PITTSFIELD — Tax debt was for sale on Thursday, yielding $1.78 million toward city coffers in tight times.
Tax liens against 61 properties went to the highest bidder during the auction, held in Council Chambers at City Hall.
For some, like downtown developer Steve Oakes, the auction offered an opportunity to further the downtown revitalization mission. Oakes is collaborating with Jodi Tartell, who purchased a tax title on the Polish Community Club Property for $63,000, on a vision to redevelop the Linden Street property.
The club owed the city $62,900 in back taxes. Now, Oakes said, they hope to work with the club on a path forward.
"They're in a tough situation," he said of the club. "That building is a liability that exceeds their financial situation."
The city has been struggling to increase its revenue base, and so held the auction in order to recoup some of its $11 million in uncollected taxes. The auction was a recurring topic of conversation during budget season, as city officials worked to tighten the belt.
The last tax title auction was held in 2015 and yielded about $2.5 million.
Ward 4 Councilor Chris Connell sat in the audience during the auction. Connell said these auctions push people to stay current in their tax payments, and keep properties from deteriorating further before new ownership can take over.
"It's a receivable that we need to continue to be aggressive on ...," he said. "I'm just really pleased that we're finally doing this."
The city's Finance Director Matt Kerwood, too, was pleased with the results.
"I view it as a success," he said.
Revenue from the event came in three different streams, Kerwood said — $875,770 in bids during the auction, $312,089 in payment plans leading up to the auction and $587,415 from property owners who paid off their debt with the city in the weeks leading up to the auction.
Auctioneers for Strategic Auction Alliance get 5 percent of bids and taxes redeemed, amounting to $73,159.
Stephen Paulin, a principal at Strategic Auction Alliance, said municipalities don't often take advantage of these types of auctions. He said they can be quite attractive to investors — investment funds buying up city titles included Tallage Davis LLC, Tower DB VIIII Trust and Lewis Morse LLC — as they can either earn back their investment at 16 percent interest or move to acquire the property. Only rarely, he said, do bidders end up receiving the property.
A bidder on behalf of Lewis Morse LLC purchased the debt associated with Berkshire Common, a large commercial property at 2 South St. assessed at $1.85 million. That property attached to the newly named Berkshire Plaza Hotel was the most sought-after of the afternoon, with several bidders going head-to-head before more than doubling the value of the lien. The bidder bought the lien, valued at $92,000, for $197,000.
Kerwood said his team announced the auction to property owners by letter in late August. Since then, the city had earned $813,585 as property owners came to catch up on taxes and avoid seeing their titles sold off.
"For a variety of reasons people get behind on their taxes," Kerwood said. "It's our fiduciary responsibility to work to collect these taxes."
City boosters in the room saw the auction as a way to keep money moving in Pittsfield, and to rebuild the downtown.
Oakes said plans surrounding the Polish Community Club property haven't firmed up, but he hopes to reach a resolution that works for everyone.
He said the building is attractive and its proximity to Barrington Stage is attractive to the bidders.
"I hope that we can find a good use for that building," he said. "Because it's so handsome."
At this point "we're just brainstorming," he said, but the hope is to see the property redeveloped.
"It's a puzzle piece that could be part of the larger downtown picture," he said.
Amanda Drane can be contacted at email@example.com, @amandadrane on Twitter, and 413-496-6296.