Economic Development, Government, and Real Estate

A lot of eyes are on Grand Rapids

Many are watching how the city and land bank conduct the Fresh Start program.

November 1, 2013
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The blight blitz to rid the city of 100 dilapidated houses is underway, and how it gets done in Grand Rapids may determine if and where it gets done the next time.

“Michigan is leading the way in this,” said Ken Parrish, founder and chairman of the Kent County Land Bank Authority, which is managing the demolition effort with the city.

Parrish, also Kent County Treasurer, said the state’s program is a test case for the nation, and if it proves to be successful, it could be imitated in other urban areas.

He also said the city and the land bank are leading the way in the strategic manner the local program is being conducted, and the effort isn’t going unnoticed.

“A lot of eyes are on us,” Parrish said.

The first decayed house, at 738 Franklin St. SE, came down Oct. 17.

The money for the local effort came from the federal government’s Troubled Assets Relief Program. The state received $100 million in TARP funds for its Fresh Start initiative, which gives five cities the money to remove about 78,000 blighted properties from their landscapes.

Grand Rapids only received $2.5 million in a grant from the state for its effort.

“Working through this demolition grant is like trying to build a plane in flight,” said KCLBA Executive Director Dave Allen.

Allen said the grant allocates a maximum of $25,000 for each house to be razed, a figure that would normally cover a demolition cost. But unlike the four other cities in the state’s program that already own the properties on their demo lists, the land bank has to buy the homes with the grant dollars — an additional expense that must be squeezed into the budget.

Allen also said some of the targeted houses on the demolition list were sold to Habitat For Humanity and that organization is following through on those properties.

“The systems are in place, and we’re getting three bids for each demolition,” he said. “Once a demo starts, it’s a pretty simple process. They come down in one day. All the contractors and realtors that are working with us have done a fantastic job.”

Of the 100 homes targeted for demolition, 27 were among the 158 tax-foreclosed properties the land bank bought from the city in July. Twenty-three of those are on the city’s southeast side, two are in the southwest sector, and two are on the northeast side. Most that have made the demolition list have either gone through a fire or are saturated with mold.

Once the properties are cleared, the lots will be sold for redevelopment purposes. “We already have one builder who has committed to four lots,” said Allen.

As for the tax-foreclosed properties the land bank bought, Allen said only 60 haven’t been sold, and of those, 23 haven’t been listed yet. So far, the land bank has $1.4 million in signed sales agreements. Nonprofit developers have purchased 21 homes and have agreed to redevelop the properties.

If the average sales price of the remaining 60 properties turns out to be $15,000, Allen said another $900,000 in revenue would come to the land bank. That total with the amount from the signed sales contracts would cover the $2.3 million KCLBA has invested in buying, selling, cleaning and upgrading the city’s properties.

Allen said the land bank made $14,000 on one sale and $12,000 on another, but it lost $3,000 on yet another transaction. “We know we’re going to lose money on some,” he said.

“We’ve had our busiest days over the past seven years,” Allen said near the end of October. “We’ve gotten two or three offers (for properties) a day. I go to Sun Title every day at 4:30.”

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