will fare better
in the 1970's.39
The U.S. Experience
The foreign experience with land banking, although extensive

and varied, may have only limited application to the situation in
America. Although large-scale public acquisition of land to facili-
tate development is not unknown in the United States, the acquisi-
tion is usually for a specific purpose, not banked. Local govern-
ments and government agencies have acquired land in advance of
actual need for such traditional public purposes as parks, schools,
airports and open space.40 Urban renewal programs are another
more restricted form of land banking used by a majority of states.41
Typically such projects entail the acquisition of blighted areas,
clearance and preparation of the sites, and the sale or lease of the
prepared sites to private developers for redevelopment according
to plan.42 Such programs thus involve the same components as
land banking except that the acquisition of land is for a specified
purpose, e.g. the elimination of slums and blighted areas, and land
is quickly passed into private hands, not banked. Within the last
two decades, the courts have generally upheld the validity of urban
renewal projects and the power of the government to condemn land
for urban renewal.43
Similar programs based on the same land bank concept have

been instituted for other specifically defined purposes. Ohio has
enacted a New Community Organization program for the purpose
of "encouraging the orderly development of well-planned, diversi-
fied and economically sound new communities Under the
program county-based Community Authorities may be set up with
power to acquire, improve, maintain, sell or lease property.45 Illi-
38. Id.
39. Id. at 56.
40. Fitch & Mack, supra note 13, 134, 139; Public Land Banking, supra note
1, at 913-15.
41. IE. Yokley, Municipal Corporations § 107 (1956).
42. Id.
43. Id. § 108.
44. Ohio Rev. Code Ann. § 349.02 (Page Supp. 1974).
45. Id. § 349.06.
nois has authorized the creatio

ment Authority designed to co
and urban slums and to encour
The Authority's powers inclu
dispose of real property.47 N
Conservancy Corporation, a no
ing quickly to acquire land for
of the Act is on the acquisition
park and recreation purposes
benefit to the State and the pu
The corporation is authorized t
mortgage, or lease any interest
offer to sell any assets it acqu
and its agencies at the same p
chased plus reasonable cost of
Programs such as these in Oh
all focus on a single, immediat
tutional problems involved wh
for unknown future uses. Ev
program, confined to special
purposes as schools, parks or
when the land was not immed
of Education v. Baczewski ,52 t
land for a school which might n
invalidated the condemnatio
immediate use, "not *** an ind
necessity In many jurisdictions an extensive land banking
46. III. Rev. Stat. ch. 67-Vfc, §§ 303-30 (1971).

47. Id. § 307.12.
48. N.C. Gen. Stat. ch. 113A §§ 135-143 (1975).
49. Id. § 136.
50. Id. § 139(12).
51. Id. § 141.
52. 340 Mich. 265, 65 N.W.2d 810 (1954).
53. Id. at 269, 65 N.W.2d at 811, accord, State ex rei. Sharp v. 0.62033 Acres
of Land, 49 Del. 174, 112 A. 2d 857 (1954) (court refused to uphold the state's
condemnation when there was no reasonable certainty that plans for a four-lane
highway would be prepared in the foreseeable future). But cf. New Windsor v.
Ronan, 329 F. Supp. 1286 (S.D. N.Y. 1971) in which the court upheld the condemna-
tion of land for a potential but not finally approved airport expansion. The court
noted:
"The state may take more than it is positive it will need; it may, given
the limits of human foresight, take land for which a need is reasonably
program would run into this type of con

this light, urban renewal and advance acq
ited to single, more immediate purposes,
a full-scale land bank program.54
More closely related to land banking
couraging) is the New York State Urban
(UDC).55 The UDC is a public benefit corp
with a state-wide range of urban problem
ited to serious housing shortages and n
ment.56 Like a land bank, the UDC has th
velop and sell land.57 It is authorized to b
notes and bonds which may be secured by
or projects.58 Because of its state-wide sc
public purposes, the UDC steps beyond
program. Although it does not consider
the UDC is currently involved in exten
1973, the Corporation owned $50 million
million more in leases and options.59 The
vived constitutional challenges,80 but h
predicted, but which eventually proves unneces

pose."
Id. at 1291.
And in Rindge Co. v. County of Los Angeles, 262 U.S. 700 (1923), the Court
upheld the county's acquisition of land for a specified but future purpose. The
Court reasoned that:
"In determining whether the taking of property is necessary for public use
not only the present demands of the public, but those which may be fairly
anticipated in the future may be considered."
Id. at 707.
Land banking's problems are more serious, though, since not only the time of
use is unspecified, but often the purpose for the taking cannot be specified.
54. For a further analysis of constitutional obstacles to land banking, see dis-
cussion in text accompanying notes 141-44, infra.
55. N.Y. Unconsol. Laws §§ 6251-85 (McKinney Supp. 1974-75).
56. Id. § 6252. For a discussion of the UDC and some of its projects see
Brannon, Integrating Recreation and Open Space Facilities into Urban Develop-
ment Projects, 24 Syra. L. Rev. 929 (1973); Public Land Banking, supra note 1, at
925-26.
57. N.Y. Unconsol. Laws § 6255(7) (McKinney Supp.974-75).

58. Id. §§ 6255(20)-(21), 6267.
59. Fitch & Mack, supra note 13, at 141.
60. Section 6270(3) of the UDC Act obligates the state to keep up the UDC
reserve fund by annual legislative appropriations. This provision was challenged as
unconstitutional in Smith v. Levitt, 37 App. Div. 2d 418, 326 N.Y.S.2d 335 (1971),
aff'd 30 N.Y.2d 934, 335 N.Y.S.2d 687, 287 N.E.2d 380 (1972). The court upheld
cially.01 At present the UDC owe

crued interest and hovers on the e
banks have refused to loan more
the state has paid off UDC debts.
jobs at stake and 20,000 housing
legislature reluctantly granted $90
rarily alive.84 A current possibilit
sider a $275 million loan to the Co
is on shaky ground and is not an
ing.
An important precedent for purposes of land banking was set

in the Commonwealth of Puerto Rico with the establishment of the
Puerto Rico Land Administration.88 In 1962 Puerto Rico created
the Land Administration as a response to problems of serious land
shortages and spiraling land costs resulting from speculative prac-
tices.87 The Land Administration Act sets out a wide range of pub-
lic purposes in a police-power type enabling clause.88 The Adminis-
tration is directed to
preserve the natural values of the lands, beaches, forests, and land-
scapes, to ensure the best conditions of health, safety, comfort, rec-
reation facilities, essential services, and esthetic activities, to pre-
serve historical values, to insure the utilization of lands on the basis
of the most reasonable costs in behalf of the welfare of the com-
munity ***."
Because of its wide range of public purposes and policies, and
the provision, calling it a contingent liability on the part of the state. In Oregon a
similar provision in the Portland Housing Division Act was recently struck down
in Gibson v. Smith, 75 Adv. Sh. 451, 531 P.2d 724 (Ore. App. 1975). The court held
that such moral obligation bonds violate the constitutional provisions restricting
the state's ability to lend its credit. Thus, the validity of moral obligation bonds,
upon which the UDC heavily relied, will vary from jurisdiction to jurisdiction.
61. For a look at the UDC's financial status and the factors that contributed
to the making of the financial crisis, see M. Kutz, How Could It Happen to the
UDC?, Planning, May 1975, at 14.
62. N.Y. Times, March 9, 1975, § 1, at 46, cols. 5-6.
63. Id. at col. 3.
64. Id. at col. 6.
65. Id. at col. 7.
66. Land Admin. Act. No. 13, § 1 (1962). P.R. Laws Ann. tit. 23, § 311 et seq.
(1964), as amended, (Supp. 1974).
67. See Public Land Banking, supra note 1, at 916-19.
68. P.R. Laws Ann. tit. 23, § 311 f (1964).
69. Id. § 311 f(t).
because its acquired land need not be use

but may be kept in reserve for the bene
Rico,70 the Land Administration is differ
tive land banking of urban renewal prog
The Land Administration is a public c

closely allied with government agencies
eral policy is determined and its powers
Board which includes the Governor of Puerto Rico and the chair-
man of the Puerto Rico Planning Board.72 The Administration may
acquire property in any lawful manner, including purchase, gift,
or exercise of eminent domain.73 Such property may be held in
reserve by the Administration74 which may carry out programs,
such as housing projects, to ensure the most effective development
and utilization of lands owned by the Administration.75 In selling,
leasing or otherwise disposing of its property, the Administration
may, if necessary, fix restrictions on the property to promote the
purposes of the Act.78
Current Proposals and Trends
In spite of the Puerto Rican precedent, full-scale public owner-

ship of land as a method of land-use control in the United States
is still a concept long on discussion and short on implementation.
Recently a number of federal commissions, committees and urban
policy task forces have joined the chorus of those recommending
that full-scale land-banking be instituted on local or state levels.77
In a recent proposal submitted to Congress, Professor Charles Haar
advocated a federal program for a metropolitan land bank which
would provide federal assistance to metropolitan authorities for
the acquisition, management and disposition of land according to
70. Id. § 311 f (q).

71. Id. § 311 b (a).
72. Id. § 311 b (b).
73. Id. § 311 f (j).
74. Id.
75. Id. § 311 f (w).
76. Id. § 311 f (z). Such restrictions can include a limitation on the profits to
be had by the transferee of the property.
77. See Public Land Banking , supra note 1, 927-28 for recommendations by the
National Commission on Urban Problems, the Advisory Commission on Intergov-
ernmental Relations, and the Report of the American Institute of Architects,
National Policy Task Force; and ALI, Model Land Development Code, supra
note 10, § 6 Commentary.
provisions of a comprehensive plan.78

tion recommends federal aid to state
who could buy land, hold it and then
and planned development.79 The Citiz
Environmental Quality echoes this p
mental action directed through stat
dent's Council on Recreation and Natu
tution of land policy patterned after
already in effect.81
Federal recognition of the need for

the urban environment has resulte
munity Development Act of 1974. 82 U
of Housing and Urban Development is
to states and units of local governmen
Development Programs.83 Specific ob
activities might be the elimination
munity services or more rational util
sources.84 Congress appropriated $8.4
block-grant program (whereby the m
governments) replaces the earlier cate
money was given to individual projec
renewal and neighborhood improv
greater control over how the money
munity Development Programs that q
acquisition of land which is deteriora
priately developed from the standp
growth,86 land to be used for public
78. Haar, Wanted: Two Federal Levers for U

Urbank, in Papers Submitted to the Subcom
Comm. on Banking and Currency, 92nd Cong
79. National Urban Coalition, Counterbudget: A Blueprint for Changing
National Priorities 1971-1976, at 141-42 (1971).
80. Land Use Task Force, The Use of Land: A Citizens Policy Guide to
Urban Growth 259-61 (W. Reilly ed. 1973).
81. President's Council on Recreation and Natural Beauty, From Sea to
Shining Sea 115-16 (1968).
82. Pub. L. No. 93-383, 88 Stat. 633, in 1974 U.S. Code Cong. & Admin. News
3243.
83. Id. § 103(a) (1).
84. Id. § 101 (c)(l)-(7).
85. Id. § 103(a)(1).
86. Id. § 105(a)(1)(A).
87. Id. § 105(a)(1)(E).
installation of public works, facilities, and si

ments,88 and disposition (through sale, lease
acquired pursuant to the Act or retained for
Act also provides federal guarantees for lo
property acquisition.90 In effect then, the A
able to any community wishing to establish
gram.
The Mechanics of Land Banking
Once the establishment of a full-scale land banking program

is contemplated, an initial choice must be made as to the
jurisdictional scope of the banking agency. The land bank may
operate on a municipal, regional or state-wide basis. The choice is
colored in part by a determination of financing structure as well
as practical considerations.91 In order to exercise effective control
over urban development, a land bank must be able to acquire and
dispose of land lying outside municipal boundaries. Because mu-
nicipal corporations cannot exercise their powers beyond corporate
limits without legal authorization,92 most proposals suggest a state-
wide or regionalized land banking program.93 State agencies can
establish acquisition plans for a large region unconstrained by city
or county boundaries, and can avoid the fragmentation of develop-
ment that occurs when planning is left totally in the hands of
municipalities.94
Some land banking proponents view the public corporation or

authority as the vehicle best suited to the operations of a land
bank.95 Public corporations are instrumentalities of the state, cre-
ated in the public interest, and are considered separate legal enti-
ties.96 Public corporations can sue or be sued and hold property in
their own name.97 They are created by special legislative acts and
88. Id. § 105(a)(2).

89. Id. § 105(a)(7).
90. Idâ § 108(a).
91. See Public Land Banking, supra note 1, 938-44.
92. 2 E. McQuillan, Municipal Corporations § 7.02 (3d ed. 1966).
93. See ALI Model Land Development Code, supra note 10; Public Land
Banking , supra note 1, at 938.
94. See generally Becker, Municipal Boundaries and Zoning : Controlling Re-
gional Land Development, 1966 Wash. U.L.Q 1.
95. Public Land Banking, supra note 1, at 938-44.
96. Pozen, The Financing of Local Housing Authorities: A Contract Approach
for Public Corporations, 82 Yale L.J. 1208, 1209 (1973).
97. Id. at 1209 & n.14.
are usually operated by non-partisan

tions may receive governmental app
bonds."
The two most highly applauded advantages of public corpora-

tions are their freedom from constitutional debt restrictions and
their political autonomy. But there are sufficient holes in these
advantages to suggest that a public corporation may not be the
most attractive instrument to implement a land banking pro-
gram.100
Most states and local governments are financially restricted

by constitutional provisions which limit the amount of indebted-
ness that they may incur.101 Because of this restriction, such gov-
ernments have sought other methods of financing public improve-
ments by borrowing money unconstrained by the debt restrictions.
The public authority or corporation is one such solution. Such
authorities may rely on revenue bond financing, whereby the inter-
est and principle on the bonds are to be paid solely from the reve-
nues of the project financed by the bond.102 Such bonds do not
require a pledge of the credit of the state or local government and
are not regarded as a general obligation of the state or local govern-
ment to which the constitutional debt restrictions apply.
But a public corporation is not the only solution to the prob-
lem of borrowing money unfettered by the debt restriction. Most
98. Id. at 1210 & nn. 16, 17.

99. Id. at n.18.
100. See Shestack, The Public Authority, 105 U. Pa. L. Rev. 553 (1957), where
the author explores the supposed advantages and actual disadvantages of public
corporations.
101. For example art. XI § 7 of the Oregon Constitution provides that the
legislature shall not "create any debt or liabilities which shall singly or in the
aggregate with previous debts or liabilities exceed the sum of fifty thousand dollars
***." Art. XI § 10 provides that:
"No county shall create any debt or liabilities which shall singly or in the
aggregate, with previous debts or liabilities, exceed the sum of $5,000; pro-
vided, however, counties may incur bonded indebtedness in excess of such
$5000 limitations to carry out purposes authorized by statute, such bonded
indebtedness not to exceed limits fixed by statute."
Art. XI § 5 provides that "[a]cts of the Legislative Assembly, incorporating towns,
and cities, shall restrict their powers of taxation, borrowing money, contracting
debts, and loaning their credit."
For debt limitations as applicable to municipalities, see generally 15 E.
McQuillan §§ 41.02-44.44 (3d ed. 1970).
102. Shestack, supra note 100, at 555.
states have now approved the "special fund

the state itself to resort to the same type of
that public corporations utilize.103 The speci
the constitutional debt restriction on the
bond is paid back wholly out of the revenu
financed by the bond. Thus most state and
now enjoy a method of financing originally
corporations.104
The other supposed "advantage" of a publ

political autonomy - its freedom from the
red tape that governmental agencies mus
tage" may not be wholly beneficial for two
members of the corporation are politically
by nature subject to traditional political pre
not effective as a shield from political press
political autonomy acts as a barrier to publ
bility, sealing off effective public control.10
ration must still be run as a business, sin
on investor confidence.107 The people and in
ing to lend money must be convinced that
nues will sufficiently outweigh operating ex
interest and principal on the loans. This fo
perform its public function for profit and t
ers as its principal clients.108 But the best inte
ers are not necessarily the best interests of
these considerations, a public authority a
banking should be approached cautiously
may be to place the land bank in the hands
more responsive to the electorate.
103. Id. at 560; see 15 E. McQuillan, Municipal Cor

1970).
104. Shestack, supra note 100 at 561-62.
105. Id. at 563.
106. For an enlightening look at an unresponsive public authority in action see
Hughes, Realtors , Bankers and Politicans in the New York/New Jersey Port
Authority , Society 63 (May/June 1974). This problem is typified by the Port Au-
thority of New York and New Jersey and arises because the authority can raise
funds only by borrowing on its own credit, pledging its revenues. Thus it cannot
afford to over-extend itself and become a poor investment without losing its source
of funding.
107. See id. at 66-67.
108. Id. at 67.
This approach is consistent with th

Land Banking Article which calls f
Land Reserve Agency.109 This may
section within an existing department
though designated an independent ag
administrative purposes, its powers w
lic corporation.111 Financially the ag
money,112 apply for grants from stat
and receive funds through state and
tions,114 and receive funds appropriat
obligation bonds (in accordance with
agency's powers would have to coordi
Land Planning Agency.116 It would b
reserve divisions which would also be
the State Land Planning Divisions.117
ment of a state agency, but in order
local governments may supply fund
agency to acquire and hold lands on t
may specify that profits from the sa
local government.119
Once the type and jurisdictional

determined, there is the additional
granted. Should the land bank be giv
tion? In the vast majority of cases, lan
by purchase through private negotiat
condemnation is essential to prevent p
ion ALI Model Land Development Code, su

110. Id. § 6-102 (2).
111. Id. § 6-201.
112. Id. § 6-201(6).
113. Id. § 6-201(2).
114. Id. § 6-201(4).
115. Id. § 6-201(5). General obligation bonds are subject to payment through
taxes and represent debt for which the city or state is liable. Since most states are
subject to constitutional debt limitations applicable to general obligation bonds,
this would not be a widely available method of financing without repeated state
constitutional amendments to raise the debt limit. See Shestack, supra note 100,
at 557; ALI Model Land Development Code, supra note 10.
116. ALI Model Land Development Code, supra note 10, § 6-103 (2), (3).
117. Id. § 6-102 (3).
118. Id. § 6-501 (4).
119. Id. § 6-501(3)(b).
ing and refusing to sell. As a good bargai

of its existence would probably minimize
A second concern is whether the proper
bank should be exempt from local proper
York State Urban Development Corpor
Housing Development Authority122 exe
from property taxes. But the property t
of revenue for local governments and i
municipalities and counties, friction m
land bank and local governments.123 This
public support for the land banking agen
concept in general. One possible compr
land bank to distribute pro rate payment
out of profits it had received in excess of
example, where the land reserve agency
of twenty-five percent of the original cos
it could distribute that excess to the loca
advantage of this plan is that it would
vested interest in the success of the prog
some of the jealousy which is bound to d
ticans and independent agencies who shar
use control. The serious disadvantage is t
on the land bank to be a profit-making en
financial gain the measure of success.
Another consideration is how long th
permitted to hold property in reserve. T
banking concept could be seriously imp
required to dispose of its holdings within
120. The UDC only used its condemnation power

1968 to 1973. The Use of Land, supra note 80, at 26
vehicle for the land banking program is to be a
agency, the power of condemnation may be too pow
of an authority with so little public accountability
nying notes 97-105, supra. This again suggests that
the land bank a state agency may be the wiser choi
121. Urban Development Corporation Act, N
(McKinney Supp. 1974-75).
122. III. Stat. Ann ch. 67-Vfr, § 330 (1973).
123. ALI Model Land Development Code, supra no
tary following.
124. Id. § 6-203(2).
125. Id. and commentary following.
the other hand unrestricted holding

vailing public sentiment, which regar
therefrom as a private rather than
judges that the development plan ha
development has not occurred within
Puerto Rico has reached a comprom
limit only on land that has been co
may be held by the Administration
posed draft would require the plann
within 20 years. After that time forc
by the State Land Planning Agenc
government and a finding by the la
land is no longer needed to accompli
The practical effect of this provision
agency's unchecked holding power wi
holding and disposing of land; furth
constitutional objections to acquisitio
future.
Finally, of great local concern is w

be given the power to override loc
York, the UDC was initially granted t
ample, would allow it to construct
regard to either local zoning ordinan
power to override local ordinances
and proved to be one of the most con
erful corporation.131 In Floyd v. Ne
ment Corporation , 132 owners of p
urban development project attacke
the Act as a violation of the state ho
upheld the validity of the UDC's pow
are inherently exempt from local
quently, however, in June 1973, the

127. ALI Model Land Development Code, s
mentary following.
128. P.R. Laws Ann. tit. 23, § 311 f (q) (19
129. ALI Model Land Development Code, s
mentary following.
130. N.Y. Unconsol. Laws §§ 6283, 6266(3)
131. N.Y. Times, Sept. 10, 1972, §1, at 92,
132. 33 N.Y.2d 1, 347 N.Y.S.2d 161, 300 N.E
133. Id. at 6, 347 N.Y.S.2d at 164, 300 N.E.2d at 706.
eviscerating the power of the UDC to o

building regulations. The amendment provides that
"[notwithstanding any inconsistent provision of this act" no pro-
posed residential project may be carried out within a town or incor-
porated village, if within a specified time period the local govern-
ing body of such town or village formally objects.134 In spite of the
political controversy that surrounds the power to override local
zoning regulations and building codes, it is an essential power if
the land bank is to be successful in its regional approach to solving
land use problems. Restrictive local zoning ordinances can impede
orderly development, and local building codes can render it pro-
hibitively expensive. Without the power to override such restric-
tions, the land bank would be unable to effectively plan for an
entire region. But to ease local opposition the override power must
be used cautiously and must be tightly tied to and called for by
the comprehensive plan.
Objections, Obstacles and Alternatives

Costs
Perhaps the greatest factor affecting the feasibility of land

banking is the cost. Ideally, the expenses of original acquisitions
can be recaptured when the sites are developed and sold, but in
the early stages of operation the land bank will probably spend
more on acquisitions than it recoups on sales. Although this is
consistent with the goal of controlled government, many may ques-
tion whether society can afford such an expensive investment.
While it may be possible to commence a land bank on a limited
scale, to be effective for long term planning, the agency must ac-
quire a sizable inventory of land. After acquisition costs, any possi-
bility of realizing revenues from land banking will depend mainly
on the maintenance costs of land and the length of time it must
be held.135 There can be no doubt that such a program will be
expensive. The American Institute of Architects estimated in 1971
the acquisition cost of one million acres within and surrounding
American cities to be $5 billion, "which would be recaptured over
the next 30 years by the appreciation in value of the land realized
by lease and sale."136 The Urban Land Research Analysts Corpora-
tion, in concluding the land banks would be financially feasible,
134. N.Y. Unconsol. Laws § 6265(5) (McKinney Supp. 1974-75).

136. Public Land Banking, supra note 1, at 928.
estimated in 1970 that the maxim

metropolitan area of 2.5 million
though an investment of half that
siderable impact upon land plann
land banks will have to rely upon
is already available in the Housin
Act of 1974. 138 For public corpor
source of funding will probably b
bonds, secured by a mortgage cove
of revenues. Yet the financial plig
this will probably not be enough.13
sure to be financially self-sufficien
orderly growth and result in sacrif
any savings will have to be measur
life" benefits which are not read
cents.140
Constitutionality
Land banking will undoubtedly f
tutionality when the power of em
rently the law requires that land ta
domain be used for a public purpos
when land is condemned for an unk
by a land bank would have to be
The individual condemnation should be scrutinized within the
framework of the whole scheme - more effective control of develop-
ment and orderly growth.143 Because courts generally give defer-
ence to the legislative definitions of public purpose and the legisla-
tive choice of means to effectuate that purpose,144 if the land bank
statute clearly spells out its aims, it might survive judicial scru-
tiny. Thus a court could conclude that minimizing urban sprawl
137. Id. at 962. Both of these estimates are probably outdated now by inflation.
138. Pub. L. No. 93-383, 88 Stat. 633 in 1974 U.S. Code Cong. & Admin. News
713.
139. See discussion in text accompanying notes 55-65 supra.
140. See Fitch & Mack, supra note 13, at 145-50.
•141. Berman v. Parker, 348 U.S. 26; 2A P. Nichols, Eminent Domain § 7.1 (3d
ed. 1975).
142. See discussion in text accompanying notes 52-54, supra.
143. Haar, supra note 78, at 940; see also, Comment, Judicial Review of Land
Bank Dispositions, 41 U. Chi. L. Rev. 377 (1974).
144. 348 U.S. at 32-33; Nichols, supra note 141, at § 7.4(1).
and promoting rational growth are valid

focusing on the specific use to which the
will be put.
One hopeful sign for land banking proponents is
Commonwealth v. Rosso,145 where constitutionality of the Puerto
Rican land banking program and of its exercise of the power of
eminent domain were attacked on grounds that condemning prop-
erty without specific plans for its use violated the public purpose
requirement. The trial court agreed and held that private property
could not be condemned for an unrevealed use.146 But the Supreme
Court of Puerto Rico found the lower court decision "out of focus
in present times", reversed, and held the enabling legislation con-
stitutional in all respects.147 The court looked not to the specific
purpose for which the Rosso's property would be used but to the
overall purpose behind the creation of the Land Administration.148
The court made extensive reference to social, moral and economic
justifications and established the notion that land banking could
be instituted by the state under the guise of public purpose con-
demnation.149 With this decision as a precedent, whether the tak-
ing of property to promote orderly urban growth and efficient plan-
ning constitutes a public use will depend largely upon whether the
court concurs with the legislative finding that such activities are a
benefit to the community.
There is an additional* restriction on the exercise of eminent
domain which may challenge land banking: only that interest in
property may be acquired by eminent domain which is reasonably
necessary for the accomplishment of the public purpose. The con-
demnor cannot acquire more land than he needs.150 Thus in State
u. Larson the court upheld the state's election to condemn and pay
for only a limited easement for access to a gravel pit, leaving the
easement rights and title to the land in the property owner.151 The
court found the limited condemnation "in harmony with the fun-
damental principle that no greater estate or interest should be
145. 95 P.R.R. 488 (1967).

146. Id. at 509.
147. Id. at 527.
148. Id. at 525-26.
149. Roberts, The Demise of Property Law, 57 Cornell L. Rev. 1, 48 (1971).
150. Nichols, supra note 141, at § 9.2.
151. 54 Wash. 2d 86, 338 P.2d 135 (1959).
taken than is reasonably necessary

purpose."152
Recently, the Montana Supreme

u. Hafer, determined that the cou
public use when it condemned 3
establish a clear zone at the end of
quoted Nichols:
*** If an easement will satisfy the pu
be unjust to the owner, who is entit
needs do not require, and to the pub
to pay for more than it needs
With that guideline, the court dete

need for a clear zone would be satisfied with an easement rather
than fee simple interest in the Hafer's land.
This decision and others like it could require the land banking
agency to condemn development rights in a parcel of land rather
than the land itself - a possibility that those interested in land
banking should investigate.155 Through the acquisition of develop-
ment rights, the banking agency could limit the land to its present
low intensity use, selling the rights to a developer for use on an-
other parcel of land or selling them back to the original owner when
time is ripe for development. All this would occur within the
framework of a carefully thought-out comprehensive plan. The
advantages of such programs are that the land remains on the tax
rolls, there is no public maintenance and the cost of buying devel-
opment rights would be considerably less than the cost of buying
the parcel of land.156 Additionally, there should be less landowner
opposition since the land remains productive in private hands.
Similar techniques have been used in preserving open space (con-
demnation of scenic easements) and historical landmarks and
could be adopted to the implementation of a comprehensive land
use plan.
152. Id. at 89, 338 P.2d at 137.

153. 532 P.2d 691 (Mont. 1975).
154. Id. at 693.
155. See Rose, Psychological, Legal and Administrative Problems of the Pro-
posal to Use the Transfer of Development Rights (TDR) as a Technique to Preserve
Open Space , 6 Urban Lawyer 919 (1974).
156. Waglender, The Urban Open Space Game , 6 Urban Lawyer 950, 956
(1974).
Other Alternatives
As noted earlier, land banking can be geared toward broad

public purpose acquisition or specific site acquisition. If the aim
is the implementation of a full-scale land bank program with the
power to acquire land for unknown future uses, enabling legislation
must be drafted which clearly spells out the public purpose, and
constitutional challenges must be expected. A simple procedure is
available with specific site acquisition: if the objectives can be
narrowly defined, greater public support is likely and the activities
may well be initiated under existing legislation or via implied pow-
ers derived from a general welfare clause. For example, Fairfax
County, Virginia recently instituted a county-wide effort to man-
age growth through land banking.157 Rather than face the long and
arduous task of drafting legislation to create a land banking agency
or revising existing legislation to give local governments the power
of direct acquisition of land, the County Board of Supervisors in-
stead chose to work through existing channels, and established a
revolving fund to be administered by the county's Department of
Housing and Community Development for financing specific site
acquisitions.158 A grant can be given for the site at the time the site
is to be acquired.
This more modest approach to land banking may be a valid
alternative to the full-scale programs, especially when fastened to
a credible comprehensive land use plan and coordinated with the
programming of public facilities and services.159 A carefully drawn
comprehensive plan can help anticipate the need for acquisitions
enough in advance that prices should be feasible. The plan pro-
vides the framework for programming the public facilities and
services in the direction the plan wants growth to take place. The
importance of timing in development was recognized by the town
of Ramapo, New York which initiated a timed growth policy to
"preserve its rural character" and protect itself from subdivisions
and development it was not equipped to handle.160 Ramapo's ordi-
nance requires a subdivision developer to obtain a special permit
before building. The permit is issued once the developer accumu-
157. Holbein, Land Banking: Saving for a Rainy Day, Planning, Jan. 1975, at
19.
158. Id. at 19, 20.
159. Id. at 21.
160. Bosselman, Can the Town of Ramapo Pass a Law to Bind the Rights of
the Whole World?, 1 Fla. St. U.L. Rev. 234 (1973).
lates 15 points under a rating s

ity of sewers, parks, schools, r
delay issuance of the permit fo
the "taking" problem since th
restriction") and so effectively
Ramapo's controlled growth pol
there and contributes to the p
towns. But such a device coul
that one town does not "control
neighboring towns which now m
velopment or sequential grow
ment beyond the urban fringe
core areas thus minimizing "l
pensive extension of public ser
tionary influence on land price
realize that development canno
specific sites could then be ac
government at reasonable price
legal and financial obstacles to
probably arouse greater public
is less overt government involv
Specific site acquisition seems le
ciency in the sense that its nar
ble. The combination of site a
wise planning also avoids the pr
which might severely cripple a
ing program. Instead success c
effective planning and orderly
answer, it is these types of tool
must investigate and coordina
ning in facing the problems of
161. Id. at 239. The timing ordinance

334 N.Y. S. 2d 138, 285 N.E.2d 291 (1972)
policy in Petaluma, California was val
had been struck down as an infringem
the district court. Construction Ind. A
(9th Cir., Aug. 31, 1975). According t
wisdom of the Petaluma Plan" was the issue in the suit. Id. at 11.
162. See Bosselman, supra note 1, at 248-50.
163. See id. at 244-45.
Conclusion
The strongest objections to land banking may rest on philo-

sophical grounds. The concept runs counter to traditional Ameri-
can respect for private property and a distaste for governmental
interference with the private sector, especially on the local level.
But government involvement does not necessarily destroy the pri-
vate market for the land developer. In some respects his job will
be made easier; ideally, costs, risks and waiting times for permit
approval will be reduced. But the major problem with land bank-
ing is that there has been no conscious decision by the people that
public (government) control is the way they want to go. And with
"public" control the public is likely to be even more cut-off from
the decision-making realm than it already is in the zoning process.
The minimizing of public input is coupled with increased oppor-
tunities for corruption and abuse for those actually in control.
Thus it remains to be seen whether the same government agencies
that have controlled zoning can be more responsive to land use
problems and public needs in a system with an ever greater dosage
of government control.

Francis Landbankingdevelopment 1975

Uploaded by

Copyright:

Available Formats

Francis Landbankingdevelopment 1975

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Francis Landbankingdevelopment 1975

Uploaded by

Copyright:

Available Formats

Lewis & Clark Law School

LAND BANKING: DEVELOPMENT CONTROL THROUGH PUBLIC ACQUISITION AND

NOTES & COMMENTS

LAND BANKING: DEVELOPMENT

Zoning, the primary weapon in the arsenal of land planning

town, shop in another and work in yet an

people according to their economic and racial statu

thought by some to hold the key t

The prospective advantages of land banking stem from a be-

Urban Landmarks, 85 Harv. L. Rev. 574 (1972).

expensive to the ultimate user than th

12. Canadian developers claim that lack of serv

will tire of passing bond issues. P

The Foreign Experience

Land banking is not a new concept. Several foreign countries

In Canada, several municipalities have s

20. Parsons & Budke, supra note 12; Canadian F

develop regional plans for specific

29. Id. §§ 8, 14.

federal aid in 180 tracts adjoining Canadian cities, which

The U.S. Experience

The foreign experience with land banking, although extensive

Similar programs based on the same land bank concept have

nois has authorized the creatio

46. III. Rev. Stat. ch. 67-Vfc, §§ 303-30 (1971).

program would run into this type of con

predicted, but which eventually proves unneces

57. N.Y. Unconsol. Laws § 6255(7) (McKinney Supp.974-75).

cially.01 At present the UDC owe

An important precedent for purposes of land banking was set

Because of its wide range of public purposes and policies, and

because its acquired land need not be use

The Land Administration is a public c

Current Proposals and Trends

In spite of the Puerto Rican precedent, full-scale public owner-

70. Id. § 311 f (q).

provisions of a comprehensive plan.78

Federal recognition of the need for

78. Haar, Wanted: Two Federal Levers for U

installation of public works, facilities, and si

The Mechanics of Land Banking

Once the establishment of a full-scale land banking program

Some land banking proponents view the public corporation or

88. Id. § 105(a)(2).

are usually operated by non-partisan

The two most highly applauded advantages of public corpora-

Most states and local governments are financially restricted

98. Id. at 1210 & nn. 16, 17.

states have now approved the "special fund

The other supposed "advantage" of a publ

103. Id. at 560; see 15 E. McQuillan, Municipal Cor

This approach is consistent with th

Once the type and jurisdictional

ion ALI Model Land Development Code, su

ing and refusing to sell. As a good bargai

120. The UDC only used its condemnation power

the other hand unrestricted holding

Finally, of great local concern is w

126. Fitch & Mack, supra note 13, at 149.

eviscerating the power of the UDC to o