Government and Real Estate

County panel hoping to hear from real estate professionals

Land Bank Subcommittee meets for first time since legal decision.

January 25, 2013
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At its first meeting since the lawsuit was filed, Kent County Commissioner Michael Wawee suggested a few area real estate professionals be invited to a future meeting of the county’s Land Bank Process Subcommittee.

Wawee, who chairs the subcommittee, said he wants to hear their views on the county’s Land Bank Authority. “I’d really like to hear them out,” he said.

Commissioners Dick Vander Molen and Candace Chivis, both members of the panel, at first expressed some reluctance before they agreed to go along with Wawee’s request. “I’d be happy to listen to them,” said Vander Molen. “I feel the same,” added Chivis.

The subcommittee met last week for the first time since November when the group decided to suspend meetings until a suit filed in 17th Circuit Court by 11 real estate professionals and property managers against the county, the land bank and county Treasurer Ken Parrish was settled. In December, Circuit Court Judge George Buth dismissed the plaintiffs’ complaint. The group appealed the decision this month.

The complaint revolved around county commissioners selling 44 tax-foreclosed properties for $422,000 to the land bank before the county held its annual auction. The plaintiffs said that action violated state law and county policy.

County Corporate Counsel Dan Ophoff told the subcommittee that Buth determined the county was within its legal rights when it sold those properties to the land bank in July and that the county’s policy on land distribution allowed the sale to take place.

“We’re very pleased with the result,” said Ophoff.

The plaintiffs are appealing Buth’s decision to the state’s appellate court, and Ophoff said it could take from 18 months to two years for a ruling. In the meantime, Ophoff told panel members the county could continue its review of the sale process.

The decision provided insight into the key question the subcommittee is looking into: whether the county can sell tax-foreclosed properties to the land bank before the auction.

“I think the first question has been answered by the court,” said Daryl Delabbio, county administrator and controller.

But Vander Molen pointed out that the county commission still has to make that decision and do so by summer.

Of the 44 properties the land bank bought from the county, land bank Executive Director Dave Allen said 17 were sold to nonprofit housing developers who made improvements to the houses. “We did 25 properties. Of the 25 properties, 16 were sold to developers and four were sold to owners. We only lost money on a couple of properties,” he said.

Allen said all of the tax-foreclosed parcels were listed on Grand Rapids Area Realtors’ multiple listing service, which gave the public an opportunity to purchase the properties. “We started getting calls from investors. They came to us. Everything was listed on the MLS,” he said.

Allen also said investors seemed to be more interested in buying from the land bank than through the county’s tax sale. With the agency, they can closely inspect properties before making a purchase — something they can’t do with the auction.

Another question before the subcommittee is how many properties the land bank should be allowed to buy from the county if commissioners agree to sell it some. Allen said he would welcome a number for planning purposes. “I’d really like to see some marching orders from this group and the commission,” he said.

“I think we should give them some parameters other than zero,” said Vander Molen.

Parrish, who chairs the land bank authority, said not allowing the agency to purchase any properties could be detrimental to the organization. “It certainly would be challenging. Financially, it would be harmful to the land bank. It would slow the momentum,” he said.

Allen said if the number of tax foreclosures fell dramatically, the land bank would likely have to close. But he added that scenario is unlikely to happen.

“I think it will be the same this year as last year,” said Parrish. More than 300 properties, mostly residences, made the tax-foreclosure list last year.

On a related issue, Chivis said the county shouldn’t limit the land bank to only buying the most blighted properties, unless the commission is willing to pick up the agency’s $225,000 operating budget each year.

“We’re not funding the land bank through the general fund. They’re on their own,” said Chivis.

The land bank spent $2.75 million on construction work and had an estimated local economic impact of $4.1 million last year, according to Allen.

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