Friday, June 13, 2014


TKC Note: For policy wonks and those really following KCMO . . . THIS INSIDER TESTIMONY regarding the Kansas City Land Bank is a MUST READ and describes EXACTLY the problems that confront yet another struggling local institution . . .

Kansas City Land Bank Issues

A friend of mine recently tried to deal with the Kansas City Land Bank regarding a city-owned lot next to his property. A few years ago he had bought another lot next to his from the Jackson County Land Trust, and he was assuming the price of the Land Bank property would be similar to what he’d paid the Land Trust. After recently bidding on the vacant lot and waiting nearly six weeks for a response, he was surprised.

The bottom line with the Land Trust was on vacant lots the county asked for 8 cents a square foot and would accept two-thirds of that. In this instance, the Land Bank asks about five times as much. The Land Bank offers (as did the Land Trust) a Special Warranty Deed making them somewhat less marketable than properties where the sellers can deliver a General Warranty Deed.

The Land Bank relies on the county assessment, and, at least with this vacant lot, refused to consider any number not at least two-thirds of the county assessment. I think this policy is not only questionable, but it will lead to the Land Bank’s holding on to these properties and wasting taxpayer money.

First, the Land Bank relies on a subjective assessment. The county is guessing what these properties are worth. As someone who is still a licensed real estate broker, I can tell you one of the first things they teach you in real estate school is a property is worth only what a willing buyer will pay a willing seller. In the case of vacant lots in the inner city, about the only people interested in them are the people who own neighboring property. It is unlikely that someone will come in, grab one of these lots, and build a new home there.

Second, it is my understanding the purpose of the Land Bank is to get rid of as many of these properties as possible. Each property costs the city (that is, taxpayers) money to keep up—in the case of vacant lots, they at least need to be mowed periodically. Further, the city is not collecting any property tax on Land Bank property. In short, it would be more sensible for the city to offer vacant lots at no cost to adjacent lot owners who could show they can maintain the property and pay the taxes on it than it is to hold on to them. Giving these properties away would turn what are now liabilities into assets. Selling these properties for a truly reasonable price would be icing on the cake.

Third, it is my understanding the Land Bank was created because of the perception the Land Trust was not getting rid of its inventory in a timely manner. If the Land Trust was not able to unload vacant lots at 8 cents a square foot, why would anyone think the Land Bank could accomplish the task by quintupling their prices and then refusing to negotiate? I don’t know of a single marketing expert who would recommend considerably higher prices as a solution for slow sales.

The Land Bank was touted as a vast improvement over the Land Trust. It seems instead it is more bureaucratic and inflexible, and the bottom line for taxpayers is we’re going to be stuck owning junk property for a long time, and the Land Bank bureaucracy has found a way to guarantee themselves permanent employment.

The Land Bank really needs to get better. Much better.


Anonymous said...

The problems include (1) the Land Bank takes a subjective county assessment and considers that a cast-in-concrete "market value" and (2) there appears to be neither an interest in nor incentives for unloading Land Bank property.

Unbelievably the old Land Trust run by the county was much more efficient and responsive.

Anonymous said...

When City promotes a lame attorney to Director of Land Bank, you pretty much know where that's headed. Why isn't he still practicing law... best kept secret in Kansas City.

Armour Hills said...

Somewhat better than Land Trust. Properties bought by adjoining property owners should be free BUT... New owner should bear the cost of replatting land into the main property thus ten years down the road there will not be these properties back up for grabs.

elBryan said...

It was my understanding that if you own the adjacent property, that the vacant lot would be no more than $75. If there is a structure on the property, they will sell it to you for much less than the assessment if you agree to make repairs to the property up to 2/3 of the value that it is assessed at.

Is that not the case? Or is this person just trying to flip properties? Do they not own the adjacent property?

Anonymous said...

No, Bryan, that is not the case. My friend wants to add to his yard. The specifics are he paid the full price the Land Trust was asking (about $700) in 2012 to the land bank for one lot next to his and the Land Bank is asking about $2800 for this lot.

Here is an excerpt from Mr. Patillo's explanation of why the Land Bank would not accept the offer of $1,000 for the lot:

"Due to the fact that Mr. [the] offer was far below the 2/3 market value (approximately 36% of the Land Bank’s asking price), the Board made the decision to reject this offer. The Board did recognize that [he] purchased a similar parcel in 2012 from the Land Trust. The Land Bank Board and staff in this instance does not believe this sale is a true indicator of the current market value for this parcel. This property is located in an area that is experiencing a good amount of interest in terms of real estate. Early in 2013, the City paid for the demolition of the structure on this property. Prior to that, the City had to maintain the property even though it was in the control of the County. The City worked diligently with an interested party to give them the opportunity to renovate the house, but that effort failed. The Land Bank, as stewards for the tax payers, has a duty to try to re-coup some of those costs either in the form of the asking price being met (or close to being met) for the land, or in anticipation of future development. This offer did neither. An offer of 24 % of market value with no plan for development was deemed insufficient."

As you can see, the Land Bank seems to be under the impression people are lining up to buy vacant lots in the inner city and "develop" them.

By the way, the property was formerly owned by one of the city's more notorious slumlords and deteriorated for years before it was torn down.

Anonymous said...

Sorry. I meant he paid the $700 to the Land Trust. I'm not awake yet.

Anonymous said...

And the statement that area that the area "is experiencing a good amount of interest in terms of real estate" would come as news to anyone who has tried to sell a property there in the recent (and not so recent) past.

Anonymous said...

This will all amble along until any real money is available to change hands, and then the usual suspects will show up.
Did the city or the feds ever figure out where the millions that disappeared from the housing program and land bank went?

Anonymous said...

Like any city agency, there's just no incentive to actually DO something. How many properties has the Land Bank gotten rid of, anyway?

Anonymous said...

Here's another Land Bank property, again in the inner city. This is the Land Bank's actual write-up:

4 Bedroom 2 bath single family residence. Property is in severe disaray (sic) and needs many repairs to bring it up to code. Property could also be demolished and used for new construction. Located in a historic neighborhood (Hyde Park), this would be a handymans dream. Market value 96,192.

The lot has no room for a driveway. A bidder would be expected to pay 2/3rds the "market value" of $96,192 (or about $64,448) for a house that "needs many repairs" just "to bring it up to code" OR to demolish it and put up "new construction."

The Land Bank needs to get real on what is the real market value of its junk.

Anonymous said...

And the same names get tossed around for virtually everything that is wrong in Kansas City. Public Works heading by Sherri McIntyre. Land Bank headed by disgraced former City Attorney, Ted Anderson under legal counsel of Amelia McIntyre. Do you see the pattern? I know Pat Klein can't be too far removed from this fiasco.

elBryan said...

In this instance, is his offer being rejected because other interested parties care offering more?

I support adjacent property owners acquiring lots for their yard at below market rate if no other offers are on the table, but if someone wants to pay more for the land to develop it, that sounds like it's just the free market working.

Anonymous said...

Nope. No other offers on this one. If someone offered more we could easily understand selling it to the highest bidder. There is no demand for vacant lots in this part of town. As it is the city's going to follow the advice in the old song and keep sittin' on it.