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.