Government and Real Estate

Decision on land bank property sale upcoming

County subcommittee may reach a recommendation next week.

March 1, 2013
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The Kent County Land Bank Process Subcommittee is close to making a decision on how many tax-foreclosed properties the Kent County Land Bank Authority can buy prior to the county’s public auction. That decision could come as early as next week when the subcommittee meets on Tuesday.

“We’re all in agreement that we want the best decision possible. It’s just how we get there,” said County Commissioner Michael Wawee, who chairs the subcommittee. “I don’t think we’re structurally there yet.”

The subcommittee’s decision will go to the full commission in the form of a recommendation, and board members will decide how many properties the land bank can buy this summer.

“We all know this will be a political decision as much as a rational or logical decision,” said County Commissioner Dick Vander Molen.

So far the subcommittee is looking at three options. One is to allow the land bank to purchase a set percentage of the tax-foreclosed properties before the public sale this year, and then reassess that number every year. Over the past three years, 16 percent of the parcels that have been sold at auction have gone back into tax foreclosure, so that percentage seems to be the leading figure now.

A second option is to let the land bank buy all the tax-foreclosed properties, the option cited as providing the county with the most revenue. The third alternative is not to let the land bank buy any properties before the auction and have the agency makes bids at the public sale.

There were 309 properties on the tax-foreclosure list last spring, and the land bank bought 44 before the auction last summer. It sold 19 of those to nonprofit developers and ended up with roughly 7 percent of all the foreclosed properties.

“Going through the county process as we did last year was legal. There is no question to that,” said County Treasurer Ken Parrish, who chairs the land bank and whose office handles tax foreclosures.

But 11 realtors and property managers felt otherwise and filed a suit last fall against Parrish, the land bank and the county, claiming the sale violated state law and county policy. A circuit court judge dismissed the case for a lack of standing, and the plaintiffs have appealed.

Part of the complaint was that the land bank “cherry picked” some of the best properties before the auction, which kept private buyers from having a chance to purchase those parcels and the free market system from operating properly.

“There is a misconception that the 44 properties we took last year were the 44 best properties, and that’s not true,” said Parrish, who also added there were a few good parcels in the mix to give the land bank a revenue source.

“There is a lot of blight that has to be dealt with, but fixing blight is costly. It takes money to do that. The land bank isn’t in the position to only take the dogs,” he said.

Parrish said about 10 percent of all the tax-foreclosed properties were razed last year, and the local governments ordered most of the demolitions. He also said the land bank has maintenance and clean-up costs associated with the foreclosed properties.

Parrish pointed out there isn’t a guarantee that every public auction will generate revenue for the county, but he noted that the county can be certain it will recoup its lost property-tax revenue for the properties the land bank buys.

“It’s the right way for the county to get its money back as quickly as possible,” he said.

Subcommittee members met recently with representatives of the Commercial Alliance of Realtors and the Grand Rapids Association of Realtors, including CAR President-Elect John Francis and GRAR Executive Director Julie Rietberg.

GRAR has issued a position paper on the land bank that generally favors the agency’s purpose, especially preserving property values throughout the county. But the group does not support the county setting aside properties for the land bank. GRAR feels the agency should be treated like any other investor. The association also feels the land bank should be funded through other means than the sale of properties and has offered to help the agency find alternative funding.

“We are absolutely continuing our dialogue with them,” said Parrish.

The land bank has been speaking with realtors since at least last summer. Every property the agency has sold has been listed on GRAR’s multiple listing service. When the organization requested listing agents for its parcels, 19 responded. Parrish said many more would have done so if the land bank had more than 25 properties for sale. He also noted that selling agents don’t have to be affiliated with listing agents in order to sell a land bank property.

Parrish disputed some realtors’ claims that the county’s auction was a free-market exercise. He said it’s cash to the highest bidder, and listing properties is a better free-market practice. Parrish also said he has asked a few realtors if they’d want to sell their homes through an auction, and they’ve told him they wouldn’t want to do that.

County Commissioner Tom Antor said no one complained about the land bank until after last summer’s sale of foreclosed properties, even though it took about three years for Parrish and the county to form the organization. “It seems like we are covering for just a few people,” he said.

County Commissioner Candace Chivis indicated some of the plaintiffs in the lawsuit have other problems than the land bank to worry about. “There are several of them that owe quite a bit of back taxes,” she said. “I’ve told several of them to their faces to take care of what they’ve got.”

Both Antor and Chivis are on the subcommittee with Vander Molen and Wawee.

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