Government

County accused of being fiscally reckless

But support for that allegation is iffy.

December 15, 2012
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The Kent County Taxpayers Alliance has accused the Kent County Board of Commissioners of giving away $1 million worth of assets last summer at a time when the county’s general operating fund was in the red by $955,000. The alliance called the action “reckless.”

KCTA added in its press release that the dire financial straits the county was in meant commissioners were faced with cutting services offered by the county, such as its veterans’ affairs fund that provides money to local military personnel for emergencies and other situations, or that they were considering raising taxes through a new millage.

The accusations revolve around the commission selling 44 tax-foreclosed properties for $422,000 in July to the Kent County Land Bank Authority before the Kent County Treasurer’s office held its annual public auction of foreclosed residential and commercial buildings and vacant lots.

That sale also ignited legal action by some local real estate professionals against the county, the land bank and the Treasurer’s office. The plaintiffs claim the defendants violated state law and county policy in making the sale. KCTA backs the lawsuit that was filed a few months ago in the 17th Circuit Court in Grand Rapids.

“The actions of the Kent County Commission, Kent County Land Bank Authority and its governing board were irresponsible at best but would probably be best described as reckless,” said KCTA spokesman Eric Larson in the release. “Not only did the commission violate state law and commission policy by giving the land bank properties at rock-bottom prices before a fair and open auction took place, but they didn’t even determine the value of the properties they were giving away.”

KCTA said the sale to the land bank was made without commissioners knowing the appraised values of the tax-foreclosed properties. The alliance came up with a $1.4 million figure from an affidavit that land bank Executive Director Dave Allen filed with the court in mid-November. KCTA has interpreted that figure as revenue lost to the county.

“It is almost comical that the county faces a $955,000 budget deficit after giving away at least a million more dollars in revenue it could have acquired in its usual auction. Now they are faced with the option of cutting county services like veteran benefits or raising taxes with a special millage to pay for their fiscal irresponsibility,” said Larson.

But revenue from the public auction doesn’t go to the county or to its general fund. It goes to the Treasurer’s office to cover the debt it incurs from buying tax-foreclosed properties from the original taxing jurisdictions, the county’s cities and townships.

Also, in his affidavit, Allen didn’t report the dollar figure as representing a State Equalized Value or an appraised value of the properties but as a value to the land bank. The $1.4 million he mentioned was spread across what the land bank paid for the properties, the amount it had spent on renovating the properties and what it hoped to receive from the sale of the properties.

County Administrator and Controller Daryl Delabbio told the Business Journal that he had no idea where the $955,000 deficit the KCTA cited came from, and he added that a slight surplus is projected for this year’s general fund. As for the Veterans’ Affairs budget, Delabbio said it wasn’t cut but increased by about $35,000 for next year over this year’s allocation.

There are 11 plaintiffs in the lawsuit, which is being heard by 17th Circuit Court Judge George Buth. Buth ruled at a recent hearing the land bank could either post a $1.4 million bond to cover the properties it purchased from the county or file a motion to have a provision in the suit that challenges the ownership of the properties removed. The land bank has chosen to file, and the plaintiffs are appealing the ruling. The provision is called lis pendens, which is Latin for a notice of pending action to buyers and prospective buyers that the titles to the tax-foreclosed properties are in legal dispute.

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