Dozens of commercial properties taken through foreclosure will be sold at auction instead of going through the contractor rehab program, Mayor Gary McCarthy said.
“They’re really commercial properties, multi-family residences, that don’t fit into the goal of owner-occupied property,” McCarthy said.
The city will sell 30 to 50 properties through Collar City Auctions by late April or early May, Zoning Officer Steve Strichman said. Bidders will submit proposals, with a minimum bid and specific repair work required.
The City Council will approve each sale, and buyers will pay the city while also paying a fee to Collar City Auctions for facilitating the process. The auction house is not charging the city for its services.
Meanwhile, contractors are still waiting to bid on houses they can rehab and quickly flip for a profit. That part of the project was supposed to begin last year.
It got off to a slow start, with the first few buyers purchasing buildings for themselves rather than rehabbing them to resell. But Building Inspector Eric Shilling said the first five to seven true rehabs will be put up for bid this month, and should be rehabbed quickly.
Contractors will be able to walk through those houses at an April 21 city-wide open house, Shilling said. Then they can bid on them, with the lowest bid winning the rehab project. Contractors don’t get paid until the house sells.
Shilling said rolling out the project turned out to be much more complicated than he expected. He needed to get “conceptual approval” from all levels of city government before accepting bids, he said. Otherwise, he said, contractors would get bogged down in bureaucracy.
“They’re not used to the [City Council] committee cycle and going back multiple times. They’re able to act very, very quickly,” he said. “I need conceptual approval so this thing could move at private sector speed.”
Some contractors might bid on a project because it can fit between two other projects, and would back out if the project is delayed, he said.
“Then we lose that contractor. We need to keep pace with their scheduling needs,” he said.
Now he believes contractors will be able to speed through the process, which includes bidding on a house, getting approval from the City Council and picking up the building permits needed to start work.
He’s enthusiastic about selling other property through Collar City Auctions as well. Some “distressed” residences will be auctioned off in the future, he said, adding that those houses wouldn’t work for the contractor program because the contractor wouldn’t make a profit. But a landlord willing to “put a lot of sweat equity into them” might consider it a good deal, he said.
“We came to realize as we dug deeper and deeper into this … we have to present a host of options and avenues,” he said.