Sowing Insolvency at the LRA
Date Posted: June 20, 2023
Posted In: News,
From NextSTL: A recent policy change at the Land Reutilization Authority (LRA), the city’s land bank, is concerning for a city seeking to reverse population loss and struggling to keep up with infrastructure liabilities rendered more difficult by the ever-present rip tide spreading out the region.
When a property owner doesn’t pay property taxes and no one purchases it at tax sale, it ends up in the hands of the LRA. The LRA has thousands of vacant buildings and lots. The St. Louis Development Corporation (SLDC) Real Estate Department maintains, markets, and sells these properties and performs land assemblage for future development.
At the Jan 25, 2023 meeting of the LRA Board, they considered a resolution “Side Lot Sales Policy and Sale of Qualified Properties.”
LRA has acquired parcels through tax sale over the years of varying small or irregular sizes and that are not buildable lots (defined by the City Code as less than 4000 square feet). As these properties are of minimal value to developers or purchasers because the parcels cannot be improved, LRA over the years has endeavored to sell them but has had very limited success. Generally, when these parcels are purchased, adjacent property owners are the purchasers and indicate they have been maintaining them or have experienced challenges due to minimal maintenance or neighborhood-related challenges.
The Side Lot Sales Policy authorized by this resolution provides for a reduced price and streamlined application and sale process for adjacent property owners to use as extended yard or otherwise to incorporate into their existing property. The following parameters will govern this policy, which is further summarized in Exhibit A:
- Property Eligibility:
o Class A
o Lots smaller than 4,000 sq. ft.
o Lot must not be adjacent or contiguous to another LRA property- Applicant Eligibility:
o Must be owner of the adjacent, contiguous occupied property;
o Must be current on all real estate taxes on all property owned within the City of St. Louis- Sale Price: $100.00, subject to usual application and closing costs
LRA Jan 30, 2023 Agenda PDF page 9
If there is a “missing tooth” vacant lot next to your home, you can purchase the lot from the LRA for $100. The goal being to get lots off the LRAs portfolio that are presumed unattractive to builders looking to leverage scale by building many homes or bigger buildings on larger lots. The purchaser can take care of their side lot instead of relying on the overwhelmed LRA
From a land productivity perspective this policy is problematic. A side lot property owner now has typically twice the frontage. That’s twice the street, alley, street lights, pipes, wires, etc, but their property didn’t become twice as valuable. As with low-productivity auto-oriented development patterns, the land’s productivity is less able to meet the long-term liabilities of the infrastructure serving it. It is made up by worse or less infrastructure or higher taxes. With each side lot sold it bakes in the cake a little less potential land productivity.
In parts of the city, the sale for a side lot might be for the best. It’s unlikely the market will support new construction for a long time. The liability to the city of the LRA taking care of the vacant lot and the positive of a little bit of property taxes is better than it remaining tax-exempt in LRA hands for who knows how long.