Economic Development, Government, and Real Estate

Grand Rapids agrees to sell tax-foreclosed properties to land bank

June 18, 2013
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City agrees to sell properties to land bank
The Kent County Land Bank Authority buys tax-foreclosed properties and sells them to buyers who meet the agency’s redevelopment conditions. Photo via fb.com

Grand Rapids Mayor George Heartwell and City Commissioner Rosalynn Bliss called the Kent County Land Bank Authority a valuable tool to redevelop blighted properties in the city.

Their remark set the stage for six of the board’s seven members to agree to sell 163 tax-foreclosed parcels in the city to the land bank on Tuesday. Only City Commissioner David Shaffer didn’t support transferring the properties.

“I am in support of this because the land bank can really be an economic developer for the city. There are no public funds being used in this,” said City Commissioner Ruth Kelly. “I think this is a way we can stabilize neighborhoods.”

The city will claim the properties from Kent County’s tax-foreclosure list and sell the properties to the land bank for $1.182 million, the amount of back taxes and fees that are due on the parcels.

The city also will create a development contract with the land bank that will require the organization to redevelop or sell the properties within 18 months of taking possession. The land bank also must provide the city with a progress report every six months.

“I support this, as well. The reason I support this is because Dave Allen has done his homework,” said City Commissioner Walt Gutowski of the land bank’s executive director.

Although the city has transferred tax-foreclosed properties in the past to nonprofit developers, this is the first time it is doing so with the land bank. “This is not a brand new process for us,” said Bliss, who represents the city on the land bank board.

The opportunity for the city to take this action came about in March when Kent County commissioners chose not to sell any tax-foreclosed properties to the land bank this year, after selling 44 last July for $422,000.

A group of residential realtors and property managers filed a lawsuit claiming the sale violated state law and county policy, but the Kent County 17th Circuit Court dismissed the complaint for a lack of standing in December. The plaintiffs appealed that decision and the case likely won’t be decided for a year or so.

The city needed to establish a public purpose for the transfer, as required by state law, and cited restoring blighted properties as its reason.

The land bank board has to approve the agreement the city has offered and it meets next week. Should KCLBA members ratify it, the land bank will have to pay the city the $1.182 million by July 19.

“The land bank has a number of tools it can use in cleaning up the properties,” said Bliss. “The land bank has tools available that we don’t have.”

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