Government and Real Estate

Land bank board adopts 2014 budget

Organization plans for fewer expenses next year than this year.

December 13, 2013
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The Kent County Land Bank Authority recently adopted its operating and development budget for next year, and the 2014 spending plan is less than this year’s.

The land bank’s total operating expenses for next year are expected to be $469,531 or about $20,000 lower than its 2013 expenditures.

Personnel expenses for the bank’s four staff members should total $294,379 and will include salaries, payroll taxes, heath insurance coverage, a retirement program and mileage.

Non-personnel expenses should come to $175,152. Those include rent, communication costs, office supplies, liability insurance, accounting and legal fees, and a few other items.

As for the development side of the budget, revenue to the land bank is expected to be $2.97 million next year, with $2.7 million of that total coming from property sales. The land bank is expecting to sell 150 properties in 2014 for an average price of $18,000 each.

Donated properties could give the land bank another $180,000 in revenue next year, with most of those expected to come from area banks. The budget has the land bank selling a dozen in 2014 at an average of $15,000 each.

The land bank will also spend about $2 million on buying, marketing, cleaning up and selling those properties next year. By the end of next year, the nonprofit organization hopes to clear $951,000 in net revenue from its development effort. The operating expenses will reduce that net revenue figure to $481,469 by year’s end.

The difficulty for the land bank to establish an annual budget is its fiscal year covers the calendar year, but its development year largely runs from July to December. That’s because all the tax-foreclosed properties in the county don’t become available for the land bank to purchase until July.

KCLBA Executive Director Dave Allen cautioned board members not to see the $481,469 in net revenue solely as a surplus that can be set aside. He said those dollars have to be used to buy properties the following year and the agency will need about $1.1 million to do that in the summer of 2015.

“We’re going to need to self-fund these acquisitions and not rely on the foundation,” he said.

Grand Rapids Community Foundation has loaned the land bank money to purchase properties; that loan matures in 2017. The land bank also has had lines of credit with Huntington Bank and Founders Bank & Trust. The organization does not receive financial support from Kent County.

“I’m pleased we finally have a budget that we can all get our hands around,” said Sharon Brinks, a Kentwood city commissioner and KCLBA board member.

Brinks asked whether the board should consider reviewing the budget at the year’s halfway mark, considering the development side of the ledger will come into play in July.

“Midpoint is always a good time to review it,” said County Treasurer Ken Parrish, who founded and chairs the organization. “It’s a working, breathing document in my view.”

An audit revealed the land bank finished 2012 with a surplus of $276,134, which was $112,796 more than it closed the year with in 2011.

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