Government and Real Estate

City eyes options as land bank winds down

Working with the State Land Bank Authority is one alternative.

October 11, 2019
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The Grand Rapids City Commission last week gave context on a resolution to authorize a contract between the city and the State Land Bank Authority for its services.

The Kent County Board of Commissioners voted December 2018 to begin the dissolution of the Kent County Land Bank Authority by no later than Dec. 31.

The unexpected decision set in motion an examination of the city’s housing efforts that has included evaluation of the relationship with the KCLBA, rethinking land banking for the city of Grand Rapids, contracting with Housing Next to provide housing practice leader services and authorizing investment in a collaborative Housing Needs Assessment for Grand Rapids and Kent County, and pausing on final action on the Affordable Housing Community Fund.

The decision also has resulted in confusion and frustration from local housing advocates, said Third Ward Commissioner Senita Lenear, who recommended pulling the resolution so the city commission could have a clear conversation about its new relationship with the state land bank.

“I think what we had talked about earlier was to try to have as many housing discussions as possible in the evening because we frequently have housing advocates … in our public comment period coming and wanting to know what it is that we’re doing,” Linear said. “So, I thought it would be a good time to pull this contract and talk a little more in depth about what it is we’re doing with the state land bank.”

First Ward Commissioner Kurt Reppart, who was appointed to serve on the KCLBA as it winds down, said the land bank has about 10 projects around the city it plans to complete by the end of October. The little money that remains in the land bank after these projects, if any, would go back to the county and the properties would belong to the city.

There are currently 145 KCLBA properties within the city, a number that will be reduced in the coming months as the KCLBA completes the ongoing projects. While the city has the ability per contract to reacquire the majority of these properties as they are covered by one of the seven agreements with KCLBA, the city’s strategic review has included understanding the future need for land banking services, including the disposition of remaining properties.

“We’ve got this agreement with the state land bank that is going to help us to make this transition a lot more smooth than if we had to do it on our own, but for the sake of wrapping it up, really anything Kent County Land Bank-related will be buttoned up by the end of this month,” Reppart said.

At the time of the announcement to dissolve KCLBA, the organization owned and managed 165 tax-foreclosed properties within the city, which were covered by one of seven active agreements between the city and KCLBA.

The city and KCLBA began discussions regarding the wind down of KCLBA efforts earlier this year.

In addition to KCLBA, the Housing Advisory Committee, Housing Now!, the proposed Housing Fund, Rental Application Fee ordinance, Homes for All and Low Income Housing Tax Credit projects all have been part of the city’s affordable housing efforts over the last three years.

The city commission took two more steps in August when it approved a contract with Housing Next for housing practice leader services that established a point person who will concentrate city efforts focused on housing matters and will coordinate application of resources that drive results. The city commission also approved investment in a housing needs assessment for Grand Rapids and Kent County with collaborative partners.

Deputy City Manager Eric DeLong said, without a land banking function, the city wouldn’t be as effective in its ability to address matters of affordable housing.

“One of the first alternatives we looked at was whether we could form our own city of Grand Rapids Land Bank, which would have been the preferred alternative, but we’re precluded by state law from doing that,” he said.

One alternative, DeLong said, was to work with the state land bank to replicate the services previously provided by KCLB.

“When a property goes through foreclosure, there may be title issues,” DeLong said. “The land bank is set up by state law to get a clean title so when a property comes back, there’s a transaction that will provide good title to the new buyer.”

The land bank also can provide maintenance, security and hold properties until the city can find a way to redevelop them for affordable housing or other uses.

The one difference in how the state land bank would operate is the city will pay upfront for holding costs for the aforementioned activities, which are estimated at about $70,000 per year, DeLong said. The city expects to use affordable housing community fund dollars to help pay holding costs.

Entering a contract with the Michigan State Land Bank Authority will complete the city’s transition from the KCLBA to a new entity that was envisioned in January this year.

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