Federalism and Municipal Innovation: Lessons from the Fight Against Vacant Properties

bentonBy Benton Martin

Cities maintain a vital role in serving as laboratories for novel government initiatives. The prevailing view of city authority, however, is that they have only those powers granted by the state. Additionally, in seeking to be innovative, cities risk running afoul of legal doctrines that reserve certain policy areas for regulation only by the federal government.

Two examples of property regulation in legacy cities serve as important reminders to city officials about federalism in the United States.

First, consider land banking. Facing rampant blight, Genesee County in Michigan developed a creative solution involving a local government entity (the land bank) acquiring, and seeking to repurpose, vacant properties. The County faced opposition, however, from limitations imposed by state law. Taking the challenges head on, local leaders persuaded the state legislature to adopt groundbreaking legislation enabling land banking. The ensuing success prompted many other municipalities to adopt this approach.

The second example is ordinances requiring registration of vacant property. As with land banking, successful registration initiatives in a handful of cities inspired imitation by hundreds more. But some state governments acted to weaken these efforts by limiting local discretion. The federal government pushed back, too. When the City of Chicago enacted an aggressive ordinance requiring mortgage lenders to comply with strict maintenance standards for foreclosed properties, the Federal Housing Finance Agency challenged the law in a federal court and won an exemption for properties with mortgages backed by Fannie Mae and Freddie Mac.

City leaders must not stop crafting bold solutions to local problems. Instead, they must remember the possibility of powerful, but often surmountable, opposition from other levels of government. Our system is one of “polyphony”—many voices contributing to a single chorus. If municipal leaders consider up front the singers in this choir—the state legislators, federal agencies, and private business or community groups with a stake in the issue—they will be in the best position to produce harmony rather than cacophony.

Benton C. Martin is a law clerk to the Honorable Geraldine Soat Brown, Presiding Magistrate Judge for the Northern District of Illinois. He writes on the importance of local government to build constituencies and head off objections from other levels of government. The full essay was published in August in The Urban Lawyer.

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