Ingham Land Bank looks ahead to expanding role, challenges

2009 has been the busiest year yet for the Ingham County Land Bank. The agency's main mission is to rehabilitate foreclosed and abandoned properties and get them back on the tax rolls. With a still-hobbling state economy and growing numbers of commercial foreclosures, 2010 promises to be even busier.

Today is Rochelle Rizzi's day in the spotlight. The owner of Rizzi Designs---a Lansing marketing and event planning firm---moves among well wishers at a reception in her new, festively-decorated offices in Old Town.

"It's really starting to sink in," she admits. "Now it's really starting to feel like it's our space."

And the occasion is memorable for other reasons. The company is purchasing its new home from the Ingham County Land Bank, which thoroughly refurbished it. The organization also offered attractive financing. Renamed "Old Town Manor," it's the agency's first commercial redevelopment.

"Just to be a small business and have an opportunity to grow our business into a space from 300 square feet to 6 thousand, it's a big feat," she adds. "And there weren't a lot of opportunities to do that financially through the banks."

Officials say 2009 land bank sales will easily clear the million dollar mark, about twice the '08 tally. But increasingly, more deals involving commercial properties have some commercial real estate professionals asking whether a public agency should be involved in business spaces. The agency points out that in a powerful recession, the free market can't absorb and process them all. Land Bank Chairman Eric Schertzing says the body is not competition for development-minded commercial companies.

"The private sector is vastly more powerful and larger than anything that I can envison the land bank ever being," he says. "But we're working in areas where nothing was going to happen and there needs to be that little...that spark plug."

Schertzing says the Land Bank enjoys a unique "tool kit." That includes Brownfield funding---money to clean up polluted properties. It can also offer financing, sometimes less expensively than a commercial lender. These tools can be a catalyst for turning around hopelessly run-down properties. With them, Schertzing says, the agency is accomplishing its mission.

But some see red flags when a government body is acquiring property. Rob Campau is the Vice President of Public Policy and Legal Affairs for the Michigan Association of Realtors. He says a part of the state constitution---2004's Hathcock Decision--- offers protection against the taking of property for economic development. But he feels the public needs to be vigilant.

"Government making those sorts of decisions--that flirts with being unconstitutional or lack of constitutionality," he says. "And yeah, we think all citizens should have a concern when government would think it has that sort of right or ability."

State Land Bank officials also point out that the act that created Michigan's Land Banks prohibits eminent domain takeovers.

Last year, the Ingham Land Bank purchased one of Lansing's most notorious properties---the Deluxe Inn at Washington and 496. The $400,000 transaction is the biggest yet for the agency. The sale got the attention of the commercial real estate community. The Land Bank's Schertzing says they need to understand his agency's plans are limited.

"I don't think on very many commercial properties that we're gonna be that public developer like we can be on a house," he explains. "We're really gonna prepare the land for redevelopment."

2010 could be busier for the Ingham County Land Bank for another reason---more federal funding. If approved, an additional $22-million could mean about 100 more renovations and other projects. The decision could be announced before the first of the year.