Economic Development, Government, and Real Estate

Newsmaker: Kent County Land Bank Authority sells foreclosed properties

January 16, 2013
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Judge dismisses lawsuit against Kent County for sale of foreclosed properties
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Editor’s note: The Business Journal is recognizing 10 nominees for its 2012 Newsmaker of the Year Award, based on their long-term economic impact on the region. One nominee will be featured each day on grbj.com — leading up to the Jan. 21 announcement of the 2012 Grand Rapids Business Journal Newsmaker of the Year.

To say that 2012 was an interesting year for the Kent County Land Bank Authority would be an understatement.

In what many say was its first full year of operation, the authority was sued and its board members and staffers were virtually and verbally abused. Yet, despite all the anger that was directed at the land bank, it still established itself as having a true economic influence in the county and displayed a potential to do bigger and greater things in the coming years.

Controversial, resilient and persistent are likely better words to describe the year KCLBA had. But whatever descriptions are used, it’s quite clear that the organization’s year revolved around a single event that took place in July. That was when county commissioners agreed to sell 44 tax-foreclosed properties to the land bank for $422,000 before the annual auction was held.

Almost immediately, the 13 commissioners who approved the sale were vilified and targeted for defeat in the November election. A dozen, though, won re-election. Then 11 real estate professionals and property managers filed suit against the county, the land bank and Kent County Treasurer Kenneth Parrish, alleging that the transaction violated state law and county policy on property distribution.

But Kent County Circuit Court Judge George Buth ruled otherwise and dismissed the case shortly after it was filed. The court said the plaintiffs had no standing to even bring the suit forward. “I’m gratified that Judge Buth dismissed the case. I am confident that the process spelled out in state law was correctly followed, and the judge agrees,” said Parrish, who also founded and chairs the land bank, shortly after the court’s ruling.

Still, in the face of that opposition, the land bank managed to compile an estimated economic impact of slightly more than $4 million from the time it bought the properties in July until the lawsuit was filed three months later.

KCLBA Executive Director Dave Allen calculated the impact by using a complex formula from the GVSU Community Research Institute that included lost property values that were saved, cost savings for governments from not having to handle foreclosed properties and spending on construction. “I think we need to be judged by our economic activity in the county,” he said.

After the suit was dismissed, Allen said the land bank sold the nine properties that were on hold, along with a few more. Of the 44 tax-foreclosed properties KCLBA bought in July, Allen said only two remained unsold at the end of December. His full report on those sales is coming in a few weeks and that will likely mean the land bank’s economic impact will top October’s $4.1 million estimate.

But despite a court victory and having sold 42 of the 44 properties, including 1205 W. Fulton that Rylee’s Ace Hardware is turning into its fourth store, the exact fate of the land bank isn’t certain.

The county’s Land Bank Process Subcommittee has to continue its investigation of the property sale and make a recommendation to commissioners as to whether it should be held again this summer, and if it is held again, how it should proceed.

In the meantime, KCLBA is hoping the recent turn of events will turn the hostility some showed it in 2012 into more of a single-minded partnership this year. “I firmly believe that despite the lawsuit, KCLBA and the real estate investors of this community can successfully and peacefully co-exist,” said Parrish.

“There still is plenty of work to be done to strengthen real estate values in Kent County. Both parties have a meaningful role to play. I look forward to the opportunity to work together to find a way.”

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