Economic Development, Government, and Real Estate

Land bank gets a toxic surprise

The agency now owns an old plating factory containing dangerous chemicals.

March 13, 2015
| By Pete Daly |
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toxic land bank
David deVelder, director of real estate development at the Kent County Land Bank Authority, with one of the vats of chemicals to be removed from a former plating company. Photo by Michael Buck

The Kent County Land Bank Authority owns an old plating factory in southeast Grand Rapids that it is sure it can sell — but only after the vats and drums full of toxic chemicals have been removed and the property cleaned.

Just the cost of disposal of the hundreds or possibly thousands of gallons of caustic and toxic liquids will be an estimated $100,000, according to David deVelder, director of real estate development at the KCLBA. Due to the large volume of chemicals, the Michigan DEQ and the EPA have authorized the transportation of the chemicals for disposal deep underground at a special facility in Arizona.

“We will take a significant loss on this building,” said Dave Allen, executive director of KCLBA.

KCLBA did not know exactly what was inside Hard Chrome Plating Co., a small, one-story factory at 1516 Blaine Ave. SE, when the agency bought it from the city of Grand Rapids one year ago for $11,705 in back taxes.

“Being a plating facility, we kind of figured there might be something in there, but I think it was a little beyond what we expected,” said deVelder.

The small plant, which KCLBA Bank officials said probably never employed more than a few workers, is about 50 feet from an occupied house and directly across Blaine Avenue from an elementary school. When KCLBA was able to enter the building after evicting the bankrupt business, it found three chromium electroplating tanks still containing chemicals, plus dozens of 55-gallon drums of chemicals. A large elevated tank containing hydrochloric acid is still in place, too.

Even if KCLBA had known about the toxic chemicals still inside the factory, it would not have shied away from buying it. The Land Bank has an agreement with the city of Grand Rapids to purchase all blighted, unmarketable properties that the county has foreclosed on for non-payment of property taxes.

The purchase agreement with the city “is all or nothing,” added Allen.

The property was essentially abandoned when the last workers left, according to deVelder. He said that under the federal Resource Conservation and Recovery Act (RCRA), the former owner might have been held responsible for the cost of the environmental clean-up. However, the 72-year-old owner was in ill health when the county foreclosed on the property and he passed away shortly thereafter.

“They weren’t doing anything wrong here. I want to be clear about that,” said Allen, noting that the company had been in compliance with the city of Grand Rapids and the Michigan DEQ’s environmental regulations.

While the building may not look impressive, and has not been advertised, it is zoned industrial and has already proven to be of interest in the business community. Allen said KCLBA has “received a lot of phone calls on it” from individuals and businesses with a possible interest in buying it.

The factory is on the edge of an active industrial area off Kalamazoo Avenue SE a few blocks south of Hall Street. Allen noted that the building is still functional as a factory, and he said light industrial properties within the city are in demand.

However, the toxic chemicals left stored in the building would be a major financial liability to any private enterprise wanting to acquire the property. Normally, the county would auction tax-foreclosed properties, starting at a minimum bid equal to the unpaid taxes due on it — meaning $11,705 in the case of Hard Chrome Plating Co.

“If I was to speculate, I would say this building would not sell at auction” because of the toxic chemical disposal cost, said Allen.

“This is a classic case for the need for a land bank,” said Allen, noting that if Kent County did not have a land bank, the local government would end up owning the property and the taxpayers would have to pay for removal and clean-up of the toxic chemicals.

KCLBA, a nonprofit organization dedicated to getting blighted properties rehabilitated and back on the tax rolls, would sell the plating factory — most likely at a loss — once it is marketable, but the Land Bank’s gains on sales of other tax foreclosed properties will offset that occasional loss. Allen calls it “cross collateralization.”

“And it doesn’t cost the taxpayers. That’s the key,” said Allen.

When the Land Bank acquires a home, it makes legally certain that the next owners are going to rehabilitate the property, helping end the spread of blight.

Although almost all of the properties acquired by the Land Bank throughout Kent County are single-family homes, it also acquires abandoned commercial properties and Hard Chrome Plating Co. is actually the second industrial plant it has owned. As was reported in the Business Journal in 2013, KCLBA acquired the defunct Sparta Foundry in Sparta, which was environmentally contaminated and requiring expensive remediation.

The Land Bank worked with the state and local governments to get the Sparta property cleaned up and got help from The Right Place in finding a buyer, which turned out to be a Canadian redevelopment firm called Blueforest Ventures.

In early March, an attempted business deal that had been ongoing between Blueforest and some local companies fell apart.

Julius Suchy, the Sparta Village Manager, said that nonetheless, the property is on the tax rolls.

“It isn’t being used yet, but the site, as it was before, was unusable,” said Suchy.

He said the industrial contamination made it potentially dangerous to the community, particularly to any kids going on the property.

“But cleaning up the site allows it to work as a blank slate. There is a lot of possibility at the site, where once there wasn’t,” said Suchy.

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