gain control of land: overview
What are the challenges to acquisition of land in
location-efficient areas?

As for-profit and nonprofit developers alike will attest, the cost of developable land near proposed or redeveloping transit stations, new town centers, and other location-efficient areas often rises as word spreads about upcoming investments in infrastructure and other amenities. Moreover, in some cases a single land owner may refuse to sell until prices peak, making it difficult to assemble targeted parcels and jeopardizing the viability of entire developments. The ability to successfully negotiate with sellers and act quickly to secure strategically-located sites before prices escalate can be especially challenging for non-profit or mission-driven developers of affordable housing, who often require extra time to line up the multiple sources of financing required for a project to pencil out. The difficulties associated with acquisition of location-efficient sites often mean that new affordable homes get built on lower-cost land at the periphery of the metro area, where families have limited access to public transit and often incur higher transportation costs.

How can states and localities help?

States and localities can adopt several strategies to help ensure that strategically-located sites remain available for affordable or mixed-income developments. Property acquisition funds and land banks provide mechanisms to acquire and hold well-located land until it can be developed for targeted purposes, including affordable housing. Public agencies can also make available surplus land in areas appropriate for residential development. In the context of transit-oriented development, the re-use of publicly-owned land may occur through a process known as joint development, in which transit agencies form partnerships with private entities to facilitate the development of agency-owned land near transit facilities.

Where are these tools most applicable?
Solutions in Action
In Minneapolis, the Community Planning and Economic Development Department's (CPED) Higher Density Corridor Housing Program (HDCHP) provides funding for the public acquisition and banking (i.e., holding) of sites intended for development of mixed-income multifamily rental or homeowner projects near community, transit, or commercial corridors. Developers, neighborhood organizations, and other interested parties may submit an application for acquisition of a specific parcel or parcels to the program at any time. If approved, CPED purchases the property, which it then holds until full project funding has been secured. Once development is ready to proceed, the land is resold to the developer at fair reuse value (its estimated market value based on the planned reuse of the property). In the interim, CPED covers other costs associated with acquiring and holding the property, including taxes, title work, and property management expenses.

The HDCHP is capitalized with Community Development Block Grant (CDBG) funds, and in keeping with the city’s affordable housing policy and CDBG requirements, a majority (51 percent) of new housing units on land purchased through the HDCHP must be affordable to families with incomes of 80 percent or less of the area median income and at least 20 percent must be affordable to households with incomes of 50 percent or less of the median income. Since the program's inception in 2005, 16 sites have been purchased along transit corridors in Minneapolis (many including multiple parcels of land), and the City has expended more than $4.7 million in HDCHP funds.

The high cost of land and other challenges related to site assembly present key barriers to development of homes for low- and moderate-income families in many communities. These issues pose a problem in many communities with robust real estate markets. Proximity to a new or redeveloping transit station and other amenities only intensifies these challenges. Many of the tools discussed in this section support the development of new for-sale and rental homes and will be most effective in areas with vacant or underutilized land that is appropriate for residential use. Acquisition funds can also be used to preserve existing affordable rental housing, and may be a useful tool in redeveloping communities with an older stock of existing affordable homes.

Learn more
about tools to gain control of well-located land

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to learn about other ways to promote sustainable and equitable development