COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY ( )

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1 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY ( ) April 25, 2017 A REPORT PREPARED BY THE MSU LAND POLICY INSTITUTE FOR THE KENT COUNTY LAND BANK AUTHORITY, GRAND RAPIDS, MICHIGAN Land Policy Institute

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3 Acknowledgements The MSU Land Policy Institute (LPI) would like to thank the following individuals and organizations for their support and guidance during the course of this project: David Allen, executive director, Kent County Land Bank Authority (KCLBA), Grand Rapids, MI; David de Velder, Director of Real Estate Development, KCLBA, Grand Rapids, MI; Ezekiel Mojica, KCLBA, Grand Rapids, MI Robin Sterner, Kent County Bureau of Equalization, Grand Rapids, MI; and The stakeholders who participated in interviews. This project was made possible by funding from the Kent County Land Bank Authority. Front cover photos from the Kent County Land Bank Authority showing residential and commercial properties that were the subject of projects by the KCLBA in the Greater Grand Rapids area. Daryl Delabbio, administrator/controller, Kent County, Grand Rapids, MI; BY THE LAND POLICY INSTITUTE AT MICHIGAN STATE UNIVERSITY Mark Wyckoff Interim director, Land Policy Institute (LPI); Mary Beth Graebert Former associate director for Programs and Operations, LPI; Yue Cui, PhD Assistant professor; LPI and the School of Planning, Design and Construction; Huiqing Huang Research assistant, LPI and the Department of Geography; Lauren Bretz Research assistant, LPI; Holly Madill Outreach specialist, LPI; Jason Cox Outreach specialist, LPI; and Danielle Gerlach Research and outreach assistant, LPI. WCAG 2.0

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5 Executive Summary IN 2016, THE KENT COUNTY LAND BANK AUTHORITY (KCLBA) CONTRACTED THE MICHIGAN STATE UNIVERSITY (MSU) LAND POLICY INSTITUTE (LPI) TO INVESTIGATE THE ECONOMIC IMPACTS OF LAND BANK ACTIVITY IN KENT COUNTY, MI. SEVERAL STUDIES HAVE EXAMINED THE NEGATIVE CONSEQUENCES OF FORECLOSURE, ABANDONMENT, VACANCY AND BLIGHT, AND IN 2013, LPI RELEASED A STUDY OF THE INGHAM COUNTY LAND BANK SUGGESTING POSITIVE IMPACTS OF LAND BANK ACTIVITY (BOROWY ET AL., 2013). YET, TO OUR KNOWLEDGE, NO STUDIES HAVE EMPIRICALLY ESTIMATED THE ECONOMIC IMPACTS OR PROPERTY VALUE EFFECTS OF LAND BANK ACTIVITY IN STRONGER REGIONAL MARKETS, SUCH AS KENT COUNTY, WHERE FORECLOSURE AND ABANDONMENT HAVE SLOWED SINCE THE GREAT RECESSION. In 2016, the Kent County Land Bank Authority (KCLBA) contracted the Michigan State University (MSU) Land Policy Institute (LPI) to investigate the economic impacts of Land Bank activity in Kent County, MI. Several studies have examined the negative consequences of foreclosure, abandonment, vacancy and blight, and in 2013, LPI released a study of the Ingham County Land Bank suggesting positive impacts of land bank activity (Borowy et al., 2013). Yet, to our knowledge, no studies have empirically estimated the economic impacts or property value effects of land bank activity in stronger regional markets, such as Kent County, where foreclosure and abandonment have slowed since the Great Recession. The primary objective of this research is to determine whether and to what extent Land Bank activities in Kent County have a positive impact on nearby property values and the regional economy more broadly. This study utilizes many of the quantitative methods and techniques used in previous economic impact studies with the intent of shedding light on the impacts of land banking in new economic contexts. The primary objective of this research is to determine whether and to what extent Land Bank activities in Kent County have a positive impact on nearby property values and the regional economy more broadly. 256 Straight Ave. in Grand Rapids was a renovated property completed in partnership with the Kent County Land Bank Authority and Habitat for Humanity. Photo by the KCLBA. Overall, the study attempts to answer the following questions: 1. What is the effect of Land Bank activities on nearby sale prices? 2. What are the total economic impacts of Land Bank construction, renovation and maintenance activities on the regional economy? 3. How do community members and stakeholders perceive the Land Bank, and what insights or context can they provide? land policy institute a land bank report for v

6 To answer these questions about the Land Bank s impacts, LPI utilized a mixed-methods approach. These methods include: 1. Hedonic Property Price Analysis, 2. Regional Economic Impact Analysis, and 3. Social Perceptions Assessment. First, the hedonic pricing method breaks down the sale price of Kent County properties into their component attributes, including a variety of building characteristics and neighborhood metrics. By statistically controlling for major factors that affect sale price, this method allows isolation of the average impact of a Land Bank property on homes sold within 500 feet. The Kent County Bureau of Equalization and the Zillow Group provided parcel data, as well as residential sales data from 2010 to For each parcel, these records include sale price, sale year, assessed value, bedrooms, bathrooms, square footage and more. This data was spatially combined with activity data from the Land Bank to determine which properties in Kent County were sold after the conclusion of Land Bank demolition, rehabilitation, maintenance or construction nearby. Although the housing market throughout most of Kent County is strong, Land Bank activity has occurred almost exclusively in neighborhoods with weak or moderate markets, as determined by a cluster analysis of average home values. The Land Policy Institute s hedonic analysis results suggest a positive and statistically significant impact of Land Bank activity on nearby sale prices. Holding other factors constant, selling a home in Kent County after the conclusion of KCLBA activity within 500 feet is associated with a $7,064 increase in sale price, on average.... Selling a home in Kent County after the conclusion of KCLBA activity within 500 feet is associated with a $7,064 increase in sale price, on average. Second, a regional impact analysis was performed. The hedonic analysis rigorously isolates neighborhood-level impacts of the Land Bank on one variable of interest: Sale price. To quantify the broader impacts of the Land Bank within the regional economy, LPI used the economic modeling tool IMPLAN, which uses local multipliers to estimate the number of jobs and economic output resulting from different kinds of investment. The Land Bank provided categorized Land Bank expenditures from 2012 through 2016 as inputs for analysis. The estimated economic impact of four years of KCLBA activity throughout Kent County is 266 jobs and $42,899,413, suggesting that for each dollar spent by the Land Bank, $1.77 of value is generated in the regional economy. The results of the hedonic property price analysis and the regional economic impact assessment suggest that the KCLBA generates positive, significant economic impacts within Kent County neighborhoods and the regional economy. These measurable results may not capture effects that are more difficult to quantify, such as improved neighborhood aesthetics, renewed community pride, new homeownership, and small business opportunities. To better understand these qualitative impacts as well as the broader context of Land Bank activity in Kent County, LPI interviewed two dozen community stakeholders and surveyed 89 residents throughout late 2016 and early full report The estimated economic impact of four years of KCLBA activity throughout Kent County is 266 jobs and $42,899,413, suggesting that for each dollar spent by the Land Bank, $1.77 of value is generated in the regional economy. vi COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

7 Third, 24 interviews were conducted among In addition to providing valuable context nonprofits, KCLBA contractors, local government and insights, the interviews also helped the officials, neighbors of Land Bank properties, research team develop an online survey that was local businesses, and others. Common themes used to quantify insights from neighborhood throughout the interviews include: residents. Survey questions were broken out into questions about the participants neighborhoods; Interviewees who were unaware of the demographic information; perceptions of land Land Bank s activities prior to interacting banking, in general; opinions on before-and-after with the organization may have had photographs of building removal, rehabilitation and initial doubts, but after working with or redevelopment in Kent County; and perceptions of interacting with KCLBA, ultimately they the KCLBA and its impacts on communities. are appreciative and supportive of their efforts to revitalize neighborhoods. Eight-nine (89) survey responses were collected with nearly all (93%) respondents identifying Between the positive benefits identified Grand Rapids as their home. Respondents were and the respected leadership of the distributed across all age ranges. Most owned KCLBA, the majority of interviewees their home and identified as white/caucasian. A viewed the KCLBA positively. Many who majority did not have children living with them, offered suggestions for improvement and more than 77% obtained a Bachelor s degree or concerns about the KCLBA also or higher. Overall, most respondents thought acknowledged positive outcomes of their their own neighborhoods were attractive and relationship or work with KCLBA. safe, and had been so for many years. A majority of Interviewees desired to understand respondents were familiar with what land banks how the KCLBA acquires properties do and viewed them favorably. The bulk of the from local units of governments and the survey asked participants to respond to a series process the Land Bank uses to prioritize of before-and-after photographs of residential projects. Many want more dialogue and and commercial renovation, redevelopment and collaboration in that prioritization process. removal by evaluating each intervention s impact on property values, crime rates, job creation, Interviewees also wanted to affordability, demographic diversity, architectural understand and facilitate how the quality and sense of community. Land Bank can support affordable housing, historic preservation and For residential properties, respondents diversity goals for communities. valued renovation the most, followed by redevelopment. This speaks to the concern Lastly, many interviewees desired to for neighborhood and historic preservation know the direction and goals of the that was echoed during the interviews. KCLBA now that the housing crisis has subsided in Kent County. For residential properties, respondents valued renovation the most, followed by redevelopment. land policy institute a land bank report for vii

8 While renovation and redevelopment More respondents felt that redeveloping of residential properties were thought a business would increase architectural to increase the sense of community quality and sense of community more and decrease crime the most in than redeveloping a home would. neighborhoods, they were also seen as In open-ended responses survey respondents working against affordability. offered many of the same favorable comments In general, respondents found the least about the KCLBA given by the interviewees: value in removal only, but were more The Land Bank helps breaks the cycle of favorable of removal of commercial disrepair made by investors who do not maintain structures than of residential ones. For properties, cleans up properties that the private residential activities, removal invoked sector would not, returns properties to tax rolls, negative perceptions relating to property improves neighborhoods, reduces blight, helps or home values, crime, job creation and communities, and is responsive to neighborhood demographic diversity. concerns and complaints. Like the interviewees, survey respondents also expressed concerns For both residential and commercial about transparency in acquiring and prioritizing activities, respondents varied most in projects, loss of free enterprise, affordability and their responses on impacts relating to job displacement of long-time residents. creation and demographic diversity. When asked explicitly which activities they felt A majority believed that all commercial were valuable uses of the Kent County Land Bank activity would result in positive impacts Authority s resources, respondents tended to on property values and crime rates. favor residential activity over commercial. It is A plurality thought that renovation and interesting to note that previously in the survey, redevelopment of commercial properties most respondents suggested that the Land Bank s would decrease affordability, while removal commercial activities had more positive impacts alone would not impact affordability. on neighborhood and economic factors than its residential activities. More respondents thought that removal of a commercial structure over removal of a home would result in decreased crime. full report viii COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

9 Table of Contents Executive Summary...v Introduction...1 Background...3 Land Bank Activity in Kent County...5 Study Objectives and Analysis...7 Hedonic Property Price Analysis...9 Data...9 Methodology...11 Results...15 Regional Economic Impact Analysis...19 Methodology...19 Data...20 Results...21 Social Perceptions Assessment...23 Methodology...23 Stakeholder Interview Findings...25 Perceptions of the Kent County Land Bank Authority...26 Nonprofit Community...26 Local Government...26 Neighbors...26 KCLBA Contractors...27 Local Businesses...27 Others...27 Benefits of KCLBA Work...27 Local Contractor Utilization...28 Suggestions for Improvement...28 Transparency...28 Communication...29 Future of the Kent County Land Bank Authority...29 Affordable Housing...29 Other Suggestions and Comments...30 Praise for the Kent County Land Bank Authority...30 Additional Comments on KCLBA...31 Conclusions from Stakeholder Interviews...31 land policy institute a land bank report for ix

10 Table of Contents (cont.) Community Survey Findings...33 About Participants Neighborhoods...33 Land Banks (Generally)...34 Participants Thoughts of Before-and-After Photos...34 Highlights Related to Renovation, Redevelopment and Removal of Residential Properties...34 Highlights Related to Renovation, Redevelopment and Removal of Commercial Properties...36 Highlights Related to Differences between Residential a Commercial Property Responses...36 Residential Property Survey Responses...36 Before-and-After House Renovation...38 Before-and-After House Removal and Replacement...38 Before-and-After House Removal and No Replacement...41 Commercial Property Survey Responses...41 Before-and-After Business Renovation...41 Before-and-After Business Removal and Replacement...43 Before-and-After Business Removal and No Replacement...43 The Kent County Land Bank Authority...44 Favorable Comments...45 Unfavorable Comments...46 Other Comments...47 Select Demographic Information...50 Conclusion...51 References...53 List of Figures Figure 1: Map of Market Categorizations of Census Block Groups in Kent County...12 Figure 2: Map of the Distribution of Land Bank Properties in Kent County Figure 3: Map of an Example of KCLBA Project Density...14 Figure 4: Number of Single-Family Home Sales by Year in Kent County Figure 5: Respondents Familiarity with Land Banks...35 Figure 6: Responses to Survey Question 7 What Effect do you Think Renovating a Distressed House has on its Neighborhood s Figure 7: Responses to Survey Question 8 What Effect do you Think Removing and Replacing a Distressed House has on its Neighborhood s full report Figure 8: Responses to Survey Question 9 What Effect do you Think Removing a Distressed House, and Not Replacing it with a Structure has on its Neighborhood s x COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

11 List of Figures (cont.) Figure 9: Responses to Survey Question 10 What Effect do you Think Renovating a Distressed Business has on its Neighborhood s Figure 10: Responses to Survey Question 11 What Effect do you Think Removing, then Replacing a Distressed Business has on its Neighborhood s Figure 11: Responses to Survey Question 12 What Effect do you Think Removing, and Not Replacing a Distressed Business has on its Neighborhood s Figure 12: Responses to Survey Question 15 Which of the Following Activities do You Feel are Valuable Uses of KCLBA s Resources?...49 Figure 13: Responses to Survey Question 18 If You Live in Grand Rapids, which Quarter of the City do You Identify with?...50 List of Tables Table 1: Number of Land Bank Properties in Kent County by Year...10 Table 2: Distribution of Residential Sales Records Table 3: Descriptions of Variables Used in Hedonic Property Price Analysis...17 Table 4: Land Bank Spending Table 5: Land Bank Spending Categories Matched to IMPLAN Industries...20 Table 6: Economic Impacts of Land Bank Spending Table 7: Perceptions of Respondents Neighborhoods...34 Table 8: Effects of Residential Property Renovation, Redevelopment and Removal on Neighborhood Characteristics...37 Table 9: Effects of Commercial Property Renovation, Redevelopment and Removal on Neighborhood Characteristics...37 land policy institute a land bank report for xi

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13 Introduction FROM THE MID-20TH CENTURY AND ON, CITIES THROUGHOUT THE UNITED STATES EXPERIENCED WIDESPREAD URBAN SPRAWL AND SUBURBANIZATION. THIS POPULATION SHIFT CREATED A SUBSTANTIAL HOUSING SURPLUS IN URBAN AREAS, AND LACK OF DEMAND DEPRESSED HOME VALUES. THE RESULT IN MANY PLACES, PARTICULARLY IN THE RUSTBELT, WAS SYSTEMIC VACANCY, BLIGHT AND FORECLOSURE THAT CITIES HAD LITTLE POWER TO COMBAT DUE TO THEIR DIMINISHED PROPERTY TAX BASES. From the mid-20th century and on, cities throughout the United States experienced widespread urban sprawl and suburbanization. This population shift created a substantial housing surplus in urban areas, and lack of demand depressed home values. The result in many places, particularly in the Rustbelt, was systemic vacancy, blight and foreclosure that cities had little power to combat due to their diminished property tax bases. Land banks were first implemented in the 1960s as a potential remedy to this cycle of abandonment. These public entities were originally used to acquire and reserve land, banking it for future use. Generally, land banks acquire tax-foreclosed properties after they fail to sell at public auction, or they acquire such properties as an alternative to auction. Recent legal developments and streamlined regulatory environments have enabled land banks to more effectively acquire, manage and dispose of property (Alexander, 2011). Spurred by the Great Recession and the associated housing market collapse, Michigan Land Bank Authorities have become instrumental in returning properties to tax rolls, removing blighted structures, rehabilitating homes, providing affordable housing options, and identifying homeowners and private developers to invest in land banked properties. Each land bank is unique in its goals and processes, as discussed in the next section detailing the operations of the Kent County Land Bank Authority. A blighted property that was demolished by the Kent County Land Bank Authority. Photo by the KCLBA. The purpose of this study is to assess the economic and social impacts of the KCLBA s activities between 2012 and 2016 on nearby homes and communities. It is important to understand the range of impacts of the Land Bank, due to the uniqueness of each land bank s operations, as well as the unique context of Kent County, which has a stronger housing market than locations covered in the existing literature. There is a policy need to quantify the economic and social effects of the KCLBA activities to improve existing programs and provide a model for other land banks operating in similar contexts. The purpose of this study is to assess the economic and social impacts of the KCLBA s activities between 2012 and 2016 on nearby homes and communities. a land bank report for land policy institute

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15 Background THERE IS A VAST BODY OF RESEARCH ON THE NEGATIVE IMPACTS OF FORECLOSURE, ABANDONMENT AND BLIGHT IN CITIES ACROSS THE COUNTRY, IN PART DUE TO THE NATIONAL MORTGAGE CRISIS OF 2007, WHICH PUT A SPOTLIGHT ON FORECLOSURE. RECENT RESEARCH SUGGESTS THAT FORECLOSURE TENDS TO REDUCE NEARBY PROPERTY VALUES, DIMINISH THE LOCAL PROPERTY TAX BASE, INCREASE CRIME AND DISRUPT SOCIAL TIES. ONE DRIVER OF THIS PHENOMENON IS THE FACT THAT HOMEOWNERS WHO EXPERIENCE FORECLOSURE HAVE LITTLE INCENTIVE TO INVEST IN MAINTENANCE. THIS CAN LEAD TO VISIBLE SIGNS OF NEGLECT THAT MAY DETER POTENTIAL BUYERS OF NEARBY HOMES, WHICH FURTHER REDUCES THE COLLECTIVE DRIVE TO INVEST IN MAINTENANCE. There is a vast body of research on the negative impacts of foreclosure, abandonment and blight in cities across the country, in part due to the national mortgage crisis of 2007, which put a spotlight on foreclosure. Recent research suggests that foreclosure tends to reduce nearby property values, diminish the local property tax base, increase crime and disrupt social ties (Lee, 2008). One driver of this phenomenon is the fact that homeowners who experience foreclosure have little incentive to invest in maintenance. This can lead to visible signs of neglect that may deter potential buyers of nearby homes, which further reduces the collective drive to invest in maintenance (Schuetz et al., 2008). In the case of tax foreclosure, municipalities have long used auctions as a way of returning foreclosed properties to the tax rolls and productive use. This is an effective and efficient strategy in many cases. However, due to the length of the tax auction process and the age of many homes in post-industrial cities, some properties experience substantial deterioration before they are sold at auction, making them more likely to be the target of speculation. Speculators purchase properties at auction then resell them or rent them out with the intent to generate short-term profits. This generally means that they do not take steps to prevent continued deterioration or a return to tax delinquency. A gas station that was removed from 555 Leonard St. NW in Grand Rapids by the Kent County Land Bank Authority. Photo by the KCLBA. Collignon (2000) found that it is not uncommon for the same properties to repeatedly cycle through the tax foreclosure system. In studied locations, up to one-fourth of the properties sold at auction had already been through another auction cycle in recent years. Dewar (2009) found that as few as one-fifth of auctioned homes become owner occupied, meaning that these homes either remain vacant or are occupied by renters. While rental properties are not inherently negative for an economy, speculative absentee owners are less likely to maintain properties, leading to negative economic and social externalities. The economic impacts of foreclosure and disinvestment are documented extensively in the literature. For example, an LPI study of the Genesee County Land Bank found that homes within 500 feet of abandoned properties sold for 2.27% less than they otherwise would have land policy institute a land bank report for

16 (Griswold and Norris, 2007). Another study in Cleveland, OH, found that tax-delinquent and tax-foreclosed properties depressed nearby sale prices by %. The authors underscore the importance of controlling for submarket conditions, because foreclosures and by extension, Land Bank activity are trailing indicators of disinvestment through blight and vacancy, which concentrate in weaker markets (Whitaker and Fitzpatrick, 2012). While the negative consequences of vacancy, foreclosure and abandonment are welldocumented, the impacts of land banks investments are less studied. However, there is some broader research on property-level investment and renovation not necessarily performed by a land bank. For example, Ding et al. (2000) used hedonic price regression with spatial lagged variables in Cleveland to show that new construction and rehabilitation have significantly positive impacts in both low-income and predominantly non-minority neighborhoods, although the impact of new construction is greater. They also found that small-scale investment has no significant impact on nearby property prices, concluding that investments should be substantial at the property level rather than distributed among many properties. Specifically concerning land bank activity, Whitaker and Fitzpatrick (2015) used Gaussian Mixture Modeling to show that demolitions performed by a land bank in Cuyahoga County, OH, resulted in a 3.4 percentage point mitigation of negative property price impacts within 500 feet. The Land Policy Institute published a study on the Ingham County Land Bank in 2013, providing evidence of a 5.2% net increase in home values within 500 feet of Land Bank renovations, all else equal (Borowy et al., 2013). The LPI s current research on the Kent County Land Bank Authority, as presented in this report, aims to test whether these results are different in a stronger housing market context and for a land bank with different operational goals. The LPI published a study on the Ingham County Land Bank in 2013, providing evidence of a 5.2% net increase in home values within 500 feet of Land Bank renovations. full report 4 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

17 Land Bank Activity in Kent County ONCE THE KENT COUNTY LAND BANK AUTHORITY (KCLBA) OBTAINS OWNERSHIP OF A PROPERTY, IT HAS SEVERAL OPTIONS. OFTEN, IT SIMPLY SELLS THE HOME TO A DEVELOPER WHO PROVIDES A LEGITIMATE SCOPE OF WORK AND FUNDING FOR RENOVATION, WHICH HELPS ENSURE THAT THE PROPERTY RETURNS TO PRODUCTIVE REUSE. WHEN A LAND BANK PROPERTY IS NOT SOLD FOR RENOVATION, THE KCLBA MAY IMPROVE THE HOME BY INVESTING TIME, LABOR AND CONSTRUCTION MATERIALS, SO THAT THE HOME CAN BE PURCHASED BY AN INDIVIDUAL OR FAMILY. IN OTHER CASES, A PROPERTY MAY BE SO BADLY DAMAGED THAT DEMOLITION IS PREFERRED. AFTER THE STRUCTURE IS REMOVED, THE LAND BANK MAY CONSTRUCT A NEW HOME OR BUSINESS (OR SELL IT TO A DEVELOPER WHO AGREES TO DO THE SAME), OR THE LAND MAY BE CONVERTED TO A NEIGHBORHOOD GARDEN OR OTHER GREEN REUSE. Once the Kent County Land Bank Authority (KCLBA) obtains ownership of a property, it has several options. Often, it simply sells the home to a developer who provides a legitimate scope of work and funding for renovation, which helps ensure that the property returns to productive reuse. When a Land Bank property is not sold for renovation, the KCLBA may improve the home by investing time, labor and construction materials, so that the home can be purchased by an individual or family. In other cases, a property may be so badly damaged that demolition is preferred. After the structure is removed, the Land Bank may construct a new home or business (or sell it to a developer who agrees to do the same), or the land may be converted to a neighborhood garden or other green reuse. Between 2012 and 2016, the Land Bank acquired 484 properties for some combination of renovation, reconstruction or removal, all of which have since been sold to private or nonprofit owners. Between 2012 and 2016, the Land Bank acquired 484 properties for some combination of renovation, reconstruction or removal, all of which have since been sold to private or nonprofit owners. Revenues from these sales An excavator demolishes a blighted home in Kent County. Photo by the Kent County Land Bank Authority. have been reinvested for use in future Land Bank activities. While the KCLBA directly witnesses the positive impacts it has on neighborhoods, communities and cities, prior to this study the overall economic and social impacts had not been systematically estimated. While most Land Bank Authorities are similar in that they purchase tax foreclosed properties and demolish, maintain, renovate and sell them, the Kent County Land Bank Authority has some unique characteristics. land policy institute a land bank report for

18 1. The Authority works with local governments as they exercise their right of first refusal for tax foreclosed properties, and they give funding to properties that the cities have identified for intervention. 2. The KCLBA offers to help relocate the previous owners of foreclosed homes by providing guidance and $1,000 to mitigate moving expenses. 3. The Land Bank intentionally hires contractors from Grand Rapids, and often works with minority-owned businesses to maintain and renovate properties. 4. The KCLBA lists all properties for resale on the Multiple Listing Service. For those properties that need improvement, the Land Bank accepts purchase offers that are accompanied by a scope of work, cost, proof of the ability to do the renovation, and proof of financing. The Authority has a 95% success rate with this sale and renovation approach. 5. The Land Bank incentivizes owner occupancy through lower sale prices in areas where neighborhoods have and would like to maintain high ownership levels. 6. Other than state-awarded Hardest Hit Funds for Blight Elimination, the Kent County Land Bank Authority has operated entirely on bank and foundation loans, as well as tax revenue shares on Land Bank disposed properties from local units of government (50% over five years). The Land Bank intentionally hires contractors from Grand Rapids, and often works with minorityowned businesses to maintain and renovate properties. The potential benefits that these deliberate actions have are apparent for the cities that have lost tax revenues, because of foreclosure; for the people who have had their homes foreclosed due to lack of payment; for the local businesses who work on or sell these properties; for the neighborhoods that have been stabilized; and for the funders who have invested in these efforts. Quantifying these benefits, both real and perceived, is valuable to the successful operation of the Kent County Land Bank Authority. When the Land Bank was created, the real estate market was weak with many foreclosed properties to turn over. Since then, the market has improved substantially to the point where affordable housing has become a critical issue in many neighborhoods and communities, as identified through LPI s Social Perception Assessment. With fewer properties available in the foreclosed market and nonprofit housing organizations available to assist, the KCLBA may be at the cusp of a new era. It has also ventured into rehabilitating commercial properties. In response to these developments, the Land Bank began a strategic planning initiative in 2017 to chart a course for the organization into the future. [The KCLBA] has ventured into rehabilitating commercial properties. full report 6

19 Study Objectives and Analysis The goals of this study were to estimate the 1. Hedonic Property Price Analysis, impact of Land Bank activity on nearby 2. Regional Economic Impact Analysis, and property prices, to estimate its overall impact in terms multiplier effects on the regional 3. Social Perceptions Assessment. economy, and to catalogue residents and other stakeholders perceptions of the KCLBA s role and The following sections describe the methods, data outcomes. This study uses multiple methods and and results for each separate analysis. a variety of data sources to examine the extent of economic and social impacts at the local and regional levels. Three analyses were conducted: land policy institute a land bank report for

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21 Hedonic Property Price Analysis THIS ANALYSIS OF THE KENT COUNTY LAND BANK AUTHORITY ADHERES TO ESTABLISHED EMPIRICAL RESEARCH METHODS BY USING THE HEDONIC PRICING METHOD TO ESTIMATE THE EFFECTS OF NEARBY LAND BANK ACTIVITY ON SALE PRICE. Many empirical studies on the effects of parcel-level economic interventions use hedonic pricing models with spatial and temporal factors to estimate the change in nearby sale prices attributable to the intervention (Malpezzi, 2008). Sale price is used as the dependent variable in a regression with independent variables that are known to influence sale price, such as building characteristics and neighborhood economic and demographic data. An additional independent variable representing the state of the intervention (with a value of one (1) if the intervention has occurred nearby, zero (0) if not) is also included. The regression assigns a coefficient to that intervention, while holding constant all other independent variables, allowing researchers to estimate the average dollar value of the intervention s contribution to sale price. This analysis of the Kent County Land Bank Authority adheres to established empirical research methods by using the hedonic pricing method to estimate the effects of nearby Land Bank activity on sale price. Structural attributes (number of bedrooms and bathrooms, year built, etc.), demographic and socio-economic conditions at the census block group level (poverty rate, education, etc.), time (year of sale), relative market strength, and a binary variable indicating sale after nearby Land Bank activity were included in the regression on price. The resulting coefficients on the Land Bank distance-buffer variable illustrate the average marginal effect (measured in dollars) that Land Bank activity on nearby sale prices, all else equal. A community garden located at 1714 Madison Ave. SE in Grand Rapids was a former blighted residential property. Photo by the Kent County Land Bank Authority. DATA First, a list of all Land Bank properties between 2012 and 2016 was obtained from the Kent County Land Bank Authority. The relevant variables from this dataset for the hedonic analysis are property address, acquisition date and date the property was sold. The type of Land Bank activity (resale, renovation, demolition, reconstruction or greening) was not incorporated in this model due to limited sample sizes. Therefore, this analysis estimates the average effect of Land Bank activity across all its intervention types. Additionally, 129 of the properties lacked a precise sale date, so they were excluded from the model. Table 1 shows the total number of Land Bank properties per year from Parcel data acquired from the Kent County Bureau of Equalization was also used in this study. This dataset includes all residential property sales from , including the following variables for each property: land policy institute a land bank report for

22 Table 1: Number of Land Bank Properties in Kent County by Year Sale Year # of Properties Share of Total % % % % % Total % Source: Kent County Land Bank Authority. Table by the Land Policy Institute, Michigan State University, full report 1. Address and parcel ID, Equalization record, allowing for precise mapping 2. Date of sale, and the collection of neighborhood-level Census data. Second, the Zillow Group data was used to 3. Sale price, fill in any missing values in the Equalization data. For example, if an Equalization record was missing 4. Type of sale, the number of bedrooms, then the Zillow Group 5. Number of bedrooms, data on the number of bedrooms for that parcel ID was substituted in. This allowed for a greater 6. Number of bathrooms, number of observations in the final model, since no 7. Homestead status, observations were excluded due to missing values. 8. Structure type, Several data cleaning steps were then carried out. To reduce multicollinearity, only the most recent 9. Number of square feet, and sale for each parcel ID was retained. Properties 10. Year built. that were not classified as single-family improved were removed, and sales terms that suggested non- Additionally, parcel data acquired from the Zillow arms-length transactions were also dropped. Next, Group was incorporated into the model. This the following outlier observations were identified data was a subset of the sales provided by the and removed: Sale prices equal to zero; sale prices Kent County Bureau of Equalization with some below the 1 st quantile and above the 99 th quantile; additional variables: sale years before 2010; and homes with zero square 1. Latitude, footage, zero bedrooms or zero bathrooms. 2. Longitude, and United States Census data was used to determine the percentage of adults with at least some 3. Census Block Group ID. college, the total household income, the poverty rate and the population of the Census Block The data from the Zillow Group was used to Group in which each property is located. GIS and augment the Equalization data in two ways. Census data were used in a cluster analysis to First, the Zillow Group data assigned a latitude, categorize each Census Block Group as a Weak, longitude and Census Block Group ID to each 10 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

23 Moderate or Strong Market based on patterns of average home values. See Figure 1 for an illustration of these categorizations. The Land Bank properties were then mapped. A radius of 500 feet was drawn around each property using GIS software, and within this buffer all residential sales between January 2010 and November 2016 were counted. Each sold home was then assigned to one of two categories: Before Land Bank activity or after Land Bank activity depending on its sale date and the date when Land Bank activity within the buffer zone was concluded. These two categories correspond to the hedonic variable buffer500, which is set equal to zero (0) or one (1), respectively, for each sale. If a sale was located within the buffer of multiple Land Bank properties, then the earliest completion date among those was used to determine the categorization of the sale. A 500-foot buffer was selected, because it is the most common buffer size used in the literature. The LPI also tested 1,000-foot and 250-foot buffers on the same dataset. While the coefficient of interest was positive in the 1,000-foot case, it was not statistically significant, which is consistent with findings in the literature that property-level interventions often have highly localized effects. Using a 250-foot buffer reduced the sample size of properties to the extent that results are not generalizable. A 500-foot buffer demonstrates the localized impacts of Land Bank activity, while maintaining a reasonable sample size of properties. Figure 2 charts the locations of the 484 Land Bank properties throughout Kent County. Figure 3 illustrates how a 1,000-foot buffer around each Land Bank property was used to count the total number of Land Bank properties within 1,000 feet of each sale as a measurement of Land Bank activity density. Separately, a 500-foot buffer around each Land Bank property was used to categorize each sale as before or after Land Bank activity within 500 feet. In total, there were 1,205 sale records within 500 feet of Land Bank properties from Figure 4 depicts the total number of single-family home sales in Kent County each year, after the exclusion of non-arms-length transactions and outliers. METHODOLOGY Many factors affect the sale price of a home, so simply comparing the price of homes nearby before and after Land Bank activity would not provide complete information about the impact of Land Bank activity. To hold constant these other factors, it is necessary to create a hedonic model that isolates the impact of each variable on sale price. For this study, a variation of the standard hedonic price model was used (Ottensmann et al., 2008): Y= β 0 + β 1 Bath + β 2 Bed + β 3 YB + β 4 SqFt + β 5 Home + β 6 Edu + β 7 Inc + β 8 Pov + β 9 Pop + β 10 Year + β 11 Market + β 12 LBcount + β 13 Buffer For each sale within 500 feet of a Land Bank property, Y is the sale price, Bath is the number of bathrooms (where three-fixture bathrooms count as one, while two-fixture bathrooms count as a half bath), Bed is the number of bedrooms, YB is the year built, SqFt is the finished square footage, Home is the percentage homestead (i.e., owner-occupied), Edu is the percentage of adults in the Census Block Group with at least some college, Inc is the total household income in the Census Block Group, Pov is land policy institute a land bank report for

24 Figure 1: Map of Market Categorizations of Census Block Groups in Kent County full report Note: The moderate market (not illustrated) is found throughout the rest of Kent County, outside of the illustrated strong and weak markets. Source: GIS and U.S. Census data. Figure by the Land Policy Institute, Michigan State University, COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

25 Figure 2: Map of the Distribution of Land Bank Properties in Kent County Source: Kent County Land Bank Authority. Figure by the Land Policy Institute, Michigan State University, land policy institute a land bank report for

26 Figure 3: Map of an Example of KCLBA Project Density full report 14 Note: Example of a 1,000-foot GIS radius (illustrated) around a Land Bank property used to calculate KCLBA Project Density; a 500-foot buffer was then used to determine the binary before/after variable (not illustrated). Source: Kent County Land Bank Authority. Figure by the Land Policy Institute, Michigan State University, COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

27 Figure 4: Number of Single-Family Home Sales by Year in Kent County ,000 16,000 14,000 Number of Homes Sales 12,000 10,000 8,000 6,000 4,000 2, Note: Sales data was not available for December 2016 at the time of this study, so the 2016 total includes an estimate for that month. Source: Kent County Bureau of Equalization. Figure by the Land Policy Institute, Michigan State University, Year the poverty rate in the Census Block Group, Pop is the population in the Census Block Group, Year is the sale year, Market is the housing market categorization of the Census Block Group (where 0 = strong, 1 = moderate, and 2 = weak), LBcount is the number of Land Bank properties within 1,000 feet, and Buffer is a binary variable indicating whether the home was sold before (= 0) or after (= 1) Land Bank activity within 500 feet. The Year and Market variables are represented in the equation above as single variables, but statistically they are non-numeric, so that each value they assume acts as its own binary variable in the applied model. For example, each year receives a separate coefficient, since we cannot assume that the change in average home prices is constant from year to year. The inclusion of 2015 Census variables assumes that neighborhood characteristics have remained the same over the course of seven years, which may not be accurate. RESULTS The regression results are presented in Table 2. For each variable in the model in Table 2, the results can be interpreted as: Holding constant all other variables in the model, a one-unit increase in this variable is associated with a $ Coefficient change in a home s sale price, on average. The chance that this estimate is actually zero is Pr(> t )x100%. For example, the variable yearbuilt has a coefficient of and a Pr(> t ) (significance) value of zero (0). This means that holding constant all other variables in the model, increasing the year built by land policy institute a land bank report for

28 Table 2: Distribution of Residential Sales Records Variable Type Estimate Std. Error T-Value Pr(> t ) Significance (Intercept) -355, , *** Year Built *** Finished Square Footage *** Bedrooms -5, , *** Total Bathrooms 8, , *** Sale Year , , Sale Year , , Sale Year , , *** Sale Year , , *** Sale Year , , *** Sale Year , , *** Homestead *** Population *** Total Household Income *** % of Adults with Some College 17, , * Poverty Rate 23, , ** Moderate Market 24, , Weak Market -13, , After 1,000 Feet -1, * Buffer 500 Feet 7, , * Not significant. * 5% < p < = 10%. ** 1% < p < = 5%. *** 0% < p < = 1%. Where p is the probability of no impact for each coefficient. Note: Data provided by Zillow through the Zillow Transaction and Assessment Dataset (ZTRAX). More information on accessing the data can be found online at ZTRAX. The results and opinions are those of the author(s) and do not reflect the position of the Zillow Group. Source: Kent County Bureau of Equalization, Zillow Group, Kent County Land Bank Authority and U.S. Census data. Table by the Land Policy Institute, Michigan State University, full report one year (i.e., selling a house that is one year newer) is associated with a $ increase in its sale price. The chance that this estimate is actually zero is ~0%. In other words, it is almost certainly true that newer homes in Kent County sell for more than older homes, on average and controlling for other factors. The other coefficients on standard hedonic variables are consistent with expectations and the literature. For example, the regression shows a positive and significant relationship between the total number of bathrooms and the sale price of a home; that is, homes with more bathrooms are expected to sell for more than homes with fewer bathrooms, all else equal. Other coefficients also make intuitive sense, such as negative coefficients on each sale year binary variable. Because 2010 was excluded from the model, it is the baseline for comparison. The coefficient on 2011 suggests that homes were $1, less expensive in 2011 than 2010, while the coefficient on 2016 suggests that homes were, on average, holding all other factors constant $51, more expensive in 2016 than In general, the increasing coefficients on each 16 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

29 successive year imply significantly rising home The overall strength of the The results of this prices in Kent County since model is given by the adjusted model suggest that, R-squared value, which is all else equal, selling It is also important to note why the variable equal to in this case. a home after Land after1000, representing the total number of In other words, the variables Bank activity within Land Bank properties within 1,000 feet of a sale, included in this model capture 500 feet is associated was included in the model. This helps isolate the about 53% of the variation in with a $7, impact of a sale occurring after nearby Land Bank sale prices in Kent County. This increase in the home s activity by controlling for the density of Land R-squared value is considered sale price, and this Bank properties around the sale. within the acceptable range estimate is statistically The variable of particular interest is buffer500. for a hedonic model, since significant at the 90% there are many other variables confidence level. This variable equals zero (0) if a home s sale that affect sale price, but few of them are likely occurred before nearby Land Bank activity, and to be correlated with Land Bank activity after it equals one (1) if the home s sale occurred after accounting for the other variables in the model. nearby Land Bank activity. The results of this model suggest that, all else equal, selling a home after A description of each variable and its summary Land Bank activity within 500 feet is associated with a statistics are presented in Table 3. $7, increase in the home s sale price, and this estimate is statistically significant at the 90% confidence level. Table 3: Descriptions of Variables Used in Hedonic Property Price Analysis Variable Description Min Median Mean Max St. Dev. YearBuilt Year the house was built 1, , , , Sqft Finished square footage 1, , , , Bed Number of bedrooms TBaths Total number of bathrooms Homestead Percentage owner-occupied Cbg_popZ Population in the Census Block Group , , , Cbg_incZ Total household income of the Census Block Group 3.4x x x x x10 7 Cbg_eduZ Percentage of adults in the Census Block Group with at least some college Cbg_povZ Poverty rate in the Census Block Group After1000 Buffer500 Total number of Land Bank properties within 1,000 feet of a home sale Home sale occurred before or after Land Bank activity within 500 feet Note: Data provided by Zillow through the Zillow Transaction and Assessment Dataset (ZTRAX). More information on accessing the data can be found online at ZTRAX. The results and opinions are those of the author(s) and do not reflect the position of the Zillow Group. Source: Kent County Bureau of Equalization, Zillow Group, Kent County Land Bank Authority and U.S. Census data. Table by the Land Policy Institute, Michigan State University, land policy institute a land bank report for

30 full report 18 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

31 Regional Economic Impact Analysis IN ADDITION TO THE HEDONIC PROPERTY PRICE ANALYSIS, THIS STUDY EXAMINES THE OVERALL ECONOMIC IMPACT OF LAND BANK ACTIVITIES USING IMPLAN. ACTIVITIES OF INTEREST INCLUDE CONSTRUCTION, REHABILITATION, DEMOLITION AND MAINTENANCE, SUCH AS LAWN CARE AND SNOW REMOVAL, OF 484 LAND BANK-OWNED PROPERTIES BETWEEN 2012 AND THE RESULTS OF THIS ANALYSIS ARE ESTIMATES OF AGGREGATED ECONOMIC OUTPUT, JOBS CREATED AND PROPERTY INCOME EFFECTS AS A RESULT OF FIVE YEARS OF LAND BANK OPERATIONS. Minnesota IMPLAN Group, Inc.). The IMPLAN s system provides data with economic resolution from the national level down to the zip code level, and it is used by many government agencies, colleges and universities, nonprofit organizations, corporations, business development organizations and community planning organizations to quickly and efficiently model economic impacts. The IMPLAN is ideal for examining impacts of targeted investments, because it outputs data files representing the economic interactions that characterize any location at a specified geographic level. 737 Madison Ave. SE in Grand Rapids after a renovation to historic standards. Photo by the Kent County Land Bank Authority. In addition to the hedonic property price analysis, this study examines the overall economic impact of Land Bank activities using IMPLAN. Activities of interest include construction, rehabilitation, demolition and maintenance, such as lawn care and snow removal, of 484 Land Bank-owned properties between 2012 and The results of this analysis are estimates of aggregated economic output, jobs created and property income effects as a result of five years of Land Bank operations. METHODOLOGY The regional economic impact analysis was performed using IMPLAN (IMpact analysis for PLANning), which is a complete economic assessment package, including data and software, devised and provided by MIG, Inc. (formerly Using multipliers provided by IMPLAN for Kent County, as well as categorized spending data provided by the Kent County Land Bank Authority, the IMPLAN model produced estimates of three types of economic impacts: 1. Direct and indirect economic impacts, or the activity generated in industries directly related to Land Bank activity, as well as in backward- and forward-linked industries; 2. Direct and indirect job creation impacts; and 3. Total value-added impacts, or the value in goods and services added across industries as a result of spending by the Land Bank, after accounting for costs. land policy institute a land bank report for

32 DATA The Kent County Land Bank Authority provided LPI with spending data for their activities between 2012 and These spending categories were matched to industries available for modeling within the IMPLAN framework. Table 4 enumerates total spending by the Land Bank in each provided category over the five-year period from These categories were matched with industries available for modeling within the IMPLAN framework, which are listed in Table 5. The multipliers provided by IMPLAN in the specified industries were applied to the categorical spending totals. The approximate impacts were calculated at three levels: Direct impacts, secondary impacts and total impacts. Direct impacts include spending in industries directly related to Land Bank activities, secondary impacts include ripple effects on backward- and forward-linked, and total impacts are the sum of direct and secondary impacts. These three levels were calculated for jobs, labor income, value-added (gross regional product) and output Table 4: Land Bank Spending Expenditure Category Amount # of Properties Development $2,451, Demolition $15,098, Acquisition $2,090, Holding $432, Renovation $866, Commission $257, Closing $357, Surveying $208, Maintenance $2,467, Total $24,230, Source: Kent County Land Bank Authority. Table by the Land Policy Institute, Michigan State University, Table 5: Land Bank Spending Categories Matched to IMPLAN Industries full report Expenditure Category IMPLAN Industry Development Waste management and remediation services Demolition Maintenance and repair of residential structures Acquisition Real estate Holding Maintenance and repair of residential structures Renovation Maintenance and repair of residential structures Commission Real estate Closing Real estate Surveying Architectural, engineering and related services Maintenance Maintenance and repair of residential structures Source: Kent County Land Bank Authority and IMPLAN. Table by the Land Policy Institute, Michigan State University, COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

33 (sales due to Land Bank activities). Labor income includes wages and salaries, payroll benefits and incomes of sole proprietors. Value-added refers to income accruing to households in the region, plus rents and profits of businesses and indirect business taxes. It is the net value added to the region s economy. For example, the value-added by a company includes wages and salaries paid to employees, their payroll benefits, profits of the company, and sales and other indirect business taxes. The company s non-labor operating costs, such as purchases of supplies and services from other firms are not included as value-added by the company. A summary of the IMPLAN analysis results is provided in Table 6. RESULTS These results (see Table 6) suggest a measurable positive economic impact of Land Bank activities on the regional economy of Kent County. The estimated direct and indirect economic impacts of this spending between 2012 and 2016 total $42,899,413. To generate this economic activity, the Land Bank spent $24,230,954 during the same time period, resulting in an estimated 1.77:1 multiplier ratio. This suggests that for each $1 spent by the Land Bank, $1.77 in value was generated in the regional economy, on average. This spending is also estimated to have supported 266 jobs and $14,509,655 in labor income between 2012 and Finally, the value-added to the gross regional product during this time period as a result of the Land Bank s activity is estimated at $21,082, For each $1 spent by the Land Bank, $1.77 in value was generated in the regional economy, on average. It is important to note that the estimates produced by this analysis may have a margin of error, due to assumptions made about the data. For example, the utility costs associated with maintaining Land Bank properties are assumed to be evenly split between electric, heating and water, because the raw data did not include a breakdown of expenditures by utility type. In reality, it is likely that some utility types cost more than others, but such a small change is unlikely to have a meaningful impact on the overall estimates of economic activity. Additionally, although we do not know what would have happened to these properties if they were not obtained by the Land Bank, it is likely that many of them would have been purchased by Table 6: Economic Impacts of Land Bank Spending Impact Type Total Economic Output Direct $23,881,744 Secondary $19,017,669 Total $42,899,413 Impact Type Sub-Set Jobs Labor Income Value- Added Direct 115 $7,747,243 $9,752,110 Secondary 151 $6,762,413 $11,330,601 Total 266 $14,509,655 $21,082,711 Source: Kent County Land Bank Authority and IMPLAN. Table by the Land Policy Institute, Michigan State University, land policy institute a land bank report for

34 However, as discussed in the literature review, there is evidence that tax-auctioned properties are less likely than other properties to be owner- occupied, well-maintained and current on property taxes. Coupled with the fact that the Land Bank works only with local companies and gives preference to minority-owned enterprises, this suggests that the economic activity that would have been generated by private developers may be less than that generated by the Land Bank. private developers, who may have then maintained, renovated or reconstructed the properties. Because LPI does not possess this counterfactual data, we cannot compare the economic activity generated by the Land Bank with the activity that may have been generated by private developers in the absence of the Land Bank. full report 22 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

35 Social Perceptions Assessment MANY OF THE IMPACTS MEASURED BY ECONOMIC METHODS MISS THE SOCIAL IMPACTS FELT BY NEIGHBORHOOD RESIDENTS THAT RESULT FROM LAND BANK ACTIVITY. WHILE AN IMMEDIATE ECONOMIC IMPACT MAY NOT BE READILY MEASURABLE, THE CLEANER AND GREENER YARDS, NEIGHBORHOODS WITH LESS ABANDONED HOMES, AND SOME RENOVATIONS CAN CREATE A SENSE OF COMMUNITY WELL-BEING AND POTENTIALLY LEAD TO MORE PEOPLE ENGAGING IN THE NEIGHBORHOOD, AMONG OTHER POSITIVE SOCIAL IMPACTS. TO MEASURE THE SOCIAL IMPACTS THAT ARE TYPICALLY MISSED BY TRADITIONAL ECONOMIC ANALYSIS METHODS, THE LPI USED A TWO-PRONG APPROACH: STAKEHOLDER INTERVIEWS AND A COMMUNITY SURVEY. METHODOLOGY To measure the social impacts that are typically missed by traditional economic analysis methods, the LPI used a two-prong approach: Stakeholder interviews and a community survey Madison Ave. SE in Grand Rapids, prior to Kent County Land Bank Authority activity on the property. Photo by the KCLBA. Many of the impacts measured by economic methods miss the social (real and perceived) impacts felt by neighborhood residents that result from Land Bank activity. While an immediate economic impact may not be readily measurable, the cleaner and greener yards, neighborhoods with less abandoned homes, and some renovations can create a sense of community well-being and potentially lead to more people engaging in the neighborhood, among other positive social impacts. This participatory research method engaged key stakeholders in areas where Land Bank investments have taken place along with organizational partners of the Land Bank. Stakeholders were primarily identified and contact information provided by the KCLBA. The interview method was helpful for identifying neighborhood histories, perceived desirable future conditions, indicators of progress toward those conditions, and the impact of Land Bank activities. The interviews not only provided valuable context and insight into opinions, they also helped the research team develop a survey instrument that was used to quantify insights from neighborhood residents. The LPI contacted stakeholders via and/ or phone to explain the project and request an The interview method was helpful for identifying neighborhood histories, perceived desirable future conditions, indicators of progress toward those conditions, and the impact of Land Bank activities. land policy institute a land bank report for

36 interview. An interview protocol was created to ensure uniformity among interviews. The first part of the interview consisted of questions pertaining specifically to the Kent County Land Bank Authority. These questions established the interviewee s role in their own organization, and The MSU Institutional Review Board (IRB), the board that protects participants in research projects, reviewed the survey and granted approval for use. The survey was created in Qualtrics, an online survey software, and distributed via an invitation to neighborhood and business associations. then their relationship to the KCLBA. Perceived The survey took about 15 minutes to complete 24 benefits of KCLBA s work, as well as suggestions or 25 questions broken out into questions about: for improving processes and procedures, were also discussed. The second part of the interview 1. Participants neighborhood; explored stories about specific properties that the Land Bank has been involved with. Interviewees 2. Land Banks (generally); were then asked to provide suggestions for 3. Participants thoughts of before-anddistributing the community survey, and identifying after pictures of building removal, other potential stakeholders to interview. The rehabilitation or redevelopment, and their interviews typically lasted between minutes. impacts on the community; Discussions were not recorded, but the interviewer took notes during the call, and then refined them 4. The Kent County Land Bank Authority; and at the conclusion of the interview. 5. Select demographic information. The research team then developed the community survey, using insights gleaned from the interviews. full report 24 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

37 Stakeholder Interview Findings IN TOTAL, 24 INTERVIEWS WERE CONDUCTED OUT OF 31 INTERVIEW REQUESTS, RESULTING IN A 77% RESPONSE RATE. INTERVIEWEE TENURE IN THEIR CURRENT POSITIONS RANGED GREATLY, FROM THREE YEARS TO 29 YEARS. INTERVIEWEES FELL INTO SIX MAIN ORGANIZATIONAL CATEGORIES, INCLUDING NONPROFITS, KCLBA CONTRACTORS, LOCAL GOVERNMENT, NEIGHBORS AND LOCAL BUSINESSES, WITH TWO INTERVIEWS THAT DID NOT FIT INTO THE AFOREMENTIONED CATEGORIES. In total, 24 interviews were conducted out of 31 interview requests, resulting in a 77% response rate. Interviewee tenure in their current positions ranged greatly, from three years to 29 years. Interviewees fell into six main organizational categories, including nonprofits, KCLBA contractors, local government, neighbors and local businesses, with two interviews that did not fit into the aforementioned categories. Interviews were conducted in a private office and were confidential. The interview consisted of the following categories: 1. Interviewee s organizations and their role within it. 2. Interviewee s relationship with the Kent County Land Bank Authority. 3. Affirming benefits of KCLBA s work and adding any additional benefits. 4. Describing observed impacts and initial perceptions resulting from the KCLBA exclusively utilizing local contractors. Bystanders watch as an excavator demolishes a former manufacturing facility in Sparta. Photo by the Kent County Land Bank Authority. 7. Telling anecdotes about specific KCLBA properties in the vicinity of where they work or live. 8. Providing suggestions for other stakeholders to interview. 9. Providing recommendations for circulating the survey among residents in order to maximize responses. 5. Offering suggestions for improving processes and/or procedures of the KCLBA. 6. Any additional comments regarding the activities of the KCLBA. The findings reported below were aggregated, highlighting trends and commonalities across interviews. land policy institute a land bank report for

38 PERCEPTIONS OF THE KENT COUNTY LAND BANK AUTHORITY When asked about their relationship with the Kent County Land Bank Authority, interviewees differed slightly regarding the perception of the Land Bank. Responses have been formatted into the respective organizational categories below: Nonprofit Community The KCLBA is viewed as a necessary partner, and nonprofit organizations are generally proud to be associated with the Land Bank as a complementary organization. This was particularly apparent when the Land Bank works with more problematic properties, due to its flexibility in both process and funding. This included working with brownfield sites, conducting environmental checks and policies, clearing titles and helping with tax foreclosed properties that were stuck in a negative cycle. It is perceived that the KCLBA helps to combat the cycle of landlords purchasing properties at auction and renting out properties for a short period of time without any renovation or maintenance, then allowing the property to go back into foreclosure. There was also a concern raised with a perceived lack of addressing lead-based paint according to EPA guidelines, which other nonprofit developers must abide by. Local Government on violations. This is a cost saving benefit to local units of government that do not have to allocate staff time and other resources to full code enforcement. The KCLBA is efficient and uses its authority to expedite the often difficult process of clearing titles on properties. Some municipalities expressed that, while involvement with the KCLBA is typically a positive experience, the work of the KCLBA does not fit all needs. Neighbors Some members of the public that are aware of the KCLBA distrust it as another instrument of government that take homes away, while others appreciate the opportunities the KCLBA offers. Many neighbors have positive perceptions surrounding the KCLBA, explaining that it has a great impact on their neighborhood. Many neighbors have positive perceptions surrounding the KCLBA, explaining that it has a great impact on their neighborhood. The KCLBA is also viewed as a necessary entity to be used as a means to put tax dollars back into the community, while keeping blight out of neighborhoods. Neighbors also saw that the KCLBA offers and provides more inventory for the housing market. full report When municipalities provide properties to the KCLBA, the Land Bank is responsible for maintenance and inspection of the properties, as well as handles complaints Lastly, there was a desire to have more awareness of what people can do to protect their property or neighboring properties from vandalism. 26 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

39 KCLBA Contractors Many contractors have experienced an increase in business due to involvement with KCLBA properties. They appreciate being able to showcase their work as the KCLBA markets properties for sale, an opportunity or exposure that they would not get otherwise. Local Businesses Investors, in particular, had positive perceptions as they are able to acquire properties and then sell them for profit. work and KCLBA work, noting that there often isn t a difference (e.g., it s not better or worse) than what a regular investor would do. Other local businesses say that the work the KCLBA is doing is good, as properties are being returned to active use, some of which may not have been purchased by other investors. Other local businesses say that the work the KCLBA is doing is good, as properties are being returned to active use, some of which may not have been purchased by other investors. In the past, there were perceptions that the KCLBA cherry picked the best properties on the tax-foreclosure list rather than buying them all. It was understood that the KCLBA needs to be self-sustaining, which was likely the cause of this. However, by purchasing the better properties, it forced the county to sit on the remaining, less desirable properties and not receive money from their sale. This led to a negative perception of the KCLBA as the properties were then not available at auctions. This also caused investors not to purchase those less desirable properties. Interviewees expressed concern regarding the preferential treatment that the KCLBA receives in acquiring properties. Furthermore, by taking those taxforeclosed properties off of the market, it doesn t allow the free market to function as intended to renovate and resell properties back into the market. Others wondered what the benefit of or difference is between free market investor There were positive comments made regarding working with the KCLBA, as they were transparent and cooperated in working with all parties involved in the process. The efforts and involvement with local boards has helped in transferring ownership to people who care, leading to providing a baseline for a safe and walkable community. Others There is an observed direct effect on sustaining value and neighbors thinking the neighborhood is trending in the right direction. Some interviewees were initially skeptical or had negative preconceptions of the KCLBA; however, once they grew more aware of KCLBA s work, those perceptions shifted into a more positive light. BENEFITS OF KCLBA WORK The MSU Land Policy Institute and Kent County Land Bank Authority identified many benefits from the KCLBA s work, including: land policy institute a land bank report for

40 1. Returning tax revenues to cities, 2. Stabilizing neighborhoods, 3. Providing return on investment for funders, 4. Helping residents who have experienced foreclosure, and 5. Giving local contractors preference. Each of these benefits was affirmed by several of the interviewees. The benefit of return on investment for funders had some ambiguity, with some people stating that data from the KCLBA didn t validate this benefit. In addition to those benefits identified by LPI and the KCLBA, there were several other benefits the interviewees identified, including: 1. Vetting homebuyers to ensure that the property will be maintained adequately. has contributed to accountability in the community. 7. Partnering and collaborating on efforts of the KCLBA have been instrumental in the community s success. LOCAL CONTRACTOR UTILIZATION For those interviewees that were aware that KCLBA utilized local contractors exclusively, the majority had positive experiences and perceptions around this policy. One interviewee noted a negative experience, which resulted in a timely response from the KCLBA. The issue was addressed shortly after the KCLBA was made aware, and that particular contractor is no longer used. Interviewees also noted that by utilizing local contractors, particularly people of color, it had helped ease tension among neighbors of color who were concerned about white strangers working in their neighborhoods. full report 2. Reducing the number of properties in a state of perpetual disrepair, and preventing the transfer of property to someone who doesn t intend to provide upkeep. 3. Having a plan that gets implemented once the property is purchased, including facilitating the upkeep, while the foreclosure process is underway, by manicuring the lawn or snow removal. This aids in the neighborhood aesthetics before new property owners acquire the property. 4. Providing safe, affordable and quality housing. 5. Being instrumental in assuring proper code compliance and safety checks. 6. Utilizing a process that moves along quickly and efficiently, which SUGGESTIONS FOR IMPROVEMENT Transparency Interviewees were skeptical about how fair and transparent the KCLBA s bidding and selection process is. They were concerned about whether or not nonprofit developers have the same access to properties from local units of government. There was concern as to whether properties were going to white nonprofits with access to government funds, or if the properties served as an opportunity for minorityowned companies and individuals. Additionally, there was a desire to have more transparency about whether or not 28 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

41 policies and guidelines are being followed and implemented uniformly in general. Another concern was raised around the increase in demand for properties as the number of tax foreclosed properties decrease. The KCLBA may need to update their processes for determining who has access to properties, and when they gain access to them. Grand Rapids area becomes stronger. There are questions around how the KCLBA will utilize its competitive advantages in ways that still benefit the community in the stronger market and how it will ensure that affordable housing is still addressed and preserved. Another issue identified was the difficulty the KCLBA faces in acquiring properties by waiting on local jurisdictions. It was also suggested that the KCLBA may need to identify affordable housing priorities within their policies and procedures. Communication There was a desire for increased communication and collaboration, particularly among other nonprofit housing organizations, KCLBA and local units of government. One interviewee suggested coordinating a regular meeting of nonprofit community development organizations with the KCLBA to ensure everyone stays on the same page and continues to act with the community s best interests in mind. Others proposed a monthly or quarterly report in order to document progress on specific properties. More information regarding access to properties was requested, as some felt it hasn t been explained thoroughly. Future of the Kent County Land Bank Authority Once the immediate need of dealing with the abundance of tax-foreclosed properties, blight elimination and vetting of sub-par investors is finished, it was questioned what the KCLBA could focus on. Because the KCLBA was created during a time that the real estate market was weak, there are concerns with how the KCLBA will adjust to the different landscape as the market in the Expansion of KCLBA activity was also a topic brought up in various interviews. Some suggested that the KCLBA get broader authority from the State, perhaps making land banks a regional authority in order to make it easier to work in smaller communities. Other interviewees wondered if it was possible for the KCLBA to become a resource for communities in the surrounding region that don t have the vision, scope or level of resources necessary to support their own land bank. Some stakeholders also discussed the possibility of expanding the KCLBA s work to address other social issues, such as working with nonprofits and other local organizations towards different forms of transition housing or job skills training for persons who are becoming re-acclimated to society (probation or parole, rehab, etc.). Another suggestion involved focusing efforts on helping minorities and underserved populations who are transitioning from rental status to owner-occupied. Affordable Housing Time and again, interviewees expressed concern over the lack of affordable housing as the Grand Rapids real estate market rebounds after the Great Recession. It was noted that the KCLBA has partnered with local builders in order to build low-income homes to help with affordable land policy institute a land bank report for

42 full report It was suggested that KCLBA look for partnerships and collaborations to build bridges to preserve the capacity to provide affordable housing. housing. It was suggested that the KCLBA look for partnerships and collaborations to build bridges to preserve the capacity to provide affordable housing. There is a perception among some that the KCLBA is now in competition with nonprofit affordable housing developers. It was mentioned that the requirements for home buyers to rehabilitate a home within a time frame forces the investor to do something with the home. This process allows for people and families to find affordable housing that won t require up-front rehabilitation or maintenance costs for quite some time. Both of these are viewed as positive outcomes of the KCLBA s work. Other Suggestions and Comments Other suggestions included opening the doors to other realtors in the area that have experience with them, rather than sole sourcing a single realtor. Also, since the KCLBA is given properties by municipalities, it becomes the holding company for them, and is then an easy place for municipalities to get their tax revenue back. This, in turn, affects the investors, not the KCLBA themselves, as an easy way to manage the situation. PRAISE FOR THE KENT COUNTY LAND BANK AUTHORITY Multiple interviewees also took this opportunity to express gratitude to the KCLBA and appreciation for its work. They were satisfied with the issues that were resolved quickly due to the KCLBA s responsiveness. By moving to a sole real estate agent, the KCLBA eliminated inconsistencies of private investors relying on many different agents. There is now easier access for everyone to move through the process quickly, and there are now multiple reasonable bids that were not happening before. By staging houses and offering contact information and other resources to real estate agents and their clients, KCLBA made the home buying experience more open and helpful. The KCLBA considered the neighbors opinions and took their input for the design of properties into account and actually implemented their suggestions. The KCLBA considered the neighbors opinions and took their input for the design of properties into account and actually implemented their suggestions. It was said that the KCLBA delivers on its agreements and is a great asset, particularly when others hands were tied. The KCLBA can step in and help make connections and provide resources when working with smaller municipalities. The KCLBA was deemed as one of the more innovative land banks, as they work hard to be creative. One interviewee thought the overall experience created a lot of community spirit and addressed the concerns of the neighbors. The community spirit radiated through the contractors, too. It was noted that tax programs tend to benefit larger scale projects. Often, developers need to be 30 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

43 large enough to afford legal work and preparation to see the benefits of behind the scenes work in order to take advantage of the economic impact of tax incentive programs. With the KCLBA, the barrier of scale is removed and it could be as simple as someone working part-time in renovation that can access the government incentive at this micro-level. As a result, there was a lot more micro-level activity occurring and this was viewed as a positive outcome of their work. The KCLBA is a means for the neighborhood to improve its housing stock with quality work, while removing blighted structures. The KCLBA is not afraid to step in and say that a house needs to be demolished and ensure their money and resources are being used wisely. Because the KCLBA has paid attention to properties that have been otherwise overlooked, there is significantly less blight. ADDITIONAL COMMENTS ON KCLBA There was concern with the revenues and funding of the KCLBA. Because it is self-sustaining, it relies on turning properties for more revenues than expenses, putting the KCLBA in a position where it is trying to balance between being the developer and being a supplier to the developers. However, it was also mentioned that Grand Rapids sets aside funds for the KCLBA in order to reduce the competition between nonprofits and the KCLBA. CONCLUSIONS FROM STAKEHOLDER INTERVIEWS Common themes throughout the interviews include: Interviewees who were unaware of the Land Bank s activities prior to interacting with the organization may have had initial doubts, but after working with or interacting with KCLBA, ultimately they were appreciative and supportive of their efforts to revitalize neighborhoods. Between the positive benefits identified and the respected leadership of the KCLBA, the majority of interviewees viewed the KCLBA positively. Many who offered suggestions for improvement or concerns about the KCLBA, also acknowledged positive outcomes of their relationship or work with KCLBA. Interviewees desired to understand how the KCLBA acquires properties from local units of governments and the process the Land Bank uses to prioritize projects. Many want more dialogue and collaboration in that prioritization process. They also want to understand and facilitate how the Land Bank can support affordable housing, historic preservation, and diversity goals for neighborhoods and communities. Often, nonprofit housing organizations felt that they have regulations and oversight from local municipalities that the KCLBA does not. Additionally, because of how quickly the KCLBA tends to move through the processes, there was a concern that municipalities continue to focus on efforts with the KCLBA, because of how quickly they can flip the house rather than what the best use of and the affordability of the property is or may be. Lastly, many desired to know what the next steps of the KCLBA were going to be now that the housing foreclosure and abandonment crisis has become less urgent in Kent County. land policy institute a land bank report for

44 full report 32 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

45 Community Survey Findings THE INTERVIEWS PROVIDED BOTH VALUABLE CONTEXT AND INFORMATION FOR THE PROJECT, AND RESPONSES AND PERCEPTIONS WERE TAKEN INTO CONSIDERATION AS THE COMMUNITY-WIDE SURVEY WAS CRAFTED. THE SURVEY WAS OPEN FOR FOUR WEEKS FROM FEB. 16 TO MAR. 16, 2017, AND 89 RESPONSES WERE RECEIVED. THE ONLINE SURVEY LINK WAS DISTRIBUTED THROUGH CONTACTS AT NEIGHBORHOOD AND BUSINESS ASSOCIATIONS, AND THROUGH THE LAND BANK. The interviews provided both valuable context and information for the project, and responses and perceptions were taken into consideration as the community-wide survey was crafted. The survey was open for four weeks from Feb. 16 to Mar. 16, 2017, and 89 responses were received. The online survey link was distributed through contacts at neighborhood and business associations, and through the Land Bank. It is important to note that this survey was not a random sample, therefore results cannot be considered representative of any population within Kent County nor can results be considered statistically significant. Due to the number of respondents and the relatively homogenous demographic characteristics of respondents, no crosstabs were run or analyzed. It may be observed that the information provided and questions asked in two of the sections were very similar. This was intentional. The first section introduced information about land banks, generally, and then specifically about the KCLBA (second section) after the respondent saw the work of the Land Bank through a series of beforeand-after photos to see if there was any change in perception. Highlights from the survey are listed below in the respective sections of the survey, then more general observations follow. A neighbor harvests produce from a community garden located at 1152 Madison Ave. SE in Grand Rapids that was the site of a blighted residential property that was removed. Photo by the Kent County Land Bank Authority. ABOUT PARTICIPANTS NEIGHBORHOODS The survey began with questions about the neighborhood the respondent lives in, in part to understand what kinds of perceptions they brought into the survey and to know if their own neighborhood experience would influence how they land policy institute a land bank report for

46 viewed the work of the Land Bank. Overall, most respondents thought their neighborhoods were attractive and safe, and had been so for many years. Nearly three quarters (74%) of respondents thought their neighborhood was very attractive or attractive, while only 26% viewed it as not very attractive or very unattractive. Although most respondents have lived in their neighborhoods for more than 15 years, Table 7 displays the variation in their responses. Eighty-seven percent (87%) of respondents thought their neighborhood was safe or very safe right now, while less than 13% thought it was unsafe or very unsafe. More than 32% believed that the current level of safety had existed for more than 15 years. LAND BANKS (GENERALLY) Figure 5 shows that most respondents (64%) were either moderately or very familiar with the activities associated with Land Banks, while 36% considered themselves slightly unfamiliar to not familiar at all. Based on their expressed knowledge of Land Banks activities, more than 60% of respondents felt moderately or very favorably toward the activities of Land Banks. A fair amount, 23%, had neutral opinions, while 17% viewed Land Bank activities slightly unfavorably or not favorably at all. PARTICIPANTS THOUGHTS OF BEFORE-AND-AFTER PHOTOS In this section of the survey instrument, respondents were shown before and after photos of properties that the Kent County Land Bank Authority had each renovated, removed or redeveloped. They were examples of such efforts, and were not necessarily representative of the broad range of renovation, reuse and removal seen throughout the county. The LPI asked respondents to consider if these Land Bank activities increased, decreased, didn t change or if they were unsure of the impact on home or property values, crime rates, job creation, affordability, demographic diversity, architectural quality and sense of community. First, they were asked about residential structures, and then about commercial structures. Tables 8 and 9 shows the results from these questions, while highlights are noted below. Highlights Related to Renovation, Redevelopment, and Removal of Residential Properties A large majority of respondents thought that renovating (92%) or redeveloping (86%) residential properties will increase home or property values more than removal only (44%). Table 7: Perceptions of Respondents Neighborhoods full report Very Attractive Attractive Not Very Attractive Very Unattractive Less than More than 15 Survey Questions 1 4: Answers or Safe or Safe or Safe or Safe Years Years Years Years Years How visually appealing is your neighborhood at the present time? 14% 60% 24% 1% 0% 0% 0% 0% 0% How long has your neighborhood been at the level of visual attractiveness in the last question? 0% 0% 0% 0% 6% 17% 23% 14% 39% How safe do you think your neighborhood is at the present time? 19% 68% 12% 1% 0% 0% 0% 0% 0% How long has your neighborhood been at the level of safety in the last question? 0% 0% 0% 0% 9% 21% 19% 18% 32% Source: Social Perceptions Community Survey. Table by the Land Policy Institute, Michigan State University, COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

47 Figure 5: Respondents Familiarity with Land Banks Very Familiar 35% Moderately Familiar 29% Slightly Familiar 15% Not Familiar at All 21% 0% 5% 10% 15% 20% 25% 30% 35% 40% Percentage of Respondents Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, A large majority of respondents thought that renovating (92%) or redeveloping (86%) residential properties will increase home and property values more than removal only (44%). An almost equal share of respondents of 60% in each activity) impacted job indicated that removal only will creation. Job creation would be increased increase home or property values as least by removal only. much as it would decrease them or A majority of respondents believed that keep them the same. both renovating (51%) and redeveloping A majority of survey participants believed (57%) decreases affordability. A majority that renovating (71%) distressed homes will also felt that removal only (61%) doesn t decrease crime more than redevelopment impact affordability. (64%) or removal only (43%). Mixed and relatively equal responses More respondents thought that removal were received on whether renovating only will not change or increase crime or redevelopment impacts demographic (combined 51%) than they believe it will diversity in any direction. Most (55%) felt decrease crime (43%). that removal only didn t change diversity. Survey participants were unsure of or The majority thought that renovating didn t think any activities (upwards increases architectural quality (80%). land policy institute a land bank report for

48 Redevelopment is still a majority (63%) for increasing architectural quality, but less than renovating. Renovating (75%) and removal only (61%) were believed by the majority of respondents to increase the sense of community. A relatively equal share (18 20%) thought that any activity wouldn t change the sense of community. Highlights Related to Renovation, Redevelopment and Removal of Commercial Properties The majority of respondents (all upwards of 70%) believed that all activities increase home or property values. The majority (all upwards of 70%) thought all activities will decrease crime rates. Redeveloping (90%) and renovating (89%) a business will increase job creation more than removal only (28%). Removal only yielded mixed results across the impacts. A plurality felt renovation (47%) and redevelopment (42%) will decrease affordability, while 48% think removal only won t change affordability. A majority of respondents (57%) thought that removal only wouldn t change diversity. Large majorities believed that renovating (84%) and redevelopment (88%) increases architectural quality. Forty-seven percent (47%) don t think removal only would change it. Redeveloping (90%) and renovating (89%) a business will increase job creation more than removal only (28%). A majority (renovating at 79% and redevelopment at 80%) and plurality (40%) believe that these activities will increase sense of community. Removal only had most uncertainty with 57% reporting they weren t sure or don t think removal only would change the sense of community. Highlights Related to Differences between Residential a Commercial Property Responses All types of commercial activity will increase home or property values more than residential activities. More respondents thought that removal only of a business (71%) over removal of a home (43%) would result in decreased crime. More respondents felt that redeveloping a business (88%) over a home (63%) would increase architectural quality. More respondents felt that redeveloping a business (80%) over a home (46%) would increase sense of community. full report 36

49 Table 8: Eff ects of R Redevelopment and R emo esidential Property Renovation, val on Neighborhood Charact eristics Answers Survey Questions 7 9: What effect do you think each activity has on its neighborhood s...? Renovating a Distressed House Increases Decreases Removing, then Replacing a Distressed House Doesn t Change Unsure Increases Decreases Removing a Distressed House and Not Replacing it with a Structure Doesn t Change Unsure Increases Decreases Doesn t Change Unsure Home or Property Values 93% 0% 6% 1% 86% 4% 7% 3% 44% 21% 23% 13% Crime Rate 1% 71% 16% 11% 3% 64% 21% 11% 9% 43% 43% 6% Job Creation 40% 0% 39% 21% 37% 0% 38% 25% 17% 8% 58% 17% Affordability 24% 51% 11% 14% 27% 57% 9% 7% 11% 16% 61% 11% Demographic Diversity 30% 26% 20% 24% 32% 27% 18% 23% 20% 8% 55% 17% Architectural Quality 80% 1% 13% 6% 63% 15% 10% 11% 18% 27% 44% 11% Sense of Community 75% 3% 18% 4% 46% 19% 20% 14% 61% 13% 18% 8% Source: Social Perceptions Community Survey. Table by the Land Policy Institute, Michigan State University, Table 9: Eff Redevelopment and R ects of C emo ommercial Property Renovation, val on Neighborhood Charact eristics Answers Survey Questions 10 12: What effect do you think each activity has on its neighborhood s...? Renovating a Distressed Business Increases Decreases Removing, then Replacing a Distressed Business Doesn t Change Unsure Increases Decreases Removing a Distressed Business and Not Replacing it with a Structure Doesn t Change Unsure Increases Decreases Doesn t Change Unsure Home or Property Values 94% 0% 5% 2% 93% 2% 3% 2% 70% 5% 15% 10% Crime Rate 3% 74% 15% 8% 3% 70% 18% 8% 3% 71% 17% 8% Job Creation 89% 0% 10% 2% 90% 0% 10% 0% 28% 7% 48% 17% Affordability 16% 47% 27% 10% 20% 42% 25% 13% 22% 8% 48% 22% Demographic Diversity 37% 13% 31% 19% 35% 8% 33% 23% 20% 0% 57% 23% Architectural Quality 84% 2% 8% 6% 88% 5% 2% 5% 25% 5% 47% 23% Sense of Community 79% 2% 15% 5% 80% 0% 10% 10% 40% 3% 37% 20% land policy institute Source: Social Perceptions Community Survey. Table by the Land Policy Institute, Michigan State University, a land bank report for

50 Residential Property Survey Responses The following section presents the before-and-after photos that survey participants responded to regarding various neighborhood and economic factors, and presents those results, along with summarized open-ended comments (see Figures 6 8). Before-and-After House Renovation BEFORE RENOVATION AFTER RENOVATION Before-and-after renovation photos 737 Madison Ave. SE in Grand Rapids by the Kent County Land Bank Authority that were part of the Social Perceptions Community Survey. Photos by the KCLBA. See Figure 6 for survey responses. Before-and-After House Removal and Replacement BEFORE REMOVAL & REPLACEMENT AFTER REMOVAL & REPLACEMENT Before-and-after removal and replacement photos of 548 Fairview Ave. NE in Grand Rapids by the Kent County Land Bank Authority that were part of the Social Perceptions Community Survey. Photos by the KCLBA. full report See Figure 7 for survey responses. Some respondents thought the project example displayed turned out beautifully, while others did not like it. Concerns were expressed about newer construction not being affordable and displacement of long-time residents. Some liked mixing renter-occupied housing with owner-occupied housing, but acknowledged concerns about parking and engagement with new neighbors at the same time. 38 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

51 Figure 6: Responses to Survey Question 7 What Effect do you Think Renovating a Distressed House has on its Neighborhood s... Home or Property Values? 93% 0% 6% 1% Crime Rate? 1% 71% 16% 11% Job Creation? 40% 0% 39% 21% Affordability? 24% 51% 11% 14% Demographic Diversity? 30% 26% 20% 24% Architectural Quality? 80% 1% 13% 6% Sense of Community? 75% 3% 18% 4% 0% 20% 40% 60% 80% 100% Percentage of Respondents Increases Decreases Doesn t Change Unsure Note: No open ended comments were offered by respondents on this question. Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, land policy institute a land bank report for

52 Figure 7: Responses to Survey Question 8 What Effect do you Think Removing and Replacing a Distressed House has on its Neighborhood s... Home or Property Values? 86% 4% 7% 3% Crime Rate? 3% 64% 21% 11% Job Creation? 37% 0% 38% 25% Affordability? 27% 57% 9% 7% Demographic Diversity? 32% 27% 18% 23% Architectural Quality? 63% 15% 10% 11% Sense of Community? 46% 19% 20% 14% 0% 20% 40% 60% 80% 100% Percentage of Respondents Increases Decreases Doesn t Change Unsure Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, full report 40 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

53 Before-and-After House Removal and No Replacement BEFORE REMOVAL AFTER REMOVAL Before-and-after removal and no replacement photos of 1152 Madison Ave. SE in Grand Rapids by the Kent County Land Bank Authority that were part of the Social Perceptions Community Survey. This property was replaced with a community garden that sells and donates produce. Photos by the KCLBA. See Figure 8 for survey responses. Some survey participants voiced frustration about how long properties sat before action was taken and about lack of code enforcement. There was about an equal amount of supporters for the concept of community gardens in neighborhoods as there were others that thought redevelopment would have been better. Commercial Property Survey Responses The following section presents the before-and-after photos that survey participants responded to regarding various commercial property neighborhood and economic factors, and presents those results, along with summarized open-ended comments (see Figures 9 11). Before-and-After Business Renovation BEFORE RENOVATION AFTER RENOVATION Before-and-after renovation photos of 1007 Fulton St. E in Grand Rapids by the Kent County Land Bank Authority that were part of the Social Perceptions Community Survey. Photos by the KCLBA. See Figure 9 for survey responses. One respondent commented that architectural quality is subjective and this was born out in the comments; however, more believed this was a positive change than not. One person expressed concern that mixed uses are not appropriate in neighborhood settings. land policy institute a land bank report for

54 Figure 8: Responses to Survey Question 9 What Effect do you Think Removing a Distressed House, and Not Replacing it with a Structure has on its Neighborhood s... Home or Property Values? 44% 21% 23% 13% Crime Rate? 9% 43% 43% 6% Job Creation? 17% 8% 58% 17% Affordability? 11% 16% 61% 11% Demographic Diversity? 20% 8% 55% 17% Architectural Quality? 18% 27% 44% 11% Sense of Community? 61% 13% 18% 8% 0% 20% 40% 60% 80% 100% Percentage of Respondents Increases Decreases Doesn t Change Unsure Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, full report 42 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

55 Lorem ipsum Figure 9: Responses to Survey Question 10 What Effect do you Think Renovating a Distressed Business has on its Neighborhood s... Home or Property Values? 94% 0% 5% 2% Crime Rate? 3% 74% 15% 8% Job Creation? 89% 0% 10% 2% Affordability? 16% 47% 27% 10% Demographic Diversity? 37% 13% 31% 19% Architectural Quality? 84% 2% 8% 6% Sense of Community? 79% 2% 15% 5% 0% 20% 40% 60% 80% 100% Percentage of Respondents Increases Decreases Doesn t Change Unsure Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, land policy institute a land bank report for

56 Before-and-After Business Removal and Replacement BEFORE REMOVAL & REPLACEMENT AFTER REMOVAL & REPLACEMENT Before-and-after removal and replacement photos of 1234 Michigan St. NE in Grand Rapids by the Kent County Land Bank Authority that were part of the Social Perceptions Community Survey. Photos by the KCLBA. See Figure 10 for survey responses. Almost all respondents reacted positively to this example. One person expressed concern about how this property was acquired, citing a less than transparent transaction, which may have disadvantaged other interested businesses. Before-and-After Business Removal and No Replacement BEFORE REMOVAL AFTER REMOVAL Before-and-after removal, and not replacing it with a structure, photos of the former foundry site in Sparta by the Kent County Land Bank Authority that were part of the Social Perceptions Community Survey. This site is now clean and ready for development. Photos by the KCLBA. See Figure 11 for survey responses. All respondents reacted positively to this example with many noting that the property would not have been cleaned up without KCLBA s help. full report 44 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

57 Figure 10: Responses to Survey Question 11 What Effect do you Think Removing, then Replacing a Distressed Business has on its Neighborhood s... Home or Property Values? 93% 2%3% 2% Crime Rate? 3% 70% 18% 8% Job Creation? 90% 0% 10% 0% Affordability? 20% 42% 25% 13% Demographic Diversity? 35% 8% 33% 23% Architectural Quality? 88% 5% 2%5% Sense of Community? 80% 0% 10% 10% 0% 20% 40% 60% 80% 100% Percentage of Respondents Increases Decreases Doesn t Change Unsure Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, THE KENT COUNTY LAND BANK AUTHORITY After seeing samples of the Kent County Land Bank s work in the before-and-after photos in the survey, the LPI then asked respondents about their general opinions of the KCLBA. Respondents were asked how familiar they were with the activities of the Kent County Land Bank Authority and 69% reported they were very or moderately familiar. A small percentage (3%) were not sure of their familiarity with the Land Bank s activities and 28% reported they were slightly unfamiliar or not familiar at all. These results are similar to results about general knowledge of land banks (see page 34). Overall, respondents viewed the Land Bank s activities favorably, with 84% stating their opinions of the KCLBA s activities as very or moderately favorable. Nearly 10% held slightly unfavorable or not favorable opinions about the Land Banks work, while another 7% remained neutral. A higher percent of survey participants viewed KCLBA favorably or neutrally than those that answered about Land Banks, in general (see page 34). When asked why they held these opinions, respondents offered the following comments, some of which have been summarized and categorized below. land policy institute a land bank report for

58 Figure 11: Responses to Survey Question 12 What Effect do you Think Removing, and Not Replacing a Distressed Business has on its Neighborhood s... Home or Property Values? 70% 5% 15% 10% Crime Rate? 3% 71% 17% 8% Job Creation? 28% 7% 48% 17% Affordability? 22% 8% 48% 22% Demographic Diversity? 20% 0% 57% 23% Architectural Quality? 25% 5% 47% 23% Sense of Community? 40% 3% 37% 20% 0% 20% 40% 60% 80% 100% Percentage of Respondents Increases Decreases Doesn t Change Unsure Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, Favorable Comments The KCLBA...: Breaks the cycle of disrepair made by investors who don t maintain properties. Reduces blight. Helps communities. Helps catalyze renovations and reconstruction of homes. full report Cleans up properties that private sector wouldn t. Returns properties to tax rolls to generate income. Improves neighborhoods. Has been creative and steadfast in its efforts to put tax reverted properties back to healthy use. Staff were responsive to neighbor concerns and complaints. 46 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

59 [The KCLBA] has been creative and steadfast in its efforts to put tax reverted properties back to healthy use. Unfavorable Comments Are the neighborhoods best interests really being kept as a priority? Or is this yet another way to get homes from homeowners who can t afford to maintain their homes? There is very real concern about the property values going so high that families with low to average incomes can no longer afford to purchase homes here. Some rehabs have sat in poor condition for two to three years waiting for renovation. The KCLBA...: Makes it difficult for a single investor to build, fix and live in a property. Gratuitously favors a select few. Cherry-picks good properties for themselves. Contributes to a loss of free enterprise. Should only be involved in properties that have roadblocks to redevelopment. Should partner much more with local nonprofits to increase and maintain affordability and diversity in neighborhoods. The KCLBA did this in the past, but has become very difficult to work with. Grand Rapids...: Has removed the opportunity for individuals to purchase properties for themselves or investors to fix up incomegenerating properties; therefore, making housing less affordable for the low income households. Loses hundreds of thousands of dollars that otherwise could be made by selling the properties on the open market. Other Comments Renovation may be preferred over redevelopment. It is important to save quality older housing and improve neighborhoods rather than promoting more suburban sprawl. All properties should be sold to owneroccupied buyers first. There are too many renters and not enough parking. This causes devaluation of property. We need affordable starter homes. The KCLBA...: Is in a position where the combination of owning property and operating as a nonprofit with essentially government funding can create lots of opportunity for corruption and misuse of power. What checks/balances are in place? Is their work mission-centered? Should ensure that their homes are affordable and that businesses employ local and minority workers/contractors. Work should never displace existing neighbors. Rather it should invite a good land policy institute a land bank report for

60 full report balance to support community growth develop affordable housing opportunities for all. and helping with the title process for these homes. Should assure that all properties disposed of have all environmental issues When asked for comments about the handling of addressed, including full remediation on distressed properties in their neighborhoods or about lead-based paint. the Kent County Land Bank Authority that had not been shared, respondents offered the following. Should engage more with community development corporations and hyper- We ve had a lot of removal of distressed local leadership in development of plans properties in our neighborhood and for properties. I m not sure how much should be maintained as greenspace and how much When asked which activities (more than one could should be redeveloped. be chosen) respondents felt were valuable uses of the Land Bank s resources, they favored residential One person doesn t think the Land Bank activity over commercial. Figure 12 displays these is needed. results. This differs from responses to the before- The Land Bank does not target a narrow and-after photos, which show many positive enough area. Doing a house here and impacts on neighborhood and economic factors. there has almost no impact. Most of the It is interesting to note that for residential activity, houses that have been improved were respondents preferred renovation, redevelopment improved by private investors. and finally removal in this order. For commercial I prefer restoration to replacement. properties, they preferred redevelopment, renovation and lastly removal, but the spread among I feel that the KCLBA offers nothing but those activities was much closer than for residential positive results. They do a fantastic job properties. and the workers are very thorough and neat. I can t say enough about how much I For this question, Other was defined by love what they do! respondents as: Affordable housing! Only properties that the marketplace won t take on itself, The organization needs more transparency in the process of how properties are sold Tax abatement market stimulation, to nonprofits, developers or homeowners. Helping build a sense of caring/ More conditions around affordability and community awareness, community benefit should be placed on Land Bank properties. Acquiring properties and brokering them to local nonprofits for them to renovate Where is the help when it comes and turn into affordable uses, and to preventing the blight, the distressed homes? Working with local nonprofits to 48 COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

61 Figure 12: Responses to Survey Question 15 Which of the Following Activities do You Feel are Valuable Uses of KCLBA s Resources? Residential Renovation of Foreclosed, Abandoned or Blighted Structures 88% Residential Redevelopment (Removal and Replacement) of Foreclosed, Abandoned or Blighted Structures 80% Residential Removal of Foreclosed, Abandoned or Blighted Structures 71% Commercial Renovation of Foreclose, Abandoned or Blighted Structures Commercial Redevelopment (Removal and Replacement) of Foreclosed, Abandoned or Blighted Structures Commercial Removal of Foreclosed, Abandoned or Blighted Structures 69% 68% 71% Other (Please Specify): 10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Percentage of Respondents Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, I find their approach to doing business I think the KCLBA is a critical tool that unsavory and embarrassing. achieves things that cannot reasonably be expected to be achieved by the private Need more rentals. sector alone. It has great potential to More owner occupied, less rentals or give communities a strategic advantage at least a better blend of neighborhood in redevelopment when local leadership landlords... so they live here too, and is engaged, and it can achieve additional care too. outcomes that are not of high interest to the private sector (such as affordable housing, lead-safe housing, community design). land policy institute a land bank report for

62 I think KCLBA is a model for other land banks and have no doubt that other communities will be coming to Kent County to see how it is done. The KCLBA team has done a great job a utilizing their unique tools to the benefit of our communities. SELECT DEMOGRAPHIC INFORMATION Of those that chose to complete the demographic questions, starting with where do you live?, 93.2% of respondents answered Grand Rapids. Grandville, Kentwood, Walker and Cannon Township each had one person complete this portion of the survey. Of those Grand Rapidians that completed this question and chose to identify with a quadrant of the City, the Northeast followed by the Southeast represented the bulk of respondents (see Figure 13). Related to the other demographic questions: The age spread I think the KCLBA was fairly evenly is a model for other distributed across land banks and have all age ranges. no doubt that other communities will be Most (93.4%) of coming to Kent County respondents own to see how it is done... their home. Sixty percent (60%) of respondents were female. The majority (60%) of respondents did not have children living with them. Of those that did, 30% had one or two children living with them, and 10% had three or more. An overwhelming majority (94.9%) of respondents identified as white/caucasian. Survey participants are a highly educated group with more than 77% indicating completion of at least a Bachelor s degree. Figure 13: Responses to Survey Question 18 If You Live in Grand Rapids, which Quarter of the City do You Identify with? Northeast 39% Northwest 15% Southeast 35% Southwest 11% full report % 5% 10% 15% 20% 25% 30% 35% 40% Percentage of Respondents Source: Social Perceptions Community Survey. Figure by the Land Policy Institute, Michigan State University, COMMUNITY IMPACT ASSESSMENT OF THE KENT COUNTY LAND BANK AUTHORITY

63 Conclusion THE RESULTS FROM BOTH THE HEDONIC PRICE ANALYSIS AND THE REGIONAL ECONOMIC IMPACT ASSESSMENT SUGGEST THAT THERE IS A SUBSTANTIAL POSITIVE IMPACT OF KENT COUNTY LAND BANK AUTHORITY ACTIVITIES WITHIN THE COUNTY S NEIGHBORHOODS. ALTHOUGH THE HOUSING MARKET IN MUCH OF KENT COUNTY IS QUITE STRONG, THE HEDONIC ANALYSIS DEMONSTRATED THAT KCLBA ACTIVITIES HAVE A STATISTICALLY SIGNIFICANT, POSITIVE IMPACT ON HOME PRICES WITHIN 500 FEET. THIS EFFECT IS ESTIMATED TO ADD $7,064.60, ON AVERAGE, TO THE PRICES OF HOMES SOLD AFTER NEARBY LAND BANK ACTIVITY. THE KCLBA S ESTIMATED ECONOMIC IMPACTS FROM AMOUNT TO $42,899,413 IN SPENDING AND 266 JOBS GENERATED WITHIN KENT COUNTY. THIS EQUATES TO $1.77 IN ECONOMIC ACTIVITY GENERATED FOR EVERY $1 SPENT BY THE LAND BANK. The results from both the hedonic price analysis and the regional economic impact assessment suggest that there is a substantial positive impact of Kent County Land Bank Authority activities within the County s neighborhoods. Although the housing market in much of Kent County is quite strong, the hedonic analysis demonstrated that KCLBA activities have a statistically significant, positive impact on home prices within 500 feet. This effect is estimated to add $7,064.60, on average, to the prices of homes sold after nearby Land Bank activity. The KCLBA s estimated economic impacts from amount to $42,899,413 in spending and 266 jobs generated within Kent County. This equates to $1.77 in regional economic activity generated for every $1 spent by the Land Bank. These quantitative effects do not necessarily capture additional qualitative effects for neighborhoods and residents. To begin to understand these impacts, a series of interviews and a social perception assessment were conducted. Those who participated in the interviews and survey generally supported the work of the Land Bank and believed that it has 138 Alger St. SE in Grand Rapids after renovation. Photos by the Kent County Land Bank Authority. created positive outcomes in neighborhoods and communities. They also suggested that there is room for more transparency and collaboration in acquiring and prioritizing projects that support affordable housing, historic preservation, and diversity goals of neighborhoods and communities. However, not everyone holds positive opinions about the KCLBA, and future success will, in part, be determined by the degree to which concerns raised by detractors are adequately addressed with effective operational changes. With a track record of strong community relationships, positive outcomes, creativity and land policy institute a land bank report for