Can We Bank on Land Banks?

‘There’s a difference between what’s legal and what’s right,’ said Wayne County Commission Chairman Gary Woronchak two weeks ago in response to allegations of misconduct by former Wayne County Land Bank executives. Continuing, he stated that he wants a revamping of how the county handles economic development. There are strong reasons to agree with Chairman Woronchak, but Wayne County residents need to be very clear about what those reasons are.Land banks, as constituted, are not fit for purpose. They are neither democratic nor market driven.To see that the former is true one has to look no farther than the recent federal grand jury probe into the dealings of the former executive director of the county land bank, Turkia Awada Mullin.

Mullin was involved in the 2007 creation of the land bank under the state’s 2003 Land Bank Fast Track Act. Shortly after it’s creation, the bank’s governing board, made up of the executive director herself, County Commissioner, County Treasurer, an appointed member of the county Office of Management and Budget and another County Executive appointed member of the community, decided to allow the bank’s executive director discretion in the awarding of all contracts valued under $100,000 or the disposal of up to 100 of the land bank’s properties. A single appointed official had the ability to largely dispose of the organization’s resources the way she wished while enjoying the oversight of a board made of herself, two other appointees and only two elected officials.

The lack of elected administration or oversight of these programs goes to the very top. The Fast Track Act, signed by Governor Granholme, directed that ‘purposes, powers, and duties of the state authority’ were to be delegated to an ‘authority board’ to oversee land banks. Four members of that seven person board are special gubernatorial appointments with it being rounded out by yet more governor’s appointees, the CEO of the Michigan Economic Development Corporation, the executive director of the Michigan State Housing Authority and the director of the Michigan Department of Licensing and Regulatory Affairs.

Such convoluted systems of oversight create the impossible situation in which one elected official, the governor or county official, is supposed to be wholly responsible for the collective failure of oversight by a large number of his or her appointees. Such officials are never held fully responsible. They blame their appointee, replace him or her and move on.

Now, one might be tempted to say, ‘At least these administrators aren’t misappropriating public funds!’ But that view fails to properly account for the fact that the land bank is not a market driven organization, but one which is wholly dependent upon exploiting the power of the government.

It is true that the bank is largely funded by voluntary donations of property that the owners view as unprofitable to own. But when you ask yourself why a property would ever be unprofitable to own, you get a rather specific answer. Because banks, the chief benefactors of land banks, aren’t the end users of the properties on which they foreclose, it is simply the cost of holding the title that makes the properties which are donated to the land bank unaffordable to own. As the Wayne County Land Bank website says, ‘The abandoned and dilapidated property in our neighborhoods is often in that condition because it cannot be sold due to enormous tax bills, water liens, title problems.’ All of these issues are the result of government policy.

If there is still any question of that, just consider that it is the land bank and the powers granted to it by the state that it is able to dispense with these drags on the value of the properties. Land-banks were created for precisely that reason, to take private property off the hands of creditors, do away with the government imposed burden and administrative hassle that makes those properties unprofitable to private owners and then to appropriate the property and the profit in a way that its non-elected and unaccountable executive deems fit.

Chairman Woronchak couldn’t be more correct. There is a difference between what is legal and what is right. It’s time to revamp how the county does economic development.

By Brandon Mitchell

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