Public sale draws more attention this year

August 12, 2012
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In past years, the public auction of tax-foreclosed properties conducted by Kent County has gone off without a hitch and has covered the county’s investment it undertook to make every taxing jurisdiction whole for the property-tax revenue each was owed.

The sale also has taken place without much fanfare. But this year’s auction, set for this week, has been in the spotlight and could remain there until the November election when voters choose their county commissioners.

There isn’t any opposition to the auction, in general, and there isn’t a readily apparent reason the sale won’t be as successful as the previous ones the Kent County Treasurer’s office has held. The conflict over it comes from county commissioners supporting the Kent County Land Bank Authority’s request to buy 43 of the 340 properties on the tax-foreclosure list prior to this week’s auction by a 13-4 vote.

“Our request is for 7 percent of all the properties on the foreclosure list,” said Dave Allen, KCLBA executive director, on the day of that vote.

The land bank will sell 19 of the 43 to four nonprofit housing developers, while two other properties reportedly have interested buyers. The land bank will list some for sale and rehabilitate some before listing those. It hopes to turn a profit from each one for operating revenue because it doesn’t receive any tax dollars from the county. In fact, the land bank pays the county rent for its office at 82 Ionia Ave. NW.

But the idea that the land bank would assume ownership of those properties prior to the public auction didn’t sit well with Commissioners Dan Koorndyk, Harold Voorhees, Shana Shroll and Michael Wawee, who voted against allowing the authority to make those purchases.

One of their points was the land bank was blocking free enterprise and the private sector’s opportunity to purchase the properties, which is a relatively new concept for the annual sale that wasn’t part of earlier auctions.

They also felt the authority was “cherry picking” properties, such as the house on Montauk Drive NW in Alpine Township. The back taxes owed are $10,500 — also the figure the land bank can buy it for — while its State Equalized Value is $77,500, about half of the home’s market value.

The four commissioners aren’t the only ones who have voiced their displeasure with the land bank’s request and the county’s resulting action on its behalf. The Kent County Taxpayers Alliance also has made its opinion known on the issue, calling it “crony government gone wild,” and has set out to campaign against the commissioners who approved the sale and are on the November ballot.

KCTA spokesman Eric Larson, also a local physician, said the auction’s goal is to “create a market for private investors to purchase properties and to raise revenue to pay for essential county services like police, prisons, courts, roads and parks” in a recent press release. But much of the revenue the county receives from the sale goes to pay off those who invest each year in the delinquent-taxes revolving fund.

The Treasurer’s office uses that fund to essentially buy the foreclosed properties from the county’s townships and cities to cover their delinquent taxes. In recent years, the Treasurer’s office has been able to meet its investor-debt obligation through the auction process every year.

KCTA also took commissioners to task for allowing the land bank to buy properties from the county at the minimum-bid price, which is usually three-year’s worth of back taxes and fees. The organization felt the county would have received more revenue from the sale of those selected properties if all had gone to auction where bidders would have run up the prices past the minimum bids.

“Although it is impossible to know the exact amount that the county would have received for these properties, it is very reasonable that they would have sold for five to ten times their minimum bid,” said Larson in the KCTA release.

“The actions of the board of commissioners in their collusion with the land bank show a complete disregard by the majority of county commissioners of their fiduciary responsibility towards Kent County. At a time that the county is contemplating cutting Sheriff deputies and other services, it is leaving hundreds of thousands if not millions on the table, which is revenue that it will need to make up in either higher taxes or cutting services,” he added.

The results from the 2010 auction showed that 78 of the 144 properties on the foreclosure list were sold; those sales were worth a bit more than $1.1 million, according to county records. The second sale, known as the “scavenger sale” because it has a minimum bid of $1, resulted in 63 of the remaining 66 properties being sold for an additional $131,540 in revenue to the county.

The Treasurer’s office needed to collect $860,000 from the 2010 auction to meet its obligation to the delinquent-tax fund’s investors. It received roughly $1.2 million from both sales, or about $400,000 more than it needed to cover its debt. Also that year, commissioners allowed the land bank to buy two properties before the auction and 10 more last year.

The number of properties that have made the tax-foreclosure sale has grown over the years. In 2007, only 35 went to the public auction. This year, that number will be around 300.

The physical sale takes place Thursday at DeVos Place. Registration is at noon, with the auction starting an hour later. Bids also can be made online at tax-sale.info. The properties that aren’t sold this week will go to the second auction, which is tentatively set for October.

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