County rejects city bid for real estate

A request by the city of Spokane to buy two pieces of tax-foreclosed real estate arrived too late, Spokane County commissioners said Tuesday.

City officials sent a letter Monday asking to buy a house at 4917 N. Napa St. and vacant industrial land at 3508 E. Queen Ave. for the taxes that were owed when the county foreclosed on them.

Those properties and others are to be offered in a public auction at 10 a.m. Friday.

Commissioners were wrestling with the difficulty of drafting a counteroffer when they learned that city officials were notified last September that the properties were available.

“It’s too much to ask in view of how much notice they have had, and we just got that letter this morning,” Commissioner Bonnie Mager said.

Commissioners Mark Richard and Todd Mielke agreed.

State law allows governments to circumvent auctions and buy foreclosed properties for the taxes owed if the real estate is to be used for a public purpose. In this case, city officials suggested they might use the properties to offset the loss of low-income housing in the downtown area.

County commissioners wanted a more specific proposal. They noted city officials have a purely financial incentive to acquire the real estate and worried that failed negotiations with the city could keep the properties off the market for a year.

If surplus land doesn’t sell at auction, county officials may sell it any time afterward for the minimum price that was set for the auction – but only if the land was offered at auction. The county conducts its surplus land auctions once a year.

Selling the Napa Street house and the Queen Avenue industrial land to the city for taxes owed would help the city recover its costs in cleaning up the properties. But the city’s gain would be at the expense of Spokane Public Schools, the state of Washington and the county government.

The four units of government will get a share of the sale proceeds in proportion to their share of the delinquent taxes.

That means the city and Spokane Public Schools have roughly equal stakes that constitute the lion’s share of the money. The state’s portion is about half the city’s or the school district’s, and the county’s share is about half of the state’s.

County officials hope to sell the house and vacant land for more than their assessed values, which far exceed the delinquent taxes. The house is assessed at $29,100, compared with a tax bill of only $80, while the vacant land has an assessed value of $14,290 and a tax debt of $1,080.

In both cases a buyer also would have to pay cleanup-cost liens that the city filed before the properties wound up in foreclosure. The problem for the city is that it doesn’t have properly “certified” liens for much of the costs it claims.

For example, the city has valid liens for only $10,860 of the $30,760 it says is owed on the house.

On the other hand, selling the house to the city for $80 would prevent the county from recouping any of its costs in maintaining the house for two years – including about $9,000 to make sure there was no methamphetamine contamination.