Land Bank forum focuses on partnerships, community

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by Cynthia Price
Legal News

Ingham County Treasurer and Land Bank board chair Eric Schertzing’s mantra could well be “partnerships, partnerships, partnerships.”

He could not have made it clearer at last week’s public forum, sponsored by Kent County Treasurer Ken Parrish, that working with partners both to determine what is in the best interests of the community and to help implement programs is critical to a land bank’s success.

Another way to think of it, according to Schertzing, is “Shared leadership, shared vision.” Or, in even less oblique terms, “Spend lots of time together,” as he told the approximately 125 interested citizens at the Dominican Center on March 23.

All this is likely to mean that land banks will be different from each other, as each reflects its own community. However, there are certain boundaries within which land banks operate and some obvious goals of all.

The Land Bank Fast Track statute, Act 258 of 2003, resulted at least to some degree from the recommendations of former Governor Jennifer Granholm’s Land Use Leadership Council, which convened a broad array of stakeholders to address both urban and rural problems.

PA 258 reads in part:

“AN ACT to provide for the creation of land bank fast track authorities to assist governmental entities in the assembly and clearance of title to property in a coordinated manner; to facilitate the use and development of certain property; to promote economic growth;... to authorize the acquisition, maintenance, and disposal of interests in real and personal property; to authorize the conveyance of certain properties to a land bank fast track authority; to authorize the enforcement of tax liens and the clearing or quieting of title by a land bank fast track authority; to provide for the distribution and use of revenues collected or received by a land bank fast track authority;... to exempt property, income, and operations of a land bank fast track authority from tax;...”

Land banks primarily focus on tax-foreclosed properties, which a unit of government, in most cases the county, holds for varying lengths of time in order to maximize benefits to the public. However, there is no statutory limit on the type of properties a land bank may purchase, and many buy mortgage foreclosures as well.

Public benefits include, but are not limited to: more control over the sale of tax-foreclosed properties and the revenues eventually to be realized from their sale; kick-starting economic redevelopment; and the ability to combat such quality of life and safety problems as blight, abandonment, and unproductive speculation.
Another obvious benefit is in expanding the ability to create affordable housing, which many feel is sorely needed.

Commented Tyler Nickerson of the Grand Rapids Area Coalition to End Homelessness, “Land banks represent a best practice to create more affordable housing — which we have to make sure is in good supply in order to house the homeless as they are able to move up — but also to limit the detrimental effects of the foreclosure crisis on neighborhoods.”

As far as the potential to increase the coffers of local governments and possibly make up for some of the revenues lost from the shrinking economy and changed state priorities, the potential of the land bank to spur economic development means that properties may bring in tax revenue where there was none before.

The land bank itself may seek grants or other types of funding for its work, but the general concept is that money from renovated housing and property sales, along with appropriate tax incentives, will produce enough to cover expenses and allow growth. The difficulty is in finding start-up financing.

Schertzing said that since its inception in 2005, the Ingham County Land Bank has purchased 649 tax and mortgage foreclosures, demolished 77 buildings with 98 more to come, maintained all of those sites, sold 51 of the 70 single family houses it has been responsible for rehabilitating, made a total of 146 purchases through Federal Neighborhood Stabilization funds, and completed eight new construction projects, seven of which have sold.

Schertzing emphasized repeatedly that none of this could have been done without a commitment to nurturing partnerships. Referring to agencies  the flagging economy had caused to falter, Schertzing said, “Perhaps the most powerful thing has been to build relationships – there used to be more people who could spend time going to meetings and planning, but a lot of those positions have been lost, and the land bank has tried to rebuild those community discussions.”

Schertzing told about the ground-breaking work of Genesee County, where Flint is located, where Treasurer Dan Kildee set up a model even before PA 258.
As detailed in the Feb. 24, 2010 issue of Grand Rapids Legal News, Kent County finalized agreements to start its land bank in late 2009. Parrish said at the presentation that Kent’s “late start” resulted from two factors: first, the county was not seeing tax foreclosures at any great rate until recently; and second, he preferred to take some time to learn from others mistakes and successes.

As Schertzing noted, nearby Muskegon County started a land bank in 2006, but its actual impact has only been felt recently. In September 2010, the county contracted for management with Tim Burgess who says he insisted that the land bank operate countywide and not just in the City of Muskegon. “We’ve really gained some traction this year after several years of relative inactivity. We’re turning over properties. including vacant land parcels, by the dozens, and I think that will keep improving this tax year,” Burgess noted.

Since receiving approval, Kent County has appointed members to its governing board. These include Parrish, County Commissioner Stan Ponstein, Grand Rapids City Commissioner Rosalyn Bliss, Kentwood Commissioner Sharon Brinks, and Plainfield Township board member George Meek.

Brinks, an attorney who heads Brinks Law Firm in Kentwood, says, “I think there’s tremendous potential here; I was very interested in being in on the ground floor, because it’s a new tool in our toolbox. I think of it as like recycling property to its next highest and best use.” But, she adds, reiterating Schertzing’s comments, “The tool is going to be used differently according to which community is using it.”

The board has been busy finalizing documents such as articles of incorporation, priorities and policies, and bylaws. They decided to include a much larger advisory board aimed at developing those partnerships.

“We spent a lot of time on the language in the document. We requested input from all the different types of communities involved, including non-profits,” Brinks comments. “There’s a theme in those documents of respect for the already established public-private partnerships, respect for the planning activities of the local governments — that’s mirrored throughout in the way the documents have been drafted.”

Parrish said at the forum that the search for seed funding is underway.

Most forum attendees commented favorably. “I thought the most important point conveyed by Schertzing was that rather than be a competitor, a land bank can and should function with as many  community partners as possible to create win-win scenarios.  But I also hope that our land bank helps snuff out the speculators who buy investment properties and either leave them to rot if they can't turn around and sell them, or become absentee slumlords,” stated Foreclosure Response Coordinator Kym Spring.

Some negative comments during the question and answer period resulted from people feeling that the land banks competed unfairly with buyers on the open market. A land bank may bundle properties in large lots when they go through tax foreclosure sale at auction. This helps ensure that at-risk properties will not fall into the hands of irresponsible landowners; for example, some low-end speculators may fail to maintain the properties, or abandon them if they are not “flipped” (resold) right away.
Schertzing said that if the community deems bundling unnecessary, the land bank may choose not to do it.

Others expressed concern that land bank properties would continue to contribute to neighborhood deterioration until they were sold. Parrish said that in Kent County, “Our priorities and policies call for us to maintain properties to community standards.” He added that as far as following community zoning, “we want to play the game by the same rules as everyone else.”

However, when someone from a community housing provider said there are times the houses they obtain are in terrible shape and demolishing them would be preferable but he is usually precluded from doing so, Parrish said the land bank might be able to help. “Let’s have a conversation,” he offered.

Serving on the Kent County Land Bank advisory board is open to any interested party. Parrish encouraged people to contact him to express interest: ken.parrish@kentcounty.org or 616-632-7513.

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