Motleys Helps City of Richmond Increase Tax Revenue Through Real Estate Auctions
Richmond puts blighted properties back on the tax rolls as entrepreneurs renovate dilapidated houses
Posted: Saturday, December 17, 2016 10:00 pm
By CAROL HAZARD Richmond Times-Dispatch
Garrett Augustine picked up a small, rundown house on Q Street in Richmond’s Church Hill neighborhood for $16,500 in February at a city-sponsored auction of tax delinquent properties.
He considered bulldozing it. “Old homes like this have no insulation, no air conditioning and all the systems are out of date. This one had roof leaks and needed major structural work.”
But it was in the middle of three identical houses, one still occupied and the other empty but recently occupied.
Demolishing this house, built in 1910, and replacing it would not have fit with the historic character of the block, said Augustine, owner of Augustine Construction.
He gutted the approximate 1,000-square-foot house, spent the next eight months rebuilding it, adding modern touches including an open floor plan and granite counter tops — and recently sold it for $159,000.
“These old properties take a lot of work,” he said. “I live in Church Hill and only do projects within a mile of my house.”
Over the past five or six years, Augustine has bought about 10 houses and empty lots at auctions of city-foreclosed properties with at least two years of unpaid property taxes.
“I’m not rich, but I am making a living off it,” Augustine said.
He also is reducing the city’s long list of neglected properties, repurposing dilapidated houses — in some cases, building new — and putting them back on the tax rolls.
He is among a growing group of entrepreneurs who see opportunity as more people choose to live in Richmond or move back to the city. The city, for the same reason, is gearing up to deal more effectively with these blighted properties and bring more revenue to its coffers.
The catalyst for private investments sprung from nonprofits like the Better Housing Coalition, generally the first one into neglected areas in Church Hill and other neighborhoods — where it took on not one house at a time, but whole city blocks to develop quality, affordable housing.
Richmond faces a backlog of nearly 5,800 properties whose owners have not paid real estate taxes. The total amount of outstanding delinquent real estate taxes was $27.7 million, according to the city’s monthly finance report as of Oct. 31.
Taxes on 45 percent are more than two years delinquent, said Nick Feucht, assistant to the deputy chief administrative officer for the city’s economic development and planning office. Virginia law requires that two years of property tax payments be in arrears before a locality can initiate a tax delinquent foreclosure and eventually sell a property at auction.
The city auctioned off 22 parcels — a mixture of houses and empty lots where crumbling houses once stood — last month. The auction was conducted by SVN/Motleys.
“Everything sold,” Feucht said about the Nov. 15 auction at the Richmond Auto Auction facility, 3600 Deepwater Terminal Road.
It’s too early to say how much the city will recoup in back taxes from the auction, since the final amount of revenue will not be known until the sales are confirmed by the Richmond District Court in January.
Buyers who fail to pay for the properties within 30 days of the auction forfeit their deposits — and those properties will be offered for sale at the next auction.
Winning bidders must provide a deposit of $2,500 or 20 percent of the winning bid plus 20 percent of a buyer’s premium, whichever is greater. Motley’s charges a buyer’s premium of 10 percent of the winning bid.
To read the article in its entirety, please visit Richmond.com.