- people on the move
Kent County Land Bank pegs economic impact at $16M
The Kent County Land Bank Authority went over its 2013 numbers for its board last week, and estimated it had generated a potential economic impact of more than $16 million.
Now starting its third year, the sometimes-embattled KCLBA owned 231 properties in 2013, some of which carried over from 2012. Fifty-six properties were vacant lots, three were commercial entities and 140 were residential properties in sellable condition. Thirty-two other properties were marked for demolition.
David de Velter, director of real estate development at KCLBA, said 131 of the 140 homes it owned in Kent County were sold. Of the 56 vacant lots, 48 were unsold by year-end, 32 of them located in a failed subdivision development in Sparta, and 14 in Grand Rapids.
The KCLBA reported $2,996,783 in sales county-wide, with $225,974 in real estate commissions. Contracts for demolitions and clean-up of the properties totaled more than $367,000.
KCLBA Director Dave Allen told the Business Journal the organization’s goal is to see its properties renovated and back in use, so it requires buyers to provide construction plans, estimates and proof of financing. Using the numbers it collected, the KCLBA said the 2013 estimated investment in renovations is more than $8 million.
Tax-foreclosed properties cost the local government money in foregone taxes, while blighted properties soon lower the values of other properties around them. The KCLBA said the properties it has returned to use saved the local units of government in Kent County about $5 million in 2013.
The land bank said 455 tax foreclosed properties were sold at auction in Grand Rapids from 2008 to 2012, and 72 percent are still owned by the investors who bought them. Only 39 building permits were pulled on those properties, and more than 4,300 instances of code violations, nuisance and blight cases are attributable to them.
In Grand Rapids, the land bank acquired 158 tax-foreclosed properties in 2013 that the city would otherwise have put up for sale by auction, and 85 percent were sold within six months after acquisition. Of those, 103 were homes in sellable condition, of which 94 were sold after an average of 38 days on the real estate market. Twenty-two were sold to nonprofit housing corporations.
The nine remaining sellable homes are listed on the Multiple Listing Service used by real estate agents.
In Grand Rapids, the land bank sold eight vacant lots; some were buildable and some were not. Fourteen remain unsold.
Thirty-three homes KCLBA owns in Grand Rapids are in severe blight condition and eligible for demolition through the MSHDA Hardest Hit fund.
De Velter also showed the board a graphic giving a quick comparison of 2012 to 2013, when the number of sellable homes went from 57 to 175 and the number of those sold went from 43 to 141. The size of the KCLBA staff was three in 2012; in 2013, it was 3.5 full-time equivalent jobs. The budget was $237,402 in the first year, and in the second it was $364,846.
Allen said the organization’s results in 2013 — selling 85 percent of its properties despite a “huge” increase in properties — were only possible because “we didn’t do the work. We hired the private sector to do the work.”
That included 152 local contractors, haulers and service companies, said Allen, and the properties were sold by 26 different real estate agents.
“We have created a significant economic impact in the private sector,” said Allen.
A group of area real estate investors has sued twice, once in 2012 and again in 2013, claiming the land bank’s activities are in violation of state law. The investors claim the properties must be sold at auction instead of the land bank being allowed to buy them first.
Both suits lost in court but both are being appealed.