A Senate committee tables, effectively killing, a bill that would’ve created land banks in South Dakota.
The tool is used to promote housing development at the local level by recovering “blighted” areas.
Senate Bill 209 creates what are called land banks. They are nonprofit corporate entities created at the local level by things like cities and counties. The nonprofit then acquires, conveys, holds or manages properties to productive use. The entities would not be allowed to use eminent domain.
The bill also outlines a way the governor can establish a land bank: following a natural disaster that caused widespread damage to or destruction of real property. The bill’s sponsor, Sioux Falls Sen. Jamie Smith gave the example of a recent flood in McCook County.
Smith said it’s an economic development tool local areas can use to take over unused land and repurpose it for the benefit of a community.
“There’s nobody wanting to use this right now. That’s why I’m bringing it right now because we oftentimes bring laws when there’s a very, very specific reason that we’re bringing the law because we have a very large corporation breathing down our neck that needs something done,” Smith said. “And they need it done now. I’d like to work with the state right now to set these up to get them to the place that we can think that this is a good tool in our toolbox to help.”
He said it gives rural communities flexibility in housing development struggles. Smith said the tool could also positively impact urban areas too.
Michael Houdyshell is the secretary of the state Department of Revenue and lone opponent to SB 209. He raised concerns that similar mechanisms already exist in South Dakota. He also said the language is too broad.
“Essentially it exempts land banks from all taxation as far as I can tell by my read of it. If you look at it, it’s just one sentence. It says, ‘The real property of a land bank and the land banks income and operations are exempt by all taxation of the state and any political subdivision of the state," Houdyshell said. "So, not only would land banks not pay any real property taxes on any property that they acquired, my reading on that is they would likely not owe sales tax on any of the goods or services that they purchase to engage in their operations as well.”
Lawmakers on the Senate Commerce and Energy Committee vote to table the bill, essentially killing SB 209.
