Kent shows confidence in land bank
Apparently most county commissioners were convinced the Kent County Land Bank Authority isn’t a threat to the private real estate sector after County Treasurer and KCLBA Chairman Kenneth Parish and the bank’s executive director, Dave Allen, answered their questions and concerns last week about the organization’s purpose and process.
Two days after that session, by a 13-4 vote, commissioners agreed to let the land bank purchase 43 of the 340 properties on the county’s tax foreclosure list prior to next month’s public auction.
The question-and-answer session came about because a handful of commissioners felt that allowing the land bank to purchase the properties before the August tax sale would deny private investors the same opportunity. They also felt the land bank was “cherry-picking” properties best suited for rehabilitation and sale.
“The present tax-sale format is not free market,” said Greg Conway, an executive vice president at Founders Bank & Trust and a member of the land bank’s advisory council. Conway told commissioners that the buyers at the public auction are a specialized niche within the real estate market. “The land bank adds value to the private and nonprofit sectors, and does not compete with them,” he added.
“The arguments made against the land bank can also be made against the recycling center,” said Commissioner Stan Ponstein, also a KCLBA board member, after the special session.
Ponstein pointed out that the county’s recycling center, which drew strong commission support and began operating a few years ago, competes with private-sector firms like Waste Management. “I think the recycling center is an asset, and the land bank is also an asset,” he said.
Six of the 43 properties are commercial sites, one of which is targeted to become a Rylee’s Ace Hardware Store on Fulton Street in Grand Rapids. The remaining 37 are residences; the land bank will sell 19 to four nonprofit housing developers that have pledged to renovate and sell the houses. The land bank is buying 24 properties and has buyers for two of those sites, including the one on Fulton Street.
“Our request is only for 7 percent of all the properties on the foreclosure list,” said Allen.
The land bank will use a loan from the Grand Rapids Community Foundation to buy the properties from the county for the taxes and fees owed, which total almost $420,400. The purchase signifies a marked step for the land bank. Last year it bought 10 tax-foreclosed properties from the county and just two in 2010.
The land bank will borrow from local banks to finance upgrades, list all the properties it keeps on the Multiple Listing Service and pay real estate agents a 6 percent sales commission.
“We have stipulated that they go out and find their own funding,” said Commissioner Harold Mast of the land bank’s management. “We have given them the challenge to sustain themselves.”
Nine of the residential properties are in Grand Rapids. Two each are in Wyoming and in Caledonia. One each is in Algoma, Alpine, Byron and Lowell townships, and in Kentwood.
As for the nonprofit developers, LINC plans to rehab two houses; Next Step will do the same to seven. New Development will renovate six, while Habitat for Humanity of Kent County will renovate four. The nonprofits will buy the 19 houses from the land bank for $131,150, the amount of delinquent taxes and interest fees due on the properties.
The land bank originally planned to buy 64 properties from the county. But county commissioners approved two for sale last month, and the land bank removed 19 parcels in the Wabasis Shore Development near Greenville from its purchase list last week at the request of Oakfield Township.
Commissioner Roger Morgan also asked that an Alpine Township home valued at $100,000 be taken off the foreclosure list because its tax-sale price is $10,400. The house is in a neighborhood where most homes are worth about $200,000, and some commissioners felt the land bank should only deal with blighted properties. The request was defeated by a 10-7 vote.
“It has been suggested that the land bank only buy properties no one else wants. If we do that, we won’t survive,” said Kenneth Parrish.
“I think we need to look at this on a macro level and not on a block-by-block nature,” said Commission Chairwoman Sandi Frost Parrish.
At least 13 individuals spoke on the issue before the commission voted last week — an unusually high number that revealed the matter’s public importance. All were tied to the real estate market in some respect. They were either directly involved in sales, or in the financing end, or as part of a neighborhood association that is concerned about the quality of its housing stock. Ten of the 13 urged commissioners to let the land bank buy the properties.