There were two resolutions on the agenda for last night's Common Council meeting: one to sell 10-12 Warren Street; the other to sell 429-431 Warren Street.
This is the second time the City has attempted to sell the two buildings. In April, the City tried to sell the buildings in a sealed bid auction, setting as the minimum bid the value of each building as determined by an appraisal--$895,000 for 10-12 Warren, and $595,000 for 429-431 Warren. There were no bids for either property.
This time, the buildings are to be sold in a live auction with no minimum bid but a $100,000 penalty if the property is not developed or is sold within three years of taking title. Councilmember Margaret Morris (First Ward) expressed concern about there being no minimum bid, opining, "It is risky for the City." It was speculated that someone could be successful in a live auction with a low ball bid of $50,000, pay the $100,000 penalty, and have a building on Warren Street for $150,000. Council president Tom DePietro suggested language be added to indicate the City reserves the right to reject any and all bids. Crystal Peck, counsel to the Council, said she had to look into the legality of that.
DePietro said many people came to view the buildings during the auction in April but all felt the minimum bids in that auction were too high. In the end, it was decided to table the two resolutions until it was determined if the City can reject a winning bid if it deemed to be too low.
In 2019, when the City held a live auction to sell 427 Warren Street, the former police station which is now Finch, there was a minimum bid set at $300,000. That was the value of the building determined by an appraisal done four years earlier in 2015. There were two bidders vying for the building. The opening bid was the minimum, and the bids increased by $5,000 increments, until the winning bid of $435,000 was cast. It doesn't seem unreasonable to expect that an appropriate minimum bid could be determined for the two buildings the City is now trying to sell.
COPYRIGHT 2023 CAROLE OSTERINK
Just auction the buildings.
ReplyDeleteThe weird penalty rider is likely to scare off serious bidders who don't want a weird liability when they could instead use their capital to buy other properties elsewhere with more straightforward and well understood purchase terms.
Unusual terms of sale creates risk and uncertainty for buyers.
If you want to run a fair auction, you do not attach future binders to the sale. it is hard enough to make an investment here.
ReplyDeleteFirst you have to have the bidders show proof of funds, or a 10% deposit shortly thereafter the sale.
You can set a fair reserve price of $ 300,000 and see where it goes.
Low reserves and estimates actually help widen the net of bidders.
Hopefully this is not another failed sale.