Michigan Land Bank Reform Bills On Hold Until After New Year

Michigan Land Bank Reform Bills On Hold Until After New Year
December 31, 2013

Legislation that provides a way to contest deals in which land banks acquire property before public auctions take place will remain in the House Local Government Committee over the holidays.

House Bill 4626 is sponsored by Rep. Ken Yonker (R-Caledonia) and House Bill 5083 is sponsored by Rep. David Rutledge (D-Ypsilanti).

"We have held a hearing on the bills," said Rep. Amanda Price (R-Park Township). "Now my understanding is that Representative Yonker would prefer to work some more on the legislation."

Rep. Yonker's office confirmed that the bills are "on hold" until after the New Year.

"There are broader issues involving land banks," a spokesman in Rep. Yonker's office said. "The governor has a work group on lank banks. We want to make sure that everybody is on the same page so we can work together."

Local Governments Doing End Run

Under Michigan law, land banks can't buy tax reverted properties until after market buyers get their chance at tax auctions. Land banks are supposed to get their pick of what is left after the public has had a chance to bid. However, the law allows local governments to buy delinquent and abandoned properties before the tax auctions.

Rep. Yonker's bill was prompted by a situation in Kent County where local governments have been buying properties on behalf of the local land bank before the auctions. The local governments make the purchase and immediately sell the property to the land bank at cost. Many of the properties do not fit the definition of being undesirable or unlikely to attract private buyers.

House Bill 5083, sponsored by Rep. Rutledge, is a companion bill to House Bill 4626. It pertains to the definition of "blighted" property.

Language to Come Out of Senate Bill

In the Senate, legislation that would have the opposite effect is being introduced. Senate Bill 640, sponsored by Sen. Darwin Booher (R-Evart) has been introduced. It would legalize what's been happening in Kent County by changing the law to allow land banks to buy delinquent and abandoned property before free market buyers get their chance at public auction.

However, a spokesman in Sen. Booher's office said the language in Senate Bill 640 that would allow land banks to make the pre-auction purchases will be taken out of the bill.

Jack Spencer (spencer@mackinac.org) is capitol affairs specialist for Michigan Capitol Confidential, a news service of the Mackinac Center for Public Policy, where this article first appeared.