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Wednesday, January 9,2013

Bank on it

Newly elected treasurer wants to form a land bank in Eaton County

by Andy Balaskovitz
Bob Robinson has a plan for the rising number of tax-foreclosed properties in Eaton County.

Robinson, the newly elected Democratic treasurer there, is looking to do what Ingham and 32 other Michigan counties do to help manage property blight: set up a county land bank.

“I can tell you the blight of abandoned homes is impacting every community in the county,” Robinson said. “One way we can deal with part of this problem is through a land bank.”

When properties are foreclosed on for taxes, in Eaton County, they are “surrendered” to the state, as Robinson put it, because the county is not what’s called a foreclosing governmental unit. The state then auctions the property off for back taxes and costs and fees. Eaton County is one of only 12 counties in the state that’s not a foreclosing governmental unit. In Ingham Co., properties foreclosed on for taxes are turned over to the county Treasurer’s Office.

Declining to become such an entity, Robinson said, has “hamstrung Eaton County.” It means the state has essentially been the steward of tax-foreclosed properties in Eaton County. More local control of those properties may yield better results for repurposing them, Robinson said. 

First, the county will need a special purpose bill to pass the Legislature allowing it to become a foreclosing governmental unit. Then it would need to enter into an intergovernmental agreement with the state Land Bank Fast Track Authority to create a land bank.

A driving factor behind Robinson’s plan is that tax foreclosures have steadily risen in Eaton County over the past six years. They more than doubled between 2008 and 2009, from 16 to 35. Last year, there were 52 tax foreclosures — nearly five times as many as there were in 2006, according to figures provided by the Treasurer’s Office. That compares to nearly 450 in Ingham County last year.

Up until 1999, Michigan properties that went into tax foreclosure lingered for up to seven years. In that year, the Legislature allowed counties to take possession of such properties after just two years.

A statewide Land Bank Fast Track Authority was created under state law in 2003 and countywide land banks sprung up thereafter, the first in Genesee County. Ingham County was the state’s second, created in 2005.

A land bank is an authority that basically manages tax-reverted, donated and unclaimed properties, either by demolishing structures or rehabilitating them. They may be funded through proceeds from the tax foreclosure process, local units of government. The Ingham County Land Bank has been heavily funded recently through federal stimulus dollars. The county treasurer decides which properties it wants to revert to the land bank, which makes it eligible for various types of financial incentives for redevelopment or demolition.

Land bank supporters say it’s advantageous to manage such blight locally rather than through the state. Moreover, they say, it doesn’t matter whether you’re in a more rural area like Eaton County or a place like Genesee or Ingham counties with an urban core.

“You can apply them to all different sized communities,” said Eric Schertzing, Ingham County treasurer and chairman of the Ingham County Land Bank. “Do you want the state of Michigan dealing with local property or would you like to do it at a county level? I think it’s a slam dunk on behalf of citizens to do it locally.”

The state, Schertzing says, doesn’t do as much “personal outreach” when auctioning off foreclosed properties, such as an open house, which he commonly does for “decent properties.” And with more “hands-on” auctions, he added, “You can get more money into the system” through “better buyers” and avoiding “low-quality investors.”

Flo McCormack, a consultant for the Michigan Association of Counties, said the original goal of land banks was to see tax-foreclosed properties end up in “productive re-use.”  Before land banks were enabled under state law a decade ago, “Many properties kept going through the tax reversion process over and over” because bidders on properties may have been from all over the country.

She called the land bank enabling legislation “one of the best pieces of legislation I’ve ever seen,” because it is “specific enough to give guidance and broad enough to let urban counties deal with (foreclosed properties) one way and rural counties a completely different way.”

Yet former Eaton County Treasurer Bill Conarton Jr., a Republican who served four terms before Robinson, never gave much thought to starting a land bank, primarily due to the relatively low number of tax-foreclosed parcels during his tenure and because of potential costs for the county, such as legal expenses that may be incurred during the foreclosure process.

State Sen. Rick Jones, R-Grand Ledge, said it’s “probably a good idea as long as it doesn’t start costing the taxpayers a lot of money.”

McCormack pointed out that county treasurers are not statutorily obligated to put any properties in the land bank. “You just have it in the toolbox,” she said.

Robinson comes from a background of public relations consulting. He ran unsuccessfully for the state House in 2010. He and Schertzing share the idea that the land bank concept challenges the traditional duties of a county treasurer.

“I want to take it beyond the minimal performance with respect to the required obligations of the job, which are collecting taxes, issuing dog licenses and investing idle funds of the county,” Robinson said. “I will evolve this office to do a lot more than that.”

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