As executive director of the Kent County Land Bank Authority, David Allen thinks his organization contributes to more affordable housing options in the greater Grand Rapids area.
State law grants the Grand Rapids-based quasi-public organization broad powers to restore blighted homes and properties to more productive uses. The Land Bank receives and brokers deals on all tax-foreclosed real estate in Kent County and has the ability to clear messy titles that commercial real estate sources say often act as a deterrent to the private market rehabilitating dilapidated properties.
To Allen, who also serves as a Grand Rapids city commissioner representing the third ward, the Land Bank’s actions help create opportunities in red-hot real estate markets, including in West Michigan where housing inventory has plummeted in recent years.
“Part of the issue we’re dealing with — why we have a housing crisis — is there’s no inventory,” Allen said. “So just by default, having inventory helps.”
Allen’s comments come on the heels of a Michigan State University Land Policy Institute report that found the Kent County Land Bank Authority (KCLBA) had a substantial overall impact on the local economy.
In addition to generating $42.9 million in economic activity in the last four years, the Land Bank helped create 266 jobs and generated $1.77 in spending for each dollar it spent, according to the report.
“That’s a powerful number,” Allen said.
Additionally, the authors of the report used a Hedonic Pricing Model, which showed a more than $7,000 increase in home sale prices for residences within 500 feet of where the Land Bank operated.
“Some of our critics say the market could have handled this,” Allen said. “What this report shows is that the market could have handled it, but we’re producing an even better outcome. It’s better for neighborhoods, it’s better for real estate agents. … It’s better for the neighbors who live around there because it’s increasing their values.”
In his role as city commissioner and as executive director of the Land Bank, Allen has spoken at length about the need for more affordable housing options in the city and across West Michigan.
Allen and other commercial real estate sources contacted for this report said they believe the Land Bank can continue to play a role in providing inventory for affordable housing. However, the Land Policy Institute report put affordable housing development as one of the key areas where the Land Bank could improve.
“Time and again, interviewees expressed concern over the lack of affordable housing as the Grand Rapids real estate market rebounds after the Great Recession,” according to the MSU report. “It was suggested that the KCLBA look for partnerships and collaborations to build bridges to preserve the capacity to provide affordable housing. There is a perception among some that the KCLBA is now in competition with nonprofit affordable housing developers.”
That challenge rings true for Tami VandenBerg, executive director of Well House, a Grand Rapids-based nonprofit organization that develops housing geared toward the city’s homeless population.
Well House initially worked with the Land Bank for 10 homes and five vacant parcels, but it has largely navigated the private market since 2015. That’s around the time the Land Bank’s top priority shifted to getting properties restored to full use as quickly as possible, she said.
Given the nature of the Well House organization and its mission, it’s challenged to work at the speed the Land Bank demanded, said VandenBerg, who is running for a second ward city commission seat in Grand Rapids.
“We’re a grassroots nonprofit, so we don’t have the funds sitting around like a for-profit developer would,” she said. “Personally, I think it makes sense to use (the Land Bank) resource for housing homeless people. It would probably save everyone money in the long run. We should always look at who needs public resources the most. The Land Bank is in a fantastic place to do that.”
Other nonprofit affordable housing developers told MiBiz that they’ve also experienced issues with obtaining properties through the Land Bank.
But some nonprofits within the sector described the Land Bank as integral to their missions.
“(ICCF and other nonprofit housing developers) are getting access to properties through the Land Bank … for their affordable housing — that’s a fact,” Jan van de Woerd, real estate development manager for Inner City Christian Federation (ICCF), told Grand Rapids public radio station WGVU last month.
Executives with ICCF declined to comment further for this report.
“What we’re trying to do is leverage our ability to get inventory or get real estate to help facilitate specifically affordable housing,” Allen said of some of the criticism leveled against his organization.
Land Bank stakeholders say that while maintaining and providing inventory for a variety of housing types continues to be a priority, the organization’s main strategy is to be an engine for economic development.
“We want to work with the market and nonprofits,” said Jack Hoffman, a member of the Land Bank advisory council and an associate attorney at Kuiper Orlebeke PC in Grand Rapids.
Hoffman’s practice focuses on real estate issues and land use.
“If you took the (state-sanctioned Land Bank) statute and pushed the envelope to the limit, could theoretically a Land Bank operate like a developer? I wouldn’t want to say that’s impossible,” he said. “I think the mission of the board (in Kent County) is to use the powers that the Land Bank has, not to be a developer, but to facilitate development.”
For his part, Allen says he faces a common challenge with real estate developers who believe it’s unfeasible to build affordable housing without significant tax credits and other subsidies, all of which contributes to the lack of available inventory.
“The developers are right,” Allen said. “That’s the $30 million question (and) I wish I had an answer. If you look at the reality, we can’t build our way out of this. The only thing we can do — and this is me putting my city commissioner hat on: We’ve got to work on finding ways to increase people’s earning potential. That’s the key. Then they can afford those things.”