Government and Real Estate

County panel says no to land bank

Group recommends that commission not sell properties to agency before auction.

March 22, 2013
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The Kent County Land Bank Process Subcommittee is recommending to the full commission that the Kent County Land Bank Authority not be allowed to buy any tax-foreclosed properties prior to the annual auction.

Underlining that decision is that the county will encourage local taxing jurisdictions, such as cities and townships, to claim their foreclosed properties for redevelopment instead of letting the parcels go to the county. State law puts municipalities second in line for tax-foreclosed properties. The state is first, but Lansing has to pay market value to buy a property.

“The state has never exercised that right in Kent County,” said County Treasurer Ken Parrish

Local units, though, also must have a public purpose for securing a property, like combating blight or attempting to increase the taxable value of a municipality for economic development reasons. A city or township also is free to transfer its properties to the county’s land bank after it takes possession and then have the authority do the redevelopment work. But the land bank will be allowed to buy properties at the tax auction.

“For me, I like having the public purpose. If we’re doing it the other way, we have no rhyme or reason,” said Commissioner Michael Wawee, who chairs the subcommittee. “I think this is a compromise at its finest extent.”

Commissioners Dick Vander Molen and Tom Antor also supported the recommendation, which Wawee suggested, while Commissioner Candace Chivis did not.

Chivis explained that her district on the southeast side of Grand Rapids would likely benefit if commissioners ratify the recommendation because at least two-thirds of the tax-foreclosed properties are usually in the county’s most populous city. But Chivis said she couldn’t back the proposal because she felt the subcommittee was being pressured by a small group of residential realtors and property managers. They filed a lawsuit last fall against the county, the land bank and Parrish over the county selling 44 properties last July to the land bank for $422,000. They claimed the sale violated state law and county policy, and inhibited the free market.

The case was dismissed in Kent County Circuit Court, but the 11 plaintiffs have appealed that decision.

“To me, it feels like we’ve been maneuvered by a small group of individuals that is suing us. I’m not uncomfortable with the compromise; I’m uncomfortable with being pushed,” she said.

“Nobody said a word about the free market when we sold the properties to the land bank. I can understand that we would make this decision in 2017 when the land bank was five years old,” she added.

Parrish, who chairs the land bank, said the authority will accept whatever decision the county makes, but he noted that the land bank has only been operational for a year and the process is being changed before all the results of the authority’s accomplishments are known.

Parrish also said if commissioners approve the recommendation, then the land bank will have “more hoops to jump through” to redevelop properties because it will have to deal with every local unit that claims a property. There are 30 cities and townships in the county.

“Would I prefer to keep it the way it is? Absolutely. We’ve done good work and we can prove we’ve done good work,” he said.

Land Bank Executive Director Dave Allen felt the authority was being judged by speculation — the perceptions others have developed about it rather than its results.

“Had we done just one or two properties this year, I don’t think we’d be here,” he said.

At the subcommittee’s previous meeting, a suggestion was made that the county transfer all the tax-foreclosed properties to the land bank so it could clear the titles. Then the land bank would operate the auction instead of the Treasurer’s office, and the authority would be allowed to add its cost for clearing a parcel’s title to the minimum required bid at the tax sale.

County Counsel Dan Ophoff was asked to review the legality of that suggestion. Ophoff said once the properties are out of the county’s possession, the county would be stepping outside the parameters of state law and would be entering unchartered territory.

“It’s a brand new area, and we haven’t been there before. It’s not a conservative way to look at the statute,” he said.

Antor said the county talked about establishing the land bank for three years before the commission voted unanimously to create it, and there wasn’t any pushback during that time.

“We made a tool that we thought would help raise property values in Kent County,” he said. “This is frustrating to me.”

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