Land bank draws some scrutiny

June 1, 2012
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Although the Kent County Commission transferred a tax-foreclosed residence in Grand Rapids that has been sitting idle for the past two years to the Kent County Land Bank Authority last week for redevelopment, three board members expressed their concern the bank could become a competitive threat to the for-profit housing industry.

County Commissioners Michael Wawee, Dan Koorndyk and Shana Shroll voted against transferring the house at 753 Emperor SW to the land bank, which, in turn, will transfer the property to an unnamed nonprofit development firm that has promised to renovate the house and put it back on the market.

“This was a unique situation in having a house go unsold and sit vacant for two years,” said County Treasurer Kenneth Parrish, who chairs the authority and brought the transfer request to the board on the land bank’s behalf.

“We still have to be extremely sensitive to where we draw the line,” said Wawee of the land bank’s actions.

The county foreclosed on the Emperor property due to delinquent taxes in 2010, and it wasn’t purchased at two public auctions that year. The auction process brought in enough revenue that year to make the county whole on the house’s back taxes. The developer will take possession of the home after it pays the land bank a transfer fee of $500.

“We’re sensitive to the issue of public versus private. But some of the properties wouldn’t sell (without the land bank),” said Commissioner Stan Ponstein, who also serves on the authority board. “It is a tool, and there are safeguards to protect the private sector.”

Commissioner Bill Hirsch said the land bank is strengthening the area, and it should have been started eight years ago. “I strongly support the land bank,” he said. Commissioner Jim Saalfeld said he attended a recent breakfast meeting hosted by the local home builders and “they were very supportive of the land bank and its mission.”

When asked how many properties the land bank has banked, Executive Director Dave Allen said 15. He noted eight of those were donated to the authority by the local offices of the Bank of America and Wells Fargo Bank. The deposited number will change this month if commissioners approve another transfer.

The land bank authority agreed last week to remove 44 parcels from the list of tax-foreclosed properties scheduled to go to public auction in August with an intention of purchasing the parcels. County commissioners have to approve a transfer of the properties from the county to the land bank before the authority can take possession of any.

“As it currently stands, the land bank doesn’t have the right to acquire the properties,” said Parrish of the state law that limits the land bank’s authority.

“They’re not all houses. There are commercial properties, vacant lots and houses,” added Allen.

Allen said the land bank received a $400,000 grant from the Grand Rapids Community Foundation and would use roughly $200,000 of that award to pay the county for the back taxes on the 44 properties and then take possession of the sites.

The land bank plans to either transfer some properties to a developer or create an agreement to restore some and get the sites back on the market. “We do not flip a house without doing something to it,” said Allen. He added that one house the authority took over has been listed for sale, “and we’ve already received two offers.” Another is being renovated, and the bank intends to sell it, too. “It’s in extremely good condition. I can’t believe it was donated to us,” said Allen.

Parrish said he plans to present his transfer request to the county’s Finance Committee on June 19 to get its recommendation. If committee members recommend a transfer, the full commission could vote on the matter the following week.

Ponstein told commissioners other units of government have asked the land bank to capture some of the 44 properties on the tax-foreclosure list on their behalf because they’ve invested more into the parcels than payment of the back taxes are worth. Oakfield Township is one of those units.

“They have a substantial amount in it,” said Ponstein of the township’s investment into Wabasis Point. “In Kent County, we have a lot of nonprofit developers that do a good job. In Kent County, we have a lot of for-profit developers that do a good job.”

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