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St. Louis targets vacant properties through special tax auctions

From the Post-Dispatch coverage: A city overwhelmed by vacant, abandoned buildings series
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The narrow, two-family home on Wisconsin Avenue had seen better days.

What used to be the back wall was now a pile of bricks in the yard, making the interior visible to anyone strolling through the alley. Abandoned by its owner, the three-story home, resting on an otherwise intact block in the Benton Park neighborhood, had twice been condemned. It racked up complaints for being unsecured and having overgrown weeds, a collapsing exterior, rats and standing water conducive to mosquito breeding.

The owner, who had moved to Arnold, walked away from a loan held by mortgage giant Freddie Mac, which never actually foreclosed on her. Neither party intervened to preserve the home, which last had a construction permit on file in 1998. The house continued to crumble.

Even in neighborhoods with stronger real estate markets, the variable, often messy circumstances surrounding many vacant properties make returning them to productive use a challenge.

Often, the task of accelerating that process falls to the city’s problem properties unit, a section of the city counselor’s office.

“Time is of the essence,” said Matt Moak, the chief lawyer for the unit.

One of the most potent tools at Moak’s disposal is an additional sheriff’s tax sale the city added in 2004 that targets vacant properties with unaddressed code violations. Instead of waiting for the taxes to be at least three years delinquent before foreclosing and auctioning the home at a tax sale, the city forecloses on unpaid vacant building fees and other city expenses for property maintenance.

In the case of the Wisconsin duplex, Moak tracked down the owner, who wanted nothing to do with the home, which she assumed had been taken by the lender. Prosecuting for code violations would be pointless, Moak decided, so he tried to get Freddie Mac to release its deed so the home could be donated to the city’s land bank.

“Freddie Mac,” he said, “it’s like a phantom.” He called for months to try to persuade it to release its deed, which was worth more than the home.

“My assumption was that they’re a bureaucratic nightmare, and they will do nothing,” he said. “And that’s exactly what happened.”

Moak stuck the Wisconsin property in the expedited tax sale, which wipes away any liens on the home, even if it receives no bid.

At the October auction, developer Deryl Brown bought the property for $45,000. He said he planned to spend “well over $100,000” on a gut rehab of the home and then sell it. He’s already begun construction.

“We’re trying to unlock the value in these properties,” Moak said.

Though his unit has nine lawyers focusing on problem properties, the expedited sale, held each October, is essentially a two-person project run by Moak and vacant building coordinator Deborah Williams.

St. Louis auctions vacant properties

This property at 2862 Wisconsin Avenue was auctioned off in October 2015 in a special tax sale the city holds each year to target vacant properties. Photo by Walker Moskop

Williams does much of the legwork — determining whether buildings are occupied, trying to contact owners and issuing citations for vacant properties with code violations. St. Louis issues $200 fines for properties that are vacant for at least six months, and slaps on additional penalties if the fine goes unpaid.

The process isn’t meant to be punitive toward owners so much as it’s intended to get their attention, Moak said. “Deborah’s going to work with them. We’re not out to just blast them with fines” or take their property, he said.

In a lot of cases, such fines are fruitless. Many of the buildings on Williams’ radar are prime examples of the untidy purgatories in which homes have been suspended since the housing crisis.

“I’ve got about 100 of them that are still in the name of a person who’s walked away, or the bank told them to get out,” she said. But the foreclosure process was never initiated or wasn’t completed. The owner, who may have moved to a different state or can’t be found, is still technically the responsible party.

In other instances, the threat of the expedited sale gets owners moving to fix up a property, Williams said, though some simply pay the fines to keep the properties from being auctioned.

“We don’t want their money,” Moak said. “We want them to make the property productive.”

The conclusion of the process, however, is frequently hampered by a lack of demand, and exposes the deep challenge of fighting vacancy in a city with several thousand privately owned, unoccupied buildings.

For every instance in which a bidding war breaks out at the expedited sale, many other properties auctioned are situated in neighborhoods with collapsed housing markets or are too deteriorated to attract interest.

“No one bids,” Moak said. “The free market says, ‘No, I don’t think so.’” The properties are then transferred to the city’s Land Reutilization Authority, which already holds several thousand boarded properties.

In the past five years, several hundred properties have been auctioned at the October sales, and 62 were bought by a private owner. “One victory at a time,” Moak said. “To me, that’s how you make progress.”

The point isn’t to dump more properties in the land bank, he said. “LRA doesn’t want them.” But at the very least, he said, “it’s better than some dead person owning it.”

As the housing market continues to improve, Moak expects to see more encouraging results.

This past October, 18 properties were sold. Four went for well above the minimum bid, which has been uncommon at expedited sales in recent years.

The gem of the auction was a three-story brick home on Hartford Avenue, just south of Tower Grove Park. Former Alderman Jennifer Florida, who is a block captain on the street, said the owner had health issues and didn’t maintain the property, which deteriorated to a point where it wasn’t safe for him to live there.

“The chimney looked like it could blow off the roof,” she said. The owner died without a will, she said, and no family members stepped forward.

It sold at the auction for $100,000, one of the highest bids ever submitted at an expedited tax sale.

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Walker Moskop is a data specialist and reporter for the St. Louis Post-Dispatch.

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