Friday, June 13, 2014
TKC MUST READ!!! RESIDENT TESTIMONY: KANSAS CITY LAND BANK STAYS LOSING!!!
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.