Putting money in the bank
Kent County Treasurer Kenneth Parrish recently told the Business Journal that his next step to make the Kent County Land Bank fully operational is to find financial backing for the endeavor. And he has a path to follow, if he chooses to do so: Ingham County Treasurer Eric Schertzing laid out a trail of fiscal breadcrumbs that Parrish could track on his journey.
When he spoke here a few weeks ago, Schertzing said the Ingham County Land Bank, which was formed in 2005, had a relatively small annual budget of $600,000 in 2006. But since then, that budget has grown by 22 times: to $13 million for the current fiscal year.
Schertzing said a key factor in building the budget was his ability to secure some revolving loans from Lansing banks. He said Citizens Bank was the first lender to get on the bandwagon by setting up a $1 million loan in April 2006, which was the very first loan of its type in Michigan. The next year, Schertzing said he replaced the Citizens Bank loan with another $1 million loan from Capital National Bank and topped that with a $5 million loan from PNC Bank the same year.
Federal money — from the Department of Housing and Urban Development — also played a role in building the land bank’s budget. Schertzing secured funds from two rounds of the Neighborhood Stabilization Program for the budget. Both Kent County and the city of Grand Rapids have received those dollars. In late 2007, Schertzing said he received state approval to issue a land-bank bond for just under $2 million that the Ingham County Board of Commissioners backed.
Schertzing also said the city of Lansing let him capture monies for the land bank from HUD’s HOME Investment Partnerships Program — funds that Grand Rapids and Kent County also have received in the past. At the same time, Schertzing said Lansing encouraged the land bank to put properties within the city limits on the city’s Brownfield Redevelopment Authority list, which brought some state dollars into the budget. This past January, Schertzing said the land bank borrowed $2.65 million from the authority. Grand Rapids also has a BRA.
“(The land bank) is an economic development tool. We’re not just green eyeshades collecting taxes,” said Schertzing of his job as treasurer.
But the budget Gov. Rick Snyder submitted to the Legislature calls for elimination of the brownfield tax credit.
“There are some things in the governor’s plan that would take some tools away,” said Schertzing. But he added that the land bank still would be able to capture a portion of the higher tax revenue that comes from properties on the brownfield list that have been improved.
The Ingham County Land Bank performs a variety of functions, including: demolishing abandoned buildings that are beyond repair, renovating homes and commercial structures, buying and maintaining tax- and mortgage-foreclosed properties, constructing new buildings, disposing of side lots, and running a garden-and-farm program.
“We buy a lot of mortgage-foreclosed properties,” said Schertzing, who chairs the land bank. He added that the land bank is authorized to spend up to $100,000 for a property.
Since 2005, the land bank has purchased 649 foreclosed properties; had 77 buildings demolished and put 98 more on a waiting list; sold 36 side lots; rehabilitated 70 single-family homes and sold 51, which is another source of funding; bought 146 homes with NSP funding; and completed eight new construction projects and sold seven.
Schertzing said the key factor in the land bank’s success is that he has established healthy ties with public officials, economic developers and private-sector professionals. “The most powerful thing we do is build relationships. This is what I spend the vast majority of time on, in what I do as county treasurer,” he said.
Ingham County, of course, is much smaller than Kent County. Ingham has a population of about 283,000 across five cities and 16 townships. Kent’s population is more than 600,000, with nine cities and 21 townships. Ingham has 16 county commissioners: 12 Democrats and four Republicans. Kent has 19 commissioners: 15 Republicans and four Democrats. The total taxable value in Ingham County was $7 billion in 2010. That figure was more than $22 billion in Kent last year.
Schertzing said there were 260 foreclosures in Ingham County last year. According to the GVSU Johnson Center Community Research Institute, there were 3,148 residential foreclosures in Kent last year. Grand Rapids alone had 1,392 — five times the number in all of Ingham County. So that comparison likely means Parrish will need a much larger budget for the Kent land bank to accomplish what the Ingham bank has.
“We’re working to secure some funding, which will then allow us to hire a staff person who can focus on that,” said Parrish. “We will also be looking at the tax-foreclosures and we’ll see what kind of properties we have foreclosed on and whether any of those make sense to be transferred to the land bank. So we’ve got a number of irons in the fire.
“We’ll look at local foundations,” he said of possible funding sources. “Principally, I’ll also be looking at potential bank financing, as well as seeing if there are dollars available from the county.”