Land bank eyeing properties for acquisition
ARENAC COUNTY — The recently formed Arenac County Land Bank — established October 2008 — was created to promote the economic development of foreclosed properties in the county and on April 1, it will begin to evaluate properites that may be feasible for development and purchase.
According to Arenac County Treasurer/Land Bank Committee Chairman Dennis Stawowy, as of Thursday, Feb. 26, there were 84 total properties — four being commercial — in the foreclosure stage and eligible for auction, although, he says that number will almost definitely decrease before the April 1 redemption deadline.
“After Feb. 18, when the courts list the foreclosures, there’s a redemption period until March 31,” Stawowy said, explaining owners of the forcelosed properties can keep them by paying the back taxes on said properties during that time.
“We’re expecting that 84 number to be down to 40, which is still substantially up from 25 last year,” Stawowy added.
He says land banks are a useful entity to a county because of the options and leeway land banks are allowed, adding job-creating tax incentives are involved as well as economic advancement.
“When a property is purchased by the land bank, (it qualifies for) Brownfield Redevelopment Authority, which utilizes all kinds of tools for development,” Stawowy said. “It creates a more traditional market.
“A land bank can purchase a property, put a modular on it and then either sell the property, or if we wanted, rent the property out. There’s lots of leeway.”
He also says Brownfield Redevelopment Authority helps to clean up a site and develop the property, making it more enticing to a developer.
“Some of the problems with foreclosure auctions are that you get people from out-of-county or even out-of-state who purchase the property in an auction in hopes of holding onto it for a short while and then flipping it, but end up not doing anything with it, not paying the taxes on it, and then it goes back into foreclosure; or when someone buys a property with an old building, hoping to fix it up or tear it down and rebuild, but finds the cost to take down a building is more than they thought,” Stawowy said. “So with a land bank and Brownfield, we’ll purchase some properties, clean ‘em up and hopefully, be able to find developers to purchase the property at fair market value.
“This is kind of the legislative fix to the problem of the foreclosures.”
He also says it’s more feasible for a developer to pay market value for a property with the tools a land bank presents than is it to purchase a “dirty” site with no tools available at foreclosed value.
Currently, the Arenac County Land Bank doesn’t own a property because of its short time of existence and it also doesn’t have any funds at this point, Stawowy says.
“(I’m) going to turn in a proposal for 2-percent grants for some funding,” the chairman said. “The board (of commissioners) has paid for training for some of the members and we’re going to see if they’ll pay for some more, too.”
He added none of the serving land bank board members receive compensation at this point, but in the future, the land bank may have to hire a manager, as he says other land banks in Michigan have ventured in that direction, while some counties have several managers.
Stawowy says he hopes Arenac County can do a little residential renewal on some vacant properties this year as the land bank will likely look to purchase only a couple of properties in its first year of operation.
“When money becomes available, (we) can start to buy Housing Urban Development (HUD) foreclosed homes and bank foreclosures,” he said. “With HUD homes, (we) can buy one at $1, fix it up, and sell the property for $30,000.
“All of the profit would then be put back in the land bank and used to purchase more properties. Land banks are like a revolving fund – none of the money can be used for county purposes or put into county funds.”
He says land banks have only been a provision under the law for about seven years and Michigan was a big initiator in the legislation that has since been copied by many other states.
“Genesee was one of the first counties to have a land bank in Michigan,” Stawowy said. “They have hundreds of projects going at the same time. They even bought up a whole block of foreclosed property in one project and developed the whole block at once. But they have a significantly larger foreclosure listing than Arenac.
“I know of one county that started their land bank by borrowing $1-2 million on the basis to pay back the loan over (many) years and have already paid it back and took out a bigger bond. That might be something down the road, if more opportunities present themselves, Arenac County could look into; but not at this point.”
He says, eventually, Arenac County’s land bank will pay for inspections prior to buying so it doesn’t end up in a bind.
“I can already see some cases where a vacant lot would be more valuable than lots with old broken-down houses,” he said, adding today’s cleanup methods for an old home are much more expensive than when you used to be able to just burn them down.
Stawowy says the county won’t be able to speculate on which properties it may look into because of the inability to predict which ones will still be foreclosed.
“We’ve had a few properties we thought for sure wouldn’t get paid but have since been paid. So we’ll just have to wait until April 1 to see,” he said.