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Land bank ready to move on foreclosed properties
Agency plans to take possession of tax-foreclosed parcels July 22.
The Kent County Land Bank plans to spend nearly $2.3 million over the coming months to buy, clean, repair and demolish tax-foreclosed properties in Grand Rapids, now that the organization’s board has approved a purchase and development agreement with the city.
Fifteen properties are slated to be demolished, another 19 are in need of critical repairs and 102 will get thorough cleanings. Twenty-five more are vacant parcels. One, an elevator shaft on Monroe Center, is likely to be removed from the list when the agreement is signed.
The land bank expects to generate about $2.7 million in revenue from the disposal of the properties and net $428,260 for its effort, which is more than its annual budget.
KCLBA Executive Director Dave Allen said nonprofit development firms want to buy 23 of the residential properties and the rest will be listed with the Grand Rapids Association of Realtors in late September and be sold by the land bank beginning in October.
“We intend on listing every property with a real estate agent. I have all the confidence in the world that we will sell 99 percent of the properties based on the demand that is out there,” said Allen.
“The first thing we want to do is have the real estate agents give us a CMA, both before and after renovation, prior to the listing. We’ll let the agents direct us on that. Having an agent that knows an area — that is the key,” he added.
Allen feels the properties in the city are expected to sell quickly because GRAR CEO Julie Rietberg said the Grand Rapids house inventory is low. She noted the city only has 2.6 months worth of inventory, while the normal inventory ranges from four to six months. Rietberg also said the inventory of homes priced below $50,000 is even lower, at 1.34 months.
“The market can’t be much better than it is now,” said Rietberg. “We are in double-digit appreciation in most neighborhoods.”
The land bank has estimated the repaired value of the properties at $7.6 million and the State Equalized Value has been calculated at $3.9 million. The back taxes, interest and fees on the city’s tax-foreclosed properties total $1.182 million.
The land bank has a tentative timeline in place to put the properties back on the market. It plans to buy the homes and vacant parcels July 19 and take possession July 22. Clean-up and construction are set to get underway July 23.
At the same time, KCLBA Director of Real Estate Development David de Velder will start putting together bid packets for the necessary demolition work and the properties’ redevelopment. Demolition costs will be covered by funds from the Michigan State Housing Development Authority.
Sun Title will determine which properties have insurable titles and which require quiet title action. Attorney Todd Van Eck is scheduled to file the title action with the court on behalf of the land bank July 23. The land bank should take title of the properties within 60 days.
“The preference is to renovate every house that can be renovated, not demolish it,” said de Velder.
Allen said Founders Bank & Trust and Huntington Bank have set up construction and other forms of financing to help redevelop the properties. In addition, the Grand Rapids Community Foundation is making a $600,000 low-interest, five-year loan to the land bank that can go to the redevelopment plan.
Allen also said an unidentified foundation is planning to provide the land bank with $300,000.
On top of that, the Fair Housing Center of West Michigan is dedicating a portion of the $1.4 million it received in a recent settlement with Wells Fargo Bank to the redevelopment of tax-foreclosed homes on the city’s southeast side, which contains half of the foreclosures.
The KCLBA board also agreed to enter into purchase and development agreements with the village of Sparta on 32 tax-foreclosed residential parcels, and with Nelson and Plainfield townships on one each. The land bank is working with the Home Builders Association of Greater Grand Rapids on the Sparta property, known as Bedford Falls. The village and the land bank will hold an open house at the site July 16 for new home builders.
Although Wyoming, Kentwood and Grandville didn’t transfer properties to the land bank, Allen said the cities may do so next year. “Even though they didn’t have any foreclosures, Grandville reached out to us,” said Allen.
The Kent County tax-foreclosure list includes about 309 properties this year, but 197 will come off the list prior to the annual auction Aug. 21.
Forty-four were removed a year ago when the county sold them to the land bank; that move fueled a small group of realtors and property managers into suing the county, the Treasurer’s office and the land bank. The case was dismissed in circuit court but was appealed to the state appellate court. The lawsuit is pending.
“When we get this done, we’ll be able to show everyone how much better is our process than the auction process,” said Allen.