A different way for the Kent County Land Bank

February 15, 2013
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I’ve been reading with interest the discussion in the Business Journal regarding the Kent County Land Bank’s purchase of tax delinquent homes for renovation. It would be hard to deny that turning dilapidated properties into attractive homes is in everyone’s best interests. But in all the talk of the benefits and value created by the Land Bank, one point always seems to be missing: the possibility that private, for-profit entities could do that same good work if given the opportunity. In my opinion, the KCLB should not be taking development opportunities away from such entrepreneurs.

As the owner of a small company that purchases foreclosed properties in the central city, extensively renovates them, and then sells or rents them, this issue is important to me and many like me. Our company, as well as other deeply committed neighbors and entrepreneurs, has significantly renovated many homes in the South Hill neighborhood. This is the community that contains the home often used as an example of KCLB’s effectiveness: 737 Madison SE.

Over the years, we have renovated many homes, with our own effort, money and risk, without any government assistance. We, like many others, have struggled to survive in a difficult investing environment these last six years. Now conditions are better and lending is beginning to break loose. Opportunities for successful renovation projects are once again in our reach. Our concern is that the KCLB is now competing directly against us on potential development opportunities. And it’s doing so with an unfair advantage: the ability to purchase desirable homes without any competitive bidding in areas we have invested in for many years.

Make no mistake, 737 Madison SE is an important home in the South Hill neighborhood and was renovated with great care, cost and attention to detail. But many feel this home was “cherry-picked” from the tax sale. This architecturally significant home, in decent shape, in an up-and-coming neighborhood, was purchased for the amount of unpaid property taxes. Many private investors would love that opportunity. But the KCLB makes the argument that most private investors would simply milk the profit from that deal without doing any work.

As an example, KCLB made the comparison between 737 Madison SE and a totally dissimilar property (in far worse shape and in a depressed part of the city) where an out-of-state owner took such an unfortunate path. Would that have been the result of 737 Madison if sold to a private investor? Maybe, maybe not. But please do not lump all investors into this slum-lord classification. There are many homes within a stone’s throw of the Madison home that have been extensively renovated by private groups for sale, rent, or personal residences. And many of them were renovated to the degree of (or better than) the Madison home.

The KCLB’s goal of carefully renovating significant properties in our city is an important and honorable one. But is there another way of achieving this goal? One where qualified private entities can make that same investment? A method that empowers local entrepreneurs, rather than creating a government-backed unit that competes against us with an unfair advantage?

Here is a suggestion: Have the KCLB identify “target” properties for 2013 in the same manner it bought the 44 properties in 2012. Then, solicit proposals from licensed, qualified groups that have a proven track record of successful renovations. The proposals would provide scope of work to be performed, budgets, licensing, insurance, permitting, methods, etc. Limit the size of these bidding companies in order to encourage the growth and success of small businesses and entrepreneurs in our community. Then choose the proposal that best meets KCLB’s goals for that property. Selected groups could then purchase the properties from the county at the county’s cost, with possibly an additional fee to cover procedural costs or to support the program. If a satisfactory proposal is not submitted, the KCLB could proceed in the same manner it did in 2012 and renovate the home with its contractors.

When the example of the renovation and sale of 737 Madison SE is discussed, it is always framed in such a way that only the KCLB, a government entity, could have accomplished such an outcome. That is simply not true! There are many qualified, successful, local companies that could do so. Our local government should craft ways to support and nurture small businesses in this difficult economy, not compete against them. This is the example of the success (and wisdom) of Start Garden, 5X5, ArtPrize and many other local efforts that set West Michigan apart from much of the rest of our state and country today. I believe this is why many in our community have expressed opposition to KCLB’s actions in 2012. We would prefer to find a private solution to this admirable goal, rather than more governmental action.

John Potter
Grand Rapids

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