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District Auctions Properties Acquired by Eminent Domain, Foreclosure

Valencia Mohammed | 2/3/2009, 5:11 p.m.

Over 300 people gathered at Judiciary Square on Fri., Jan. 30 to participate in the District€s first auction of €nuisance€ properties.
Thirty-one properties were initially listed to attract the potential buyers. The District hopes to raise funds for the Department of Housing and Community Development (DCHD), the agency that sponsored the auction.

Developers, real estate investors, potential first time homeowners and curious individuals from around the region participated in the event.

With two properties removed from the list, each participant surrendered a $10,000 cashier€s check for a chance to bid on 29 properties. Some participants came prepared with several certified checks.

Before the bidding started, there was much skepticism in the room. It seemed no one trusted the Department of Consumer and Regulatory Affairs (DCRA) to complete the paperwork in less than a year.

€It will be almost impossible to complete remodeling in 18 months when it seems that DCRA deliberately delays the process,€ said Italo Rodriguez, 65, a Northwest resident.However, Angelina Colon-Francis, senior public affairs officer, said DCRA is an integral partner in the venture and will ensure an expeditious process.

The properties varied from Victorian Brown stone three-story homes in some of the fast gentrifying neighborhoods to four-unit apartment buildings in poverty-stricken areas of the District. The District obtained the properties by eminent domain, owner sales and tax foreclosures. Although the properties were scattered throughout the city, according to city officials, the majority of properties were located in Columbia Heights.

The room became tense as it filled to capacity. A fire marshal closed the doors leaving hundreds of other potential bidders waiting in the building. By 2:26p.m., the gavel final hit and the bidding began. The first property up for bid was a three-story brownstone in Columbia Heights just walking distance from its new retail district.

€Okay ladies and gents, we will start the bids out of sequence for now and go straight to the property at 3004 13th Street, Northwest,€ said auctioneer Paul Cooper of Alex Cooper Auctioneers, Inc.

The auctioneer started the bid at $100,000. In less than three minutes, it sold to Scot Zimmerman of Capitol City Realtors for $380,000.

€We buy properties throughout the District, renovate them and sell it,€ he said. By the end of the day, Zimmerman purchased several pieces of prime real estate at market rate.

Sight unseen, the bidding continued with most properties starting with bids of $50,000 or more. Besides the winning bids, there were additional DCHD requirements and conditions that must be met upon the resale of the property.

The owner/developer must obtain a Certificate of Occupancy from DCRA and a Certificate of Completion from DCHD. Once these have been completed, the owner/developer can obtain a release of the €development covenant€ from DCHD which will be recorded in the D.C. land records.

There is also a post-auction hearing to inform the public of DCHD€s intent to sell the properties and comment. Additionally, the winning bidders must obtain owner€s title insurance. The amount of construction finance requirements will be made on a case-by-case basis.

George Rodgers Sr., an African American contractor, owns a real estate development company. He bid five properties successfully.

€I didn€t get exactly what I wanted but I got some property that I can make money on,€ Rodgers said.

Victor Selman, assistant director of DCHD said the next milestone is the actual purchase of the property.

€We will be waiting to see how many properties have been purchased and developed before we engage in this procedure again,€ Selman said.

The auction generated $5 million. The District has more than 200 nuisance properties remaining in its inventory. No date has been set for the remaining properties to be auctioned.