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Posted on Thu, Mar 18, 2010 : 6:02 a.m.

Washtenaw County officials vote to dissolve land bank authority

By Ryan J. Stanton

Washtenaw County Treasurer Catherine McClary sat quietly on the sidelines Wednesday night as county commissioners voted to dissolve the county's recently formed land bank authority.

After the meeting was over, McClary expressed regret to see the county miss out on what she said was an opportunity to do something positive with the county's hundreds of foreclosed properties.


Commissioner Ronnie Peterson expressed frustration Wednesday night that the county was dissolving the land bank authority.

Ryan J. Stanton |

With foreclosures near record rates, the Washtenaw County Board of Commissioners took McClary's advice last July to create the land bank authority to give local officials alternatives to auctioning off foreclosed properties.

Without a land bank authority, the county's only option for dealing with foreclosed land is to auction it off to the highest bidder. The land bank authority could have taken possession of properties in default and resold them.

But before voting on Wednesday, commissioners cited a lack of agreement between the board and McClary on issues surrounding the land bank authority.

Commissioners also said funding for the land bank authority had fallen through. The county was hoping to get about $5 million in Neighborhood Stabilization Program grant dollars that never materialized, leaving the authority underfunded.

Commissioner Jeff Irwin, D-11th District, said a lack of strategy - coupled with a lack of funding - caused commissioners to question the viability of the land bank, and its usefulness was becoming less and less clear.

"There were a lot of concerns about exactly what types of strategies and exactly what types of properties might this land bank look to go after, how long might they hold them and for what purpose?" Irwin said. "There were a lot of questions and, as a result of that, this board asked the land bank authority and the treasurer to come back with some strategies for exactly how this tool might be used in the future ... but in the last six or more months we haven't really seen any strategies."

Multiple commissioners said they reluctantly were deciding to step back from the land bank authority for now, expressing regret that there were so many challenges involved. Some said they wouldn't rule out reconsidering it as an option in the future.

McClary said it could help repurpose foreclosed properties.

"Two years ago, I foreclosed approximately 50 properties. Last year, I foreclosed 102. This year, I foreclosed 515," McClary said, adding that many of those properties end up auctioned off to real estate speculators in other states and countries.

"Last year, 40 percent of our properties were sold to out-of-state or out-of-country owners," she said. "And 60 percent of the purchasers were corporations or limited liability companies, so these aren't even individuals. These are entities with names like Seized Property LLC out of Nevada."

The county now must send a letter to the state, beginning a six-month notice period to officially dissolve the authority.

"I did push hard for it, but you cannot have a successful county land bank without the support of the board of commissioners and the commissioners did not make their appointments to the land bank board," McClary said after Wednesday's meeting.

She said the board of commissioners was responsible for appointing two members to the lank bank authority's seven-member governing board, but dragged its feet on doing so for the last eight months. She said commissioners had opportunities to make those appointments but did not follow through.

"One of the concerns was that, out of those two appointments, one was a supervisor from the western part of the county and the other was a commissioner, and they wanted two commissioners," McClary said. "And we made that possible. Then they had three appointments and they didn't make any of them."

Commissioner Ronnie Peterson, D-6th District, expressed concerns that without a land bank authority the county has little control over what's happening in its neighborhoods and communities as more and more properties are foreclosed.

Ypsilanti Mayor Paul Schreiber expressed similar concerns Wednesday night as he addressed the board. He urged commissioners to reconsider dissolving the land bank authority, but they ultimately went against his advice.

McClary said it's the cities and townships of the county that stand to lose the most from the lack of a land bank authority. She said the land bank authority allows the county to work with local units of government to redevelop foreclosed properties.

Commissioners voted 9-2 to dissolve the land bank authority in committee on Wednesday, with Conan Smith, D-10th District, and Peterson voting no. When it went to the full board meeting that immediately followed, the vote was 8-1 with Peterson being the lone no vote. Smith and Commissioner Ken Schwartz, D-2nd District, had stepped away from their seats and were not present for the vote.

Smith said he's sad to see the county reach a point where it is dissolving the land bank authority, leaving the county with one less tool in its belt. He said it's going to be to the county's detriment that it wasn't able to resolve its own issues.

Schwartz said he was enthusiastic about establishing a land bank back in July. He acknowledged some the problems the county experienced were the board's fault.

"Looking back at it now, I kind of feel that in many ways we failed to maybe do our homework as a board and look at the land bank in the context of our community development, our neighborhood stabilization strategies, our urban county committees and aligning those with priorities of the board in a way that perhaps would have made this more successful," he said.

"One of the commissioners characterized it as 'taffy pulling,'" McClary said of the debate over the land bank authority. "I think they had a lot of issues and, yes, I'm disappointed, but I think I'm more disappointed that those of us who supported the land bank really were not able to articulate well enough what some of the advantages would be. And I think the commissioners just didn't see the advantages."

Ryan J. Stanton covers government for Reach him at or 734-623-2529.



Thu, Mar 18, 2010 : 10:58 p.m.

Alan, I don't believe very much of Ann Arbor could be considered the kind of blighted area or urban area that your OSU article was concerned with. We don't have blocks of vacant properties that need to be secured by government purchase of them. "Hysterical anti-government/anti-tax hyperbole"? That is is pretty insulting to try to discredit what I believe to be a well-founded opinion through years of observation and experience. I just do not believe that there is any semblence of a crisis-level need for the government to be involved in ownership of foreclosed properties in Washtenaw County and to be in competition with the private sector. Show me a real need for the government to do it. In spite of the best of intentions, the government has not typically proven to be as responsive or as efficient as the private sector when it comes to residential real estate and solving housing needs. A2grateful raises a good point about using government and non-profits to help prevent delinquencies on the front-end, rather than dealing with the aftermath. Contrary to whay you said, non-payment of taxes IS a cause for mortgage foreclosure, not just a symptom. If a borrower fails to pay the real estate taxes, or the tax escrow payments, the mortgage is automatically in default even if the loan payments are not past-due. The lender must pay the taxes to keep the property from going to tax sale just to protect its mortgage position. The taxes come ahead of the mortgage in the legal pecking order, so the lender must pay the taxes to prevent losing its collateral. If the borrower cannot work out a satisfactory arrangement with the lender, then the lender will probably need to foreclose to prevent further loss. You are right in part that the present crisis was brought on by deregulation, speculation, and fraud. What you left out is that the govenment created the situation and allowed it to snowball. Democrats and Republicans, they all had a hand in it. Too many people have been crossing back and forth between the financial sector and the regulators. The foxes are still being allowed to guard the henhouse.


Thu, Mar 18, 2010 : 7:46 p.m.

Why would another bureacratic agency make things better when it comes to foreclosers. If the bureacratic agencies that were responsible for regulating loans and mortgages had done their jobs, we wouldn't be in this situation. Getting rid of unecessary and unproductive agencies is a step in the right direction. These unecessary agencies just suck the life out of the economy without contributing anything. They just made it more difficult for people who actually want to DO something with those properties. We also have to put a curb on increases in tax dollars to support these wasteful agencies and their unproductive employees. It's time to take back our government and make it accountable to the taxpayers who support it. It's time to get rid of the fat.


Thu, Mar 18, 2010 : 3:22 p.m.

Hey Ryan, nice extra info... Too bad the nonprofit groups didn't make an effort on the front end of the foreclosure, helping existing homeowners keep their homes. It's all moot. The market is as the market does. There's a great inventory of more affordable houses. The inventory will likely stay great until the new regional economy develops... New jobs will stabilize real estate values... nothing else.

Ryan J. Stanton

Thu, Mar 18, 2010 : 2:08 p.m.

Also, for those who wanted more information on the land bank authority, click here. McClary provided me with a copy of her 2009 annual report for the land bank, which stated that the authority with a majority of board members appointed held its first meeting in October. They began by reviewing information about land banks and policies adopted by other Michigan land banks. By early November, the board adopted articles of incorporation, drafted bylaws, and started to consider a mission statement as well as policies and procedures for the acquisition and disposition of property. But they still were missing two members that were supposed to be appointed by the Washtenaw County Board of Commissioners. "The upcoming year promises to be eventful for the new land bank and its board," McClary wrote. "First year goals include finalizing the infrastructure and staffing, creating an informative website, and completing the organization's policy documents. Finalizing the last appointments to the board of directors is important because a completed board will help the authority function effectively and will enhance the policy formation process." McClary stated in her report that the land bank board was expected to solicit public comment actively, visit local units of government for input and seek advice from county commissioners. She said the directors wanted to identify policies that make sense for Washtenaw County rather than just simply adopt policies used by other land banks in the state. "After directors complete the policy development process, they will begin considering opportunities for property acquisition," McClary wrote. "Property acquisition will likely start with donated properties or with properties foreclosed for nonpayment of real property taxes that become available after April 1." She concluded her report by stating that a draft document of the policies and procedures for the acquisition and disposition of property had been completed and was available for public comment.

Ryan J. Stanton

Thu, Mar 18, 2010 : 1:54 p.m.

Commissioner Leah Gunn, D-9th District, pointed out there are efforts being made by the Washtenaw Urban County to purchase foreclosed homes through nonprofit groups and get qualified buyers into them. The Urban County board had allocated $300,000 to the land bank authority, but county officials were hoping that a sizable amount of Neighborhood Stabilization Program money also would be awarded and that funding did not come through, as the story points out. Gunn said the $300,000 allocated by the Urban County would, if the members voted that way, be used to buy properties in the NSP census tracts (in Ann Arbor, Ypsilanti City, and Superior and Ypsilanti Townships), and to see that qualified buyers can own them. She said that's a continuation of what the county already is doing. "We are buying residential homes through the community development housing organizations," Gunn said at Wednesday's meeting. "We are finding qualified buyers and they must be low- to moderate- income and we are putting them in these homes as homeowners."


Thu, Mar 18, 2010 : 11:43 a.m.

Hmmm... what rhymes with canard?

Alan Benard

Thu, Mar 18, 2010 : 10:50 a.m.

@tlb1201:I live in an urban area called Ann Arbor, and it has derelict and abandoned properties in it. Not on the scale of Detroit and Flint, yet. I live down the road from Ypsilanti and Ypsilanti Township. The problem is more pronounced there. Having a local government hold the property means there is a body, responsive to us, locally available to manage this land and these structures. It would also have the long-term interest of the region at heart, not short-term profits. Blaming the county for foreclosing for unpaid property taxes seems a canard, and hysterical anti-government/anti-tax hyperbole which is not useful. When the mortgage holder can't pay the mortgage, they certainly can't pay the property taxes -- which they pay WITH the mortgage payments, and which flow through the financing institution. Unpaid taxes and subsequent auctions are symptoms of foreclosure, not causes. The present housing crisis was caused by deregulation, rampant speculation and fraud in mortgage lending. How could the government do worse than the private sector, which has completely destroyed the credit markets?


Thu, Mar 18, 2010 : 10:08 a.m.

Alan, You failed to mentione that the article you cited was from Ohio State! A closet Buckeye in our midst?! It also focuses on properties in blighted urban areas like inner-city Detroit and Cleveland where there are many vacant properties in concentrated areas, not communities like most of Washtenaw County where they are most likely scattered. What you quote is true, but how relevant is it to our county? Without having better information on where the properties are, what they are like, how many will end up vacant, etc, we really don't know how problematic they really are. If we have problem areas that have high abandonment, then let's deal with them specifically. And if the land bank were to own them, wouldn't they be vacant for a while as well? Is the government really more efficient at turning them around and selling them? Probably not!


Thu, Mar 18, 2010 : 9:50 a.m.

This article raises many more questions for me than it answers. Would the authority actually solve some problems, or was it just a vehicle primarily for the county to speculate in the foreclosure market and risk further losses and costs? How many of those 515 properties will actually end up owned by the bidders? Isn't it a pretty low percentage, with most of them being redeemed before they end up being transferred? How many are we really talking about? How much cost and overhead would be created to deal with only a few properties that would actually become owned? There is probably a very good reason that many of the specualtors who purchase tax-foreclosed properties are specialists in real estate speculation --they know what they are doing. The county would not, at least not initially. And contrary to what the treasurer said, not all corportions and LLC's are evil empires. Many are owned by individuals or families who choose to operate their business under that type of ownership for sound business reasons and not for sinister purposes. Please quit perpetuating the myth that businesses and business owners are these evil things and that government is all altruistic and good. One of the scariest statements ever is: "I'm from the government and I'm here to help."

delete this profile

Thu, Mar 18, 2010 : 9:48 a.m.

@V...I don't know what court case you're citing but this is not good information to be spreading. If there really was such a case, it was a fluke. Mortgages are recorded just after closing and the banks/lenders do indeed have a legal right to foreclose. It's not something they want to do, they lose a lot of money, but they have no choice. If they had no right to take a house back when the mortgage is not being paid, who would bother to pay their mortgage? Where would the money come from to lend to new prospective homeowners? And the sheriff's office is doing the job they are paid to do. Foreclosure is an ugly, horrible thing but the right to foreclose is necessary to keep the financial industry stable in this country. Tax foreclosures are a whole different matter.


Thu, Mar 18, 2010 : 9:47 a.m.

@AB: Or maybe another way to keep houses from being vacant is extend a 3-year grace period, as opposed to throwing a resident into the street, and taking their property. Land banks take peoples' land and homes. They CAUSE the vacancy. If you think that leads to economic stability, so be it...

Alan Benard

Thu, Mar 18, 2010 : 9:15 a.m.

Just to be clear: Land banks promote stability in local communities in a time of economic turmoil."Vacant property is a drain on city resources, producing no property tax revenue.""Vacant properties often contain poor wiring and are attractive targets to arsonists.i Research by the National Fire Protection Association found that vacant properties create on average 12,000 fires and $73 million in property damage per year."Vacant properties impact the potential for arson in urban areas but also increase criminal activity. Studies have shown a direct link between vacant structures and criminal activity."Vacant properties impact the potential for arson in urban areas but also increase criminal activity. Studies have shown a direct link between vacant structures and criminal activity. Research in Texas has found that more than 80% of vacant buildings that are accessible to enter showed evidence of criminal activity. Vacant structures were associated with narcotics trafficking, storing stolen goods, sexual assault and a variety of other crimes.


Thu, Mar 18, 2010 : 9:05 a.m.

Just to be clear: This land bank was to be formed by TAX foreclosures. The County was to be the entity that was taking title through foreclosure process. The County was to benefit from an owner's inability to pay TAXES, taking the property from the owner.

Alan Benard

Thu, Mar 18, 2010 : 8:04 a.m.

Sounds to me like the County Board failed us in this regard. Real estate interests win over human beings yet again. Remember this come election time.


Thu, Mar 18, 2010 : 6:30 a.m.

Maybe the real problem is that the County forecloses at all right now. The largest foreclosing entity in the Great Depression was the local taxing authority, not the banks. The County is crying that they are missing out on their "profit." Now an evil private entity can profit. What about the idea that the profit, regardless of beneficiary, is founded on the misery of the foreclosed party? Oh, well... that's life... up and down... that's real estate... up and down... that's the sun (hooray!)... up and down...