County Blocks Private Citizens From Purchasing Home; Buys The Property Itself

Sale proceeds could be used to fund Kent County Land Bank Authority's operations

By Tom Gantert | Sept. 25, 2012 | Follow Tom Gantert on Twitter

5076 Montauk Drive, in Alpine Township. The property was acquired by the Kent County Land Bank for $10,448.28. Photo by Rusty Richter.

The Kent County government blocked private citizens who had interest in buying an abandoned house and purchased the property itself so the county could then re-sell it for an estimated $100,000 profit.

And a county official said it was all legal.

The house in Alpine Township was designated as "blighted" and before it was offered to realtors or others who might have been interested in the property, the Kent County Land Bank Authority acquired it for $10,448.28.

"It is true that from the outside, this house looks to be in good shape," said Kent County Treasurer Ken Parrish, who also serves as chair of the land bank authority. "However, the interior required a significant amount of work to be done. More importantly, blight can be viewed in many different ways. Certainly buildings that are falling down can be viewed as blight. But so can properties that for other reasons drive down the value of properties around it, such as abandoned property as this one was." 

Parrish said the county will invest tens of thousands of dollars in improvements in the house and then re-sell the property.

"It should serve as a sales comparable that will support increases in value of all of the neighborhood," Parrish said in an email. "That's good for the neighborhood, and also good for the county, as increased property values lead to increases in tax revenue."

But comments published on a news website by what was reported as "land bank staff" suggest that the county was interested in turning a profit on the property to help fund its own operations.

That raises questions about how fair it was for the county to take the property off the auction block where private citizens could have bid on it.

Realtor Rusty Richter said he was interested in buying the property at the auction and does not believe the property is blighted.

But Parrish said the law provides the county the right to take properties off the auction block — and buy the property itself.

"[A]ll the statutes were followed," Parrish said.

According to an MLive story, the land bank staff comments on 5076 Montauk Drive NE  were: "Staff comments: Nice Home-Big mistake by City Financial. Revenue from this project will go a long way to help fund the Land Bank."

County records show that $10,440 was owed in taxes. The property's development cost was set at $57,267 and the county estimated it could make $97,733 profit on the sale.

"We all want vacant property to be purchased and rehabbed," said Audrey Spalding, a land bank expert who works at the Mackinac Center for Public Policy. "Realtors say that buyers were lined up for that house. And yet, the Kent County Land Bank got in the way. The land bank's listed reason for acquiring 5076 Montauk was to acquire funding for itself.

"The concern should be getting vacant property back into productive use, not funding a new government land bank."

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See also:

Land Bank Powers Abused, Costly to Taxpayers

Kent County Taxpayers Question Land Bank

Analysis: Genesee County Land Bank Threatens Private Property Rights

Land Bank Loans Often Losers

Land Banking: An Old Idea With A Poor Track Record

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