Kent County government loses hundreds of thousands of dollars due to preferential transfers to the Land Bank, faces deficit of $955,000, considers raising taxes

The Kent County Taxpayers Alliance previously pointed out that the Kent County government authorized the Kent County Land Bank Authority to cherry-pick prime properties that were slated for public auction due to tax foreclosure, short-circuiting the usual process and depriving county government of much-needed revenue. Now, after analyzing the financials of those preferential transfers, we’ve determined that county government is facing a deficit of nearly $1 million, much (if not all) of which is a result of preferential land transfers to the Kent County Land Bank Authority for government-run real estate speculation. Consequently, county government is now considering a tax increase to pay for shortfalls in the Veterans’ Affairs budget.


When a property owner does not pay the required property taxes for several years, the county government forecloses on that property and takes possession. Normally, these properties go up for public auction to cover the unpaid taxes as well as other costs that the county incurs in the process. Most of these properties sell for more than the minimum bid, bringing in additional revenue to the county, which can then be spent on general county operations.

Normally, land banks across the state acquire property that no one else wants because of blight, limited usability of the property, or environmental cleanup problems. The intent behind the land bank statute is to allow counties a method for making these sorts of properties marketable again so that they do not sit vacant or pose a risk to the community. Indeed, the land bank statute mandates that land banks can only acquire property after the county holds its two auctions and there are still unsold properties.1

Cherry picking and government-run real estate speculation

This year, however, the newly-formed Kent County Land Bank Authority requested and received preferential treatment from the County Commission to cherry-pick prime properties that were slated to be publicly auctioned, and then acquired those properties for only the amount of taxes due to the county. Many of those properties were acquired by the Land Bank solely for the purpose of flipping and profiting to fund the Land Bank’s own operations. Not only did this deprive the county government of much-needed revenue, it shut out individuals and small business owners who normally purchase these properties for private investment. Make no mistake, these transfers to the land bank had nothing to do with rehabilitating properties that otherwise would not have been purchased by local investors. The county has entered into the business of real estate speculation.

An additional consequence is that 50% of the property taxes on flipped properties go to the Land Bank for five years, instead of local government, further depriving municipalities and the county government of revenue.

The 47 properties that the Land Bank acquired for only the taxes due totaled $420,000. The remaining properties that did end up going to auction had a minimum bid total of $977,100, but $1.64 million was raised at the public auction of those properties, resulting in a “profit” of $667,000 for the county. For those properties that did not sell at the first action, they were put up for a second auction with no minimum bid. Those properties brought in $363,400 for the county.

This year, the county needed to bring in $1.9 million to break even on the process. The total brought in was $2.42 million. Although the county did bring in more than it needed to, it lost significant further revenue due to the no-bid sales to the Land Bank.

To conservatively estimate how much the Land Bank properties would have raised in a public auction, we can look at the amount over the minimum that was brought in as a result of the August auction. Since the minimum total bids for those properties was $977,000 and they raised $1.64 million, we can see that the auction brought in 1.68 times more than the minimum bid. This means that, at a minimum, $285,000 in revenue for the county was lost due to the below-market price transfer to the Land Bank. However, since the Land Bank cherry-picked some of the prime properties for its preferential transfer, significantly more could have been obtained on several properties.

For instance, several properties would likely have sold for much higher multiples than 1.68. Examples include the following:

  • 5076 Montuak Dr. Taxes Due: $10,500. Market value: $150,000. Loss of $139,500.
  • 1306 Benjamin Ave SE. Taxes due: $7,875. Market value: $38,000. Loss of $30,125.
  • 1121 Crescent SE. Taxes due: $9,120. Market value: $32,000. Loss of $22,880.
  • 6930 84th St SE. Taxes due: $7,464. Market value: $59,900. Loss of $52,436.
  • 9524 92nd St SE. Taxes due: $7,255. Market value: $80,000. Loss of $72,745.
  • 3447 Raven SW. Taxes due: $4,700. Market value: $40,000. Loss of $35,300.
  • 2796 64th St SW. Taxes due: $10,440. Market value: $62,000. Loss of $51,560.

Being conservative, we can estimate that, at a bare minimum, the county lost out on revenue of at least half a million dollars, but it likely would have been as high as a $1 million.

Recently, the Kent County Land Bank Authority filed an affidavit from its Executive Director, David Allen, stating that the market value of just some of the properties it held was at least $1.4 million, meaning that our conservative estimate is likely low and that the county lost out on significant revenue, inevitably to be made up by taxpayers.2 The Land Bank, by its own admission, has deprived the county government of at least one million dollars.

County deficit and a potential tax increase

Coincidentally, in August the county revealed that it is looking at a $955,000 deficit for the current fiscal year.3 A significant portion (if not the entire amount) can be attributed to the Land Bank’s activities.

Now the county is exploring a new millage to pay for a deficit in the Veterans’ Affairs budget because the county can’t afford to provide critical service to veterans.4 The Veterans’ Affairs budget has a $40,000 deficit, which would easily had been covered if the County had simply sold its foreclosed properties through the usual process.

The Land Bank is a solution in search of a problem

The Grand Rapids Business Journal recently published a story showing that Kent County has the lowest number of foreclosed properties amongst large counties in Michigan. Kent county had an average of 130 tax foreclosures per year between 2006 and 2012 (out of 247,231 housing units). For comparison, Muskegon County had 269, Saginaw County had 687, and Wayne County had 10,427. Clearly, tax foreclosures are not a major problem for communities in Kent County, yet the Land Bank was formed primarily to “stabilize communities” and to reduce “blight.” We have to ask, what blight? The Kent County Land Bank Authority appears to be a solution in search of a problem. The Land Bank is causing more problems than it aims to solve.

This article is available in printable form here.


  1. MCL 124.755. Available online at “A foreclosing governmental unit may not transfer property subject to forfeiture, foreclosure, and sale . . . until after the property has been offered for sale or other transfer under . . . the general property tax act . . . and the foreclosing governmental unit has retained possession of the property . . .” []
  2. In the affidavit Allen calls himself, under oath, the “President” of the Kent County Land Bank Authority, yet no such position exists. View the affidavit here: []
  3. []
  4. []

Permanent link to this article:

Kent County Taxpayers Question Whether the Rapid Engaged in Improper Campaign Activity

The Kent County Taxpayers Alliance (KCTA) is calling into question whether the Interurban Transit Partnership (the Rapid) engaged is improper campaign activity in the city of Walker. On Tuesday, November 6th, city of Walker voters will be given the opportunity to exit the ITP and its taxing authority once the current tax renewal expires. On Thursday, October 25th, Walker residents found a mail piece from the ITP in their mailbox touting the benefits of mass transit signed by the Mayor and Mayor pro-tem of Walker. (Images of the mail piece can be found at this link.)

It is not clear to KCTA who exactly received the mail piece within Walker but there were no reports from KCTA supporters throughout the other ITP member cities of any promotional piece coming from the Rapid. If in fact, the promotional piece was only sent to Walker just days before a major election to help decide whether the city remains in the ITP this would potentially be a violation of state law.

Eric Larson, spokesman for KCTA said, “The Rapid seems to be using taxpayer money to influence an election which is at least improper and potentially illegal. The timing of the piece with only Walker board members on the propaganda is clearly meant to sway voters in the upcoming withdrawal question. State law specifically prohibits public entities from engaging in political campaigns because there is an enormous conflict of interest. We see very few credible explanations for sending the promotional piece only to Walker days before the big election day. We have no problem with campaign groups engaging in the Walker withdrawal question (like Friends of Transit) but public agencies using taxpayer’s money to convince taxpayers to vote a certain way is wrong.”

Permanent link to this article:

Kent County Taxpayers Alliance calls for resignation of Interurban Transit Partnership CEO Peter Varga

Today the Kent County Taxpayers Alliance is calling for the resignation of Peter Varga, the CEO of the Interurban Transit Partnership (also known as “The Rapid”). The ITP is the regional transit agency in Kent County that covers Grand Rapids, East Grand Rapids, Walker, Wyoming, Kentwood, and Grandville. A news report from David Bailey, investigative reporter from WWMT Channel 3, uncovered unambiguous evidence that members of Varga’s staff, with his knowledge, encouraged each other to circumvent Michigan’s open records laws to prevent public scrutiny of their actions. (view the news story here). Conrad Venema, Planning Director of the taxpayer-funded ITP, emailed Peter Varga, along with two other ITP staff members and two outside paid consultants, and told them to “take this discussion to our private email accounts.” The group was discussing the upcoming vote in Walker on whether to allow voters there to control their own tax rates and spending. (view the email here).

Furthermore, the email mentions that at least one ITP board member may have been involved, potentially implicating the state’s Open Meetings law, which requires public bodies to deliberate in public meetings, not over private email.

KCTA has long criticized the ITP for being the least-transparent and least-accountable government entity in the county. Not only is the ITP’s board not directly elected, but it largely consists of individuals who are not elected to any office at all. Furthermore, the ITP is the only government entity in Kent County that can raise taxes but does not have an elected leadership.

Previously, Mr. Varga has refused to answer simple questions on his agency’s spending and waste, and he even walked out on an interview in May, unable to come up with any answers at all after sitting silent in the face of those questions. Mr. Varga more recently refused to answer questions posed by County Commissioners when he testified to that body last month.

Now Mr. Varga has explicitly approved the use of non-public resources to conduct the business of his agency with the intent of circumventing state law in regards to open records. This is a blatant attempt at preventing the public from understanding what and how the ITP operates. Not only is Mr. Varga’s agency unaccountable, it acts with complete disregard for the taxpayers who pay the salaries of its public servants. Mr. Varga’s actions have no place in a public agency.

“Peter Varga should be ashamed, but frankly, we’re not surprised. The ITP is unaccountable and this is what happens when a public agency is run by an unelected board. Peter Varga’s disregard for the spirit and letter of state law is telling about his wanton disregard for those who pay his salary,” said Jeff Steinport, project manager for KCTA. “We were shocked by David Bailey’s report. This is just a continuation of the ITP’s disregard for openness. The ITP has broken state open records laws in the past when we filed our own Freedom of Information Act request, and they backed down when we made their actions public.”

Previously, KCTA has exposed made-up numbers that the ITP publishes on its economic benefits, its false claim that its buses reduce pollution, its false claims of how much it costs taxpayers to run its buses, and its false claims of improved gas mileage when it spent enormous amounts of money on hybrid-electric buses.

“Frankly, the ITP has no credibility,” continued Steinport. “We’ve never come across a government body that so frequently misleads taxpayers. The public cannot believe the ITP’s numbers because they have such an extensive record of being misleading or simply making things up. The ITP appears to have an internal culture of contempt for openness and accountability. Also, Mr. Varga’s reference to some of the taxpayers – the one’s who pay his $200,000 plus salary, benefits, and company car – as ‘enemies’ because they question the practices of the ITP, shows a remarkably callous disrespect towards those whom he is asked to serve.”

Permanent link to this article:

Kent County Taxpayers Alliance Announces Lawsuit Against Kent County Land Bank Authority for Violating State Law

Today the Kent County Taxpayers Alliance (KCTA) announces that a lawsuit was filed against various Kent County government entities to stop the activities of the Kent County Land Bank Authority (Land Bank). KCTA has been working with several individual, organizational, and business entities to review the legality of the Land Bank’s purchase of tax-foreclosed property from Kent County government and has discovered that the preferential transfer of 44 properties was prohibited by state law.

“The state law that created land bank authorities is quite clear; the land bank may only acquire property either at an auction or after the auction process has completed,” said Jeff Steinport, a project manager with the Kent County Taxpayers Alliance. “The county government decided to short-circuit this process.”

KCTA pointed out previously that the county violated its own policy when it transferred the properties to the Land Bank. This lawsuit repeats that allegation as well as the allegation that the county violated state law in the process. The lawsuit aims to stop the preferential transfer of properties to the land bank and prohibit such transfers in the future.

According to state law, when the county forecloses on property that is delinquent on property taxes, it normally holds a public auction of that property to attain the greatest value for taxpayers. The Land Bank is authorized to bid on these properties, along with the general public. However, this year the Land Bank was given preferential treatment and allowed to acquire 44 properties prior to the public auction for only the amount of taxes owed. This significantly reduced the county’s revenue, by as much as a million dollars or more.

“In part because of the Land Bank’s purchase of these properties, county government is again looking at shortfalls and considering raising taxes,” said Steinport. He continued, “Taxpayers are getting the short end of the stick when the county is supporting a new bureaucracy that engages in property speculation, cronyism, and questionable legal practices.”

The named defendants in the lawsuit are Ken Parrish as Kent County Treasurer, the County of Kent, and the Kent County Land Bank Authority. The plaintiffs are Rusty Richter, a local real estate agent; Keystone Realty Group LLC and 3830G LLC, real estate investment companies; Jeff Fortuna and James Kane, individuals who normally invest in tax-foreclosed properties; and the Affordable Housing Coalition, a non-profit organization which purchases tax-foreclosed properties and puts them to productive use.

Permanent link to this article:

The Kent County Land Bank is Crony Government Gone Wild

Today the Kent County Taxpayers Alliance (KCTA) announced its educational and electoral campaign opposing the Kent County Land Bank and the Kent County Commissioners who support it. KCTA has been active in Kent County for years fighting government corruption, inefficiencies, excessive taxation, and abusive election practices. This newest front represents their attempt to bring more sunshine on the new practices of this unaccountable government authority that is distorting local real estate markets.

The Land Bank is a local governmental authority that has as its mission the purchase of dilapidated and blighted properties that are over 3 years behind in paying property taxes. These properties are owned by the county and the Land Bank’s role is to return them onto the tax rolls as soon as possible. Land banks are used in 41 of Michigan’s 83 counties right now, most prominently seen in severely blighted counties like Genessee and Wayne.

Every year in mid August, the county holds an auction for the properties it has seized for failure to pay taxes. The goal of the auction is to create a market for private investors to purchase properties and to raise revenue to pay for essential county services like police, prisons, courts, roads, and parks. The Board of Commissioners’ own policy states that it is to maximize the return to the taxpayers on these properties which it has done for many years through the auction process.

However, on July 12, the Board of Commissioners, in a vote of 13-4, chose to hand over 40 properties to the Land Bank for just the minimum bid (the amount of delinquent taxes) before allowing private citizens to participate. Although it is impossible to know the exact amount that the county would have received for these properties it is very reasonable that they would have sold for five to ten times their minimum bid. This means that the nearly $500,000 that was spent by the Land Bank potentially ended up costing the county hundreds of thousands if not millions of dollars in lost revenue.

Said KCTA spokesman Eric Larson, “The actions of the Board of Commissioners in their collusion with the Land Bank shows a complete disregard by the majority of county commissioners of their fiduciary responsibility towards Kent County. At a time that the county is contemplating cutting sheriff deputies and other services it is leaving hundreds of thousands of dollars if not millions on the table which is revenue that it will need to make up either in higher taxes or cutting services. This Board action was reckless and shows that most of the commissioners are more comfortable giving property away for a steal to central planners than allowing the market of private investors at an auction to operate as it has for years.

“The whole point of the Land Bank is to be the buyer of last resort for properties that no one wants at the minimum bid. The ‘impossible to sell’ properties they purchased included a farm home on the bike path in Byron Center (2796 64th St), a beautiful residential property in Alpine Township (5076 Montauk Dr.), and numerous other properties that were about as dilapidated as the new Children’s Hospital. This is exactly the type of crony government action that KCTA has been fighting since our inception. We have an unaccountable board running the Land Bank with the ability to circumvent the normal auction process and purchase property before private entrepreneurs or current homeowners can – all at a massive financial loss to the taxpayers.”

KCTA plans to run a social media campaign targeted at eductating the public about this crony government practice and highlighting the role that the Kent County Board of Commissioners had in violating their own policy for maximizing the taxpayers’ return on these properties. KCTA has begun a fund raising campaign to air a radio ad explaining the Land Bank and the reckless actions of the Board of Commissioners to the public.

To learn more about the Kent County Land Bank, please see our Issues page on the Kent County Land Bank.

Permanent link to this article:

KCTA Praises Channel 3 Reporter David Bailey for Courageous Reporting on The Rapid

The Kent County Taxpayers Alliance today praised David Bailey, lead reporter from Television News Channel 3, for his hard-hitting reporting on yesterday’s news broadcast. Bailey’s broadcast involved an interview with Peter Varga, the CEO and director of The Rapid, the area’s local government agency that provides public busing service to Grand Rapids, East Grand Rapids, Walker, Wyoming, Grandville, and Kentwood. Unable to answer the most basic questions about The Rapid’s services and use of public money, Varga walked out of the interview and refused to answer Bailey’s questions.

Prior to this report, Bailey contacted KCTA for help in getting information from The Rapid because of the unwillingness of The Rapid’s staff to be helpful and forthcoming. Our own experience is very similar. Last year, The Rapid tried to slap KCTA with a $450 bill for a Freedom of Information Act Request, but backed down when we appealed that bill and pointed out that The Rapid’s actions were illegal and a violation of the Act.

Eric Larson, spokesperson for the Kent County Taxpayers Alliance, said, “Our experience mirrors the Channel 3 reporter’s experience. The Rapid works hard at preventing openness, transparency, and accountability to the public. Frankly, The Rapid has the worst record in the county of all local governments we’ve dealt with.” Larson went on to say, “Trying to get information from The Rapid on how our tax money is being spent is frequently frustrating and disheartening.”

The must-see Channel 3 report can be viewed in two parts online:

Part One:

Part Two:

Permanent link to this article:

KCTA Opposes Abusive Tax Election in Northview Public Schools District

Today the Kent County Taxpayers Alliance (formerly Kent County Families for Fiscal Responsibility) announced that it is opposing the tax increase election to be held by the Northview Public Schools district on Tuesday, May 8th. Voters rejected the same tax increase request in November of last year.

“Our organization did not take a position on the original tax request last year, but we are opposing it now because this is a classic case of an abusive tax election,” said Eric Larson, spokesperson for the Kent County Taxpayers Alliance. He continued, “We believe that elected officials need to respect the wishes of voters, not schedule election after election until their tax hike passes.”

An abusive tax election is defined as an attempt by a local government body to pass a tax increase shortly after it was already rejected by voters. Michigan’s laws do not prevent local governments from returning to voters every three or four months to ask for the same tax increase, over and over.

Northview Public Schools had two tax issues on the ballot last November; one of them passed, the other did not. The school district has decided to try again on the issue that did not pass.

KCTA will be reaching out to voters in the Northview Public Schools district to remind them to vote and to oppose this abusive tax election.

Kent County Taxpayers Alliance opposed a similar attempt by the leaders of Wyoming Public Schools to pass a tax hike after it was rejected by voters in May of 2011. KCTA got involved when Wyoming tried again just three months later to pass the same tax increase. After KCTA’s involvement, the request failed by an even larger margin.

Permanent link to this article:

KCFFR is Now Kent County Taxpayers Alliance

Kent County’s premier (and only) non-partisan taxpayer advocacy organization today announced that it changed its name and reorganized as an independent political action committee. The organization, formerly Kent County Families for Fiscal Responsibility, has changed its name to Kent County Taxpayers Alliance.

Permanent link to this article:

Earth Friendly? Not The Rapid as it Posts an Even Worse Pollution Record Than Last Year

As Earth Day approaches, the people of West Michigan are encouraged to be conscientious of the planet and its resources. Citizens are asked to rethink the way they live their lives in order to reduce their carbon footprint and the detrimental impact that they may have on the environment. People are often encouraged to reduce their consumption of fossil fuels whether it is by walking and biking more or riding the bus.

But does riding the bus really help the environment? Does riding mass transit decrease a person’s carbon footprint?

Last year, Kent County Taxpayers Alliance showed definitively that The Rapid transit system buses were less green than the average SUV. After reviewing the newest data that The Rapid provides annually to the federal government and its National Transportation Database, we have determined that The Rapid is actually getting worse performance from its bus fleet and is even more harmful to the environment than it was last year.

In the latest data, Rapid buses averaged 4.10 mpg which is down from the 4.17 mpg it posted the previous year.  Its greenhouse gas emissions were worse too as the amount of carbon dioxide released from each passenger mile traveled increased from 0.762 pounds to 0.774 pounds. After calculating the total amount of miles driven by the buses this comes to 25.4 million pounds of carbon dioxide produced by the bus fleet. In comparison, if people had instead used SUVs, there would have been 3.9 million pounds less of carbon dioxide produced in the Grand Rapids area.

“The simple fact,” said spokesman Eric Larson, “is that the buses get lousy gas mileage and operate mostly empty throughout the metro area to be an environmental benefit to the community. The fact that The Rapid is going to be adding even more stops and run more buses through the streets will probably worsen its already dismal environmental record. We will continue to report on The Rapid’s performance and work on improving its transparency as long as it fails to provide this information voluntarily to the public.”

A full explanation and example of the calculations can be found on the ITP Watch website as well as many other facts about The Rapid transit system.

Permanent link to this article:

KCTA Successfully Fights Wasteful Tax Increase in Wyoming

The Kent County Taxpayers Alliance, a local non-partisan taxpayer advocacy organization, is celebrating another victory at the ballot box. Today Wyoming Public Schools again asked for a 0.5 mill property tax increase for a so-called sinking fund. This fund would have enabled Wyoming Public Schools to pay for building repairs and other capital expenses, without having to dip into operating funds.

The exact same issue was on the ballot in May of this year, and it was defeated by a vote of 58% to 42%. Wyoming Public School leaders believed that voters didn’t understand the tax issue in May and decided to try again only three months later. KCTA did not oppose the tax increase in May.

KCTA got involved in this election because such redundant and repetitive elections display a contempt for taxpayers on the part of elected leaders. This is the only issue that was on the ballot in Wyoming and this election cost taxpayers over $9,000 to administer.

“We have consistently fought to limit the number of tax issues that local governments can put on the ballot each year,” said Eric Larson, spokesman for KCTA. He continued, “Wyoming Public Schools wasted more taxpayer money, hoping that voters wouldn’t show up to oppose the tax increase a second time because this was the only question on the ballot.”

The result today was 63% voting “no,” a higher percentage than in May. KCTA reached out to over 2,000 voters in Wyoming to remind them to vote “no” and send a message that these sorts of wasteful elections need to stop.

Permanent link to this article:

Older posts «

» Newer posts