Land Bank Playbook: Organizing a LRC

Land Bank Playbook Section III

A. Commissioner’s Resolutions and Governance

a. County Commissioner Resolutions

R.C. 5722.02 authorizes counties to form land banks generally and LRCs specifically. The statute authorizes counties to undertake their land banks in the form of a Revised Code Chapter 1724 corporation. There are essentially three resolutions that should be passed:

  • First resolution. The first authorizes the creation of a Revised Code Chapter 5722 county land bank through the vehicle of a LRC and authorizes the County Treasurer to file Articles of Incorporation to form the corporate entity. Once the Articles are prepared, they are submitted to the Ohio Attorney General to approve the form, and thereafter the Articles may be filed.
  • Second resolution. The second resolution authorizes the county pursuant to R.C. 1724.04 and 1724.10 to designate the LRC as its agency to act on its behalf to perform the duties under Revised Code Chapter 5722.
  • Third resolution. The third resolution authorizes the adoption and execution of a “Plan and Agreement” pursuant to R.C. 1724.10 between the county and the LRC. This Plan and Agreement contains the broad statutory parameters and mission within which the LRC must operate. The Plan and Agreement should be broadly stated to include virtually all things which the law allows LRCs to perform.

The chronology of when these resolutions can be passed by the County Commissioners is suggested below.

b. Board Composition

The aforesaid three resolutions embody the statutory requirements necessary for a county land bank to operate through the agency of a LRC. As a matter of chronology, once the organization has been officially incorporated, it is necessary to establish a compliant board of directors. This is necessary so that the LRC “board” can officially adopt the Plan and Agreement. Thereafter the Board submits the Plan and Agreement to the County Commissioners for their approval via the third resolution.

Pursuant to R.C. 1724.03(B), LRC governance must consist of a separate board of least five members. After July 2010, LRC boards must consist of the following: 1.) two county commissioners; 2.) the county treasurer; 3.) one representative of the largest municipality; and 4.) one representative of a township with a population in excess of ten thousand. The board may be expanded to 7 or 9 members, with any additional members selected by consensus of the two county commissioners and the Treasurer. At least one board member must have private or non-profit real estate experience.

c. Code of Regulations

Once the Articles of Incorporation have been filed and returned by the Ohio Secretary of State, a statutorily compliant board of directors is established, and the Agreement and Plan adopted both by the board of directors and the commissioners, the board should quickly thereafter adopt a Code or Regulations for the LRC’s internal government. R.C. 1724.03 authorizes a Code of Regulations as prescribed in R.C. 1702.01 et seq. This should be adopted at the LRC’s first board of directors meeting. The Code of Regulations may govern all the matters referred to in R.C. 1702.11. It should address some of the basic things such as how the board members are selected, how they are retained, general times and places of meetings, corporate authority to act, quorums, etc.

B. Commentary: R.C. 5722 Land Banking Through R.C. 1724 Corporations

LRCs are Revised Code Chapter 5722 “land banks”. However, when a LRC is designated as the county’s agency to perform the Revised Code Chapter 5722 functions, the LRC has heightened transactional capabilities and powers. Many of the reporting requirements, advisory committees, recapture of taxes on land resale and transactional restrictions applicable to the conventional land banks do not apply to LRCs. Specifically, the LRC “corporation” can buy, sell, trade, invest, borrow, loan, float bonds, be an equity partner, make contributions, etc. the same way as a private corporation so long as all these activities fit within the general mission of the land bank as reflected in its agreement and plan (R.C. 1724.02).

In essence, the LRC is a legislatively intended marriage between very useful governmental powers under Revised Code Chapter 5722 land bank laws and the private enterprise-like capabilities of a Revised Code Chapter 1724 private corporation. In order for the LRC to transact, it is not legally necessary to obtain legislative authorization for routine contracts, legislative re-appropriations, governmental board of control authorizations, city planning department reviews, etc. All of these matters are governed by Board policy. Of course, like any other property owner, the LRC is subject to all zoning, building and housing codes.

C. Federal Tax and Corporate Status

Miscellaneous things to remember about the nature of the LRC:

  • It must have its own tax identification number;
  • Its debts, liabilities and obligations do not pass vicariously to the County (unless the County accepts such responsibility);
  • It is unlikely that a completely independently funded LRC is a “constituent” part of the county for purposes of the annual Ohio Auditor’s audit of the County (although the jury is still out on this as of this writing).

If a particular county wishes to subsidize directly and support the operations and staff, then it may be deemed a “constituent” part of county government. In Cuyahoga County, for example, the salaries, obligations, contracts and activities of the LRC are not the obligations of the county nor is the LRC staff eligible for PERS. As such the State of Ohio Auditor determined that the Cuyahoga County LRCs’ budget should not be included in the County’s annual audit but that the LRC’s activities should be footnoted. The Cuyahoga County Land Reutilization Corporation has procured opinions on this matter specific to its corporation. Further consultation with the Cuyahoga County Land Reutilization Corporation directly can provide further insights into this matter.

Similarly, the Cuyahoga County Land Reutilization Corporation has determined that it is a federally tax-exempt organization under Section 115 of the Internal Revenue Code. As such, the Cuyahoga County Land Reutilization Corporation has elected not to secure tax exempt status under the more common 501(c)(3) status. Likewise, the Cuyahoga County Land Reutilization Corporation has procured opinions on this matter specific to its corporation. Further consultation with the Cuyahoga County Land Reutilization Corporation directly can provide further insights into this matter.

Section III Sample Forms

  • Form III-1 – Commissioners Resolution Establishing County Land Bank–Instructions to Treasurer to File Articles of Organization
  • Form III-2 – Articles of Incorporation
  • Form III-3 – Commissioners Resolution Designating LRC to Act as its R.C. 5722 Agency
  • Form III-4 – Commissioners Resolution Authorizing Plan and Agreement, and its Execution
  • Form III-5 – Plan and Agreement
  • Form III-6 – Code of Regulations