County land bank coming
Kent County Treasurer Kenneth Parrish is close to creating a countywide land bank association.
“I am getting the documents together and will run them by the legal counsels,” he said.
Parrish has to run those papers by the county’s attorney, Dan Ophoff, and the legal staff at the state’s land bank association.
“I’m hoping to have everything ready by the end of the year.”
Creating a land bank would allow the county to sell, lease and manage property, convey property for other than monetary consideration, and use financing tools.
It would also give the county another option to selling tax-foreclosed properties at a public auction, as with a land bank, the county would be able to list parcels with Realtors. This alternative could net the county a sale price closer to a property’s actual market value instead of having to accept what a tax auction delivers.
The Treasurer’s office held two sales this year of tax-foreclosed properties and sold all but two of the parcels, both of which are contaminated sites.
“We’ve been fortunate in Kent County that tax foreclosures haven’t been a significant issue,” he said. “While any foreclosure is harmful, the county’s total was less than other counties.”
But Parrish also noted there are three significant issues negatively affecting the county.
First, he said a decline in property values is leading to a leveling off, or a downturn, in tax revenue to the county. He said this is not only a real issue for property owners but also for the county. Property-tax revenue to the county has been projected next year to drop by at least $250,000 from this year’s total.
Parrish said that roughly 10 percent of property taxes are delinquent in a given year and that his office is able to collect about 75 percent in that year, with the rest being collected the following year. This year the county borrowed $36 million to pay the municipalities for their delinquent taxes. Parrish said the county can afford to do that because the interest it pays on the short-term tax notes — around 3 percent — is less than the interest it collects from the back taxes.
Commissioner Stan Ponstein said it would be less expensive and more efficient if one governmental unit in the county, like Parrish’s office, collected all the property taxes instead of having the 30 townships and cities do the collecting and then report the totals to the county. Parrish agreed but added that he didn’t think state lawmakers would make that change anytime in the near future.
“I think it makes sense. A lot of my fellow treasurers think it makes sense,” he said.
Parrish said his office should process more than 23,000 tax receipts this year.
The second significant issue, Parrish said, is falling revenue from the county’s lodging excise tax. He has two staff members who audit a quarter of the 93 hotels and motels in the county each year to make sure the proper tax amounts from the county’s 5 percent levy get reported.
“We have very good compliance because of that,” he said.
Revenue from the lodging excise tax pays for two bond packages that helped build DeVos Place, the city’s convention center. It also funds the West Michigan Sports Commission.
Third on Parrish’s issues list is falling interest rates. His office administers the local government investment pool, which is a large collection of government securities, pooled funds, certificates of deposit, money market accounts and cash that totaled $386.1 million at the end of last year. Deposits from the county, cities, townships and other public bodies, like the Convention and Arena Authority, go into the pool. During 2008, though, the value of the investments fell by 18.6 percent, or roughly $87 million.
“By having a larger pool of revenue, everyone can get a better rate. By increasing our amount, we can get a better rate, too,” he said.
Parrish reminded the county’s Legislative Committee last week that the restrictions on how the county can invest its fund are stricter than what state law requires of municipal governments.
“We manage what I call a very plain vanilla envelope of investments, and we still get competitive rates,” he said.
At the start of this year, the county had $256.4 million of the pool’s total invested in CDs and money market accounts with 26 local banks. The pool had nearly $18 million invested with Irwin Union Bank, which had two subsidiaries fail in September that were acquired by First Financial Bank of Ohio. Parrish said that investment was insured and the pool didn’t lose money from the Irwin Union failure.
“We watch all of the banks closely so we don’t lose county dollars,” he said, while adding that Michigan has been fortunate that so few banks have failed over the past year.
Parrish was pleased that the county’s triple-A bond rating was renewed again this year in April. His office works with county administration and the Fiscal Services department on the renewal applications to Moody’s Investors Services and Standard & Poor’s.
“A good bond rating is a signal to the rest of the world that Kent County knows what it is doing,” said Parrish.