Government and Real Estate

Kent to review process of selling properties

August 19, 2012
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County Commission Chairwoman Sandi Frost Parrish announced she is creating a subcommittee that will look into the role the county plays in the tax-foreclosure process, and she named four commissioners to that panel last week.

The county commission is expected to appoint commissioners Michael Wawee, Tom Antor, Dick Vander Molen and Candace Chivis to the subcommittee Thursday. They will be joined by a member of the county’s legal staff and an administrator, possibly County Administrator and Controller Daryl Delabbio. Parrish selected Wawee to chair the subcommittee.

Wawee was one of four commissioners who voted several weeks ago not to let the Kent County Land Bank Authority purchase tax-foreclosed properties prior to the public sale, which the county’s Treasurer’s office held last week. Those purchases became a topic of controversy when critics argued that the land bank’s action was interfering with the private sector’s right to buy the parcels and the organization was “cherry picking” the best properties before the annual sale.

By a 13-4 vote, though, commissioners allowed the land bank on July 12 to buy 43 of the 340 properties on the tax-foreclosure list. The land bank received the board’s authority to purchase two properties in 2010 and 10 last year. It buys the properties from the county.

When Parrish announced her decision last Thursday, she made one point very clear about the new subcommittee’s mission. “It will not look at the land bank,” she said. Instead, Parrish said the panel’s focus will be to review how the county sells properties before the public sale and to identify the circumstances that allow the county to sell those properties, most of which are residential.

Parrish also made a key comment about the annual public auction in order to correct some of the media reports she said she encountered. “The purpose of the tax sale isn’t to promote private enterprise. It’s to make the county whole (on the loss of tax revenue),” she said.

Parrish also tried to clear what she felt was another misconception regarding the land bank in that the organization’s sole purpose is not to battle blight by purchasing the worst properties on the foreclosure list. In July, she said the land bank has to have some better properties in its portfolio in order to create a revenue stream to fund the rehab of other properties, as the county does not give the bank tax dollars.

The “cherry picking” issue that surfaced last month centered on a tax-foreclosed home in Alpine Township that the land bank bought for $10,500, the amount of back taxes and the fees associated with the foreclosure process. The home’s State Equalized Value this year is $77,500, which represents about half of its market value.

Some commissioners questioned whether that is the type of properties the land bank should buy. Some private investors argued that the land bank’s purpose wasn’t to purchase properties with that high of a market value for such a small amount and that it should focus on properties the private sector isn’t as interested in buying.

Following those comments, commissioners tabled their vote as to whether they should allow the land bank to buy properties from the county before the auction. At their next meeting, they authorized the purchases.

At first, the land bank wanted to buy 64 of the foreclosed properties but decided on 43 after one taxing jurisdiction asked to have 19 parcels removed from the list and two were given a green light to be sold in late June. The land bank then sold 19 of the 43 to four nonprofit residential housing developers who, by agreement, are required to make improvements to the houses within a year. Six of those properties are commercial sites and at least one in Grand Rapids has been sold for a new hardware store.

“This is not only about the land bank. It’s also about the foreclosure laws,” said Commissioner Jim Saalfeld.

Saalfeld, an attorney, pointed out that state law, not the land bank’s charter or a county ordinance, allows properties to be removed from the list before the auction, and the subcommittee needs to take that legal aspect into consideration.

Parrish said she expects the subcommittee to file its report in March.

In a related matter, the Kent County Taxpayers Alliance announced recently it will campaign against commissioners who voted to allow the land bank to buy the properties. The election is set for Nov. 6.

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