Land Bank Reform Bill Introduced

HB 4626 would penalize land banks for violating state law

In response to government land banks side-stepping state law, a reform bill has been introduced by Rep. Ken Yonker, R-Caledonia, that would penalize land banks for acquiring property before tax auction.

It's no accident that this bill came from Rep. Yonker: Several people he represents were outraged at the actions of the Kent County Land Bank when it blocked the sale of more than 40 vacant properties last year. 

Though land banks are promoted as entities that take over vacant, tax-delinquent property that no one would purchase, the Kent County Land Bank has worked to acquire desirable property that certainly would have been purchased and developed.

"Near bike trail, hot area," wrote the Kent County land bank staff about one desirable property that it blocked from auction. "Revenue from this project will go a long way to help fund the Land Bank."

The Kent County Land Bank did this despite the fact that state law prohibits land banks from acquiring property before it goes up for public auction. In response, Kent County developers sued the land bank, but a judge said that they lacked standing. It's not clear how many other county land banks are violating state law.

Rep. Yonker's bill provides much-needed reform by penalizing land banks (and land bank officials) for breaking state law. The bill allows individuals to bring complaints against land banks — meaning that taxpayers don't have to suffer if officials overlook violations.

Under House Bill 4626, the Department of Labor and Economic Growth could stop the land bank from acquiring any more property if it found out that the land bank had previously acquired property in violation of state law.

Additionally, any person or business could file a complaint against a land bank for acquiring property before tax auction. In that case, the department would have to determine within 90 days whether the land bank violated the law. If either the land bank or the person who filed the complaint disagreed with the department's finding, they could appeal the decision in court.

Rep. Yonker's bill also provides personal accountability for people who run land banks. If the department finds that a land bank acquired property in violation of the law, the director will be fired.

HB 4626 fixes several problems that have arisen in Kent County: It punishes land banks for disobeying state law and it allows individuals and businesses to hold land banks accountable. If there is a dispute, it will be resolved in court.

And it will penalize officials who are using government land banks to block property from going back into productive, private use. 

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.