New Challenge to Land Bank Purchasing Practice

Efforts to test the legality of the Kent County Land Bank's purchasing practices have taken a new twist.

At least one person who didn't get a chance to buy a property because the land bank grabbed it first is joining a lawsuit over the issue. 

"We're amending our complaint so that it includes someone who was going to make a purchase at the auction but lost the opportunity when the land bank took the property first," said Ron Vander Veen, attorney for a coalition of local real estate groups and Realtor agencies opposing the land bank's practices in court.

Vander Veen said Rosie Baker of Grand Rapids is being added to the coalition challenging the land bank in court.

At issue, is the Kent County Land Bank's practice of gaining access to property before it goes to auction.

Under Michigan law, land banks aren't allowed to buy delinquent and abandoned properties until after free market buyers get their chance at tax auctions. However, local governments are allowed to purchase such properties before the auctions.

Over the past two years in Kent County, first the county and then the city of Grand Rapids, began operating as purchasing conduits for the Kent County Land Bank. In pre-arranged deals, the county or city would exercise their option to buy property before the tax auction was held and then immediately sell it to the land bank at cost. Realtors and others have said most of the properties likely would have attracted buyers at the auctions.

Kent County Land Bank officials have maintained that what it has been doing is proper and lawful.

The dispute over the way the land bank has been acquiring property has yet to be tested in the courts.

In 2012, the coalition filed a lawsuit over the issue against the Kent County Treasurer, Kent County Land Bank and Kent County, but Judge George S. Buth ruled the coalition had no standing to bring the lawsuit. However, the coalition hopes that by including individual potential buyers with this new lawsuit it will be able to establish standing and have the case heard in court.

"The land bank is getting in the way of individuals who want to purchase properties," said Audrey Spalding, a land bank expert whose work has been cited nationally and who also is director of education policy at the Mackinac Center for Public Policy. "This is not just about development companies; it's about people who want to own a home."

After the 2012 lawsuit, Kent County stopped participating in the purchases. But the city of Grand Rapids began participating in purchases this year. The city bought nearly all of the 163 tax reverted properties that otherwise would have gone up for auction and sold them at cost to the Kent County Land Bank, according to property records.