Dear PoPville – DC GOV owned properties?

“Dear PoPville,

What should DC do with houses that it “owns” due to vacancy or tax issues?

I have an interesting example of one way the DC gov has tried to solve this issue. I think that if the DC gov works on this they have the opportunity to be a flexible and agile, expediter of state owned properties while creating revenue and eliminating blight.

I have attached a picture of 514 3rd St NE from January 2009 when the DC gov was going to auction it off along with other properties. I was interested in bidding on the place and then the day of the auction the property was not put up for sale.

Per property records the home has been owned by the DC government since June 2006.

I contacted the DC GOV back in 2009 and here is what I learned….

“The District reserves the right to remove any of the auction properties from the auction prior to the event, and 514 3rd ST, NE has been removed from the auction. The property will be included in an upcoming turnkey development solicitation, whereby DHCD will coordinate with the Office of Contracting and Procurement to contract directly with a construction company or a fee developer to rehabilitate the structure. The rehabilitated structure will then be offered for sale, below market rate, to affordable households. The anticipated issuance of the OCP solicitation should be by the second week of February.

Thank you,

Martine Combal
Property Acquisition
and Disposition Division (PADD)
Department of Housing
and Community Development”

Fast forward several years and the house is back on the market in a ‘rehabbed” state, paid for by the DC gov.

The “affordable house rule” no longer applies. The only major stipulation is that you must use it as your primary residence for 5 years.

While I like that DC has put the house back into working order I would suggest that DC can improve on this process in several ways.

First, the government held onto the property for almost 5 years. That is far too long.

Second, the renovation is on the low end based on the REDFIN pics and only 1.5 baths for a 3 bedroom house which means the GOV will lose potential income ($300,000,000 budget shortfall I am looking at you).

Nicely rehabbed houses in this area go for at least $100,000 more than they are asking for this place.

So what do your readers think should have been done with this and other DC GOV owned properties?

Overall, I think the DC gov tried to do something interesting with this house and I am happy to see the house finally moving back onto the open market and making the neighborhood nicer.”

51 Comment

  • DC gov should not be in the business of low-income housing with these homes. Sell them as quickly as possible at auction to the highest bidder. Put it to productive use as quickly as possible!

    We are at a point where people will buy and rehab properties literally anywhere in the city since there is money to be had doing so, even if it’s in Barry Farms and they’re renovating to rent to Section 8.

    • +1

      DC should unload these places at market rate ASAP and focus on getting the slumlords and derelict owners to clean up their messes.

    • ah


      If DC wants to address low-income housing, then stipulate something to that effect in the sales contract to the developer. But the city definitely should *not* be doing the development themselves.

      Better though to take the money from the sale and put it towards other low income housing projects that are underfunded.

  • Clearly government is not set up to be in the house flipping/investment business and nor should it. Not only does it not perform this function well, it interferes with the market.

    If the government finds itself owning a property, it should immediately put it on the market for sale based on fair market value. If it takes more than 12 months to sell, an auction will be held and it will go to the highest bidder.

    There are SOOOO many things that the DC government is and should be responsible for that they do not do well (protection, infrastructure, etc). They need to focus on better serving DC residents and visitors with these core services long before they begin trying to make a profit off foreclosed properties.

  • Agree with all of the above. The DC government is (a) slow and (b) bad at rehabbing. Then, when they sell the poorly rehabbed row houses at below market as affordable/low income housing, it affects the comps and property values of all the neighbors. Not to mention when they do stupid things like build a monstrosity of a wheelchair lift on the front of a home in a historic district and give it to a family that can’t even use the lift.

  • DC government isn’t in the business of rehabbing properties, it’s in the business of handouts to politically connected small developers.

    Someone find out who the developer was and who he contributed money to.

    • Yeah, based on my interactions with the DC government I’d guess this is likely what is going on. Some builder with friends in whatever agency oversees property rehab got a sweetheart deal to renovate the property.

      While it looks like a pretty decent renovation, it’s not something the DC government should be doing. The house should have been sold long ago at whatever price somebody was willing to pay for it.

    • +1. I wouldn’t be the slightest bit surprised to discover this is what has happened here. But as usual, the responsible parties will get away with it once again.

    • +1,000

      Does anyone know how to figure out who the developer was?

      I know zoning records are online. But are building permits?

      • I don’t know who the developer was, but all the permits were taken out by “Clifford Dixon.”

        • Hmmm….a google search revels that he gets a TON of building permits. Maybe he’s just a busy developer and there is nothing to see here.

          • yeah and maybe all of vince gray’s hires really are legit.

          • Or, more likely a permit expediter. He seems to be the person pulling the permits that are in a bunch of other people / entities names.

          • He’s definitely not a developer, because he pulled the first permit for my house (to my surprise) and the first contractor I had got the permit through him somehow…It was also the wrong permit.

  • perhaps government-owned houses sit on the market so long because the DC government is unable to acquire its own construction permits in a timely manner – that’s the kind of dysfunction I have observed firsthand…

  • As long as this city remains a one party city, daily manifestations of a banana republic are inevitable.
    sorry…no checks and ballances=no efficient government. and DC is a case study in this.

    • ah

      I’m no fan of DC government, but it’s not like our current situation of split government in Congress, with the “checks and balances” of the President has done wonders for the productive output of the U.S. government either.

    • A Banana Republic? Like Guatemala in 1954?

      I don’t recall the District government being overthrown and replaced by a CIA puppet regime…

  • but when politicians know that the majority will always vote for one party,it makes it no different than Chausescu’s Romania.
    and as efficient.

  • I will agree, that holding on to a property for 5 years is too long, but then again that happens so rarely I doubt it qualifies as a problem. 99.9% of all property the District takes ownership of is auctioned off within the legally permitted time.

    I’m not quite sure how the District lost money. On the contrary, it looked like the District just made a mint.

    The city picked up a house free of charge because someone was 3 years behind on their property tax. Debt to the city so far, ~$6K dollars.

    City, for some reason decided to rehab this one. I don’t know why, don’t care, but they did.

    Worst recession in 70 years, DC runs half a billion dollar yearly deficits, and the project sits for a couple more years. Regretable, but not unexpected. House sits for ~4 years, DC loses another ~8K in property tax.

    DC renovates house… OP thinks its a low end renovation, but considering the house was off the market in a week and it only sold for about $50 bucks a sq/ft less than the standard mkt comps, AND its english basement isn’t finished, just roughed in, I’d say the renovation quality was in line with that of the rest of the comparable real estate.

    DC probably spent more for the renovation just because of the extra time and people, and “juicy” contracts involved. Lets say they spent a whopping $250K renovating the place.

    Then that had to pay sellers agents etc a commission on the ~650K sale ($19,500).

    So in total, the city spent (or lost via uncollected property tax) a total of $~285,000 on this property and just sold it in a week for ~650K. Profit to the District, ~$360K.

    The city actually increased the value of the property substntailly by digging out two entrances for the english basement (that again, isn’t finished) that didn’t exist before.

    It kinda sound like the OP is just upset that he/she didn’t get the opportunity to make the killing that the District did.

    • I did not want to make a killing, I wanted to make a home. I like the Hill and this was an opportunity that I may have been able to afford.

      Also, I know the DC government can be corrupt and I was curious to see why one of the best properties was pulled from the auction without any explanation.

      Finally, that 360k profit you mentioned, could have easily been made at the auction, thus 2 years earlier.

      • OP,

        Fine, you wanted to make a home. I am sorry if I offended your noble pursuit.

        And lets just be honest, as someone who has bought a few houses at auction here in the District, none of them go for anywhere close to market value, especially ones that need a lot of work. Thats the whole draw of buying auctioned properties. They typically go for a range of 20 to 40 cents on the dollar of assesed value depending on condition, not even market value. The house in 2006, in its condition wouldn’t have fetched anymore that 175-200K, and that would have been extremely doubtful.

        Honestly now, were you going to bid 360K for the place? I think its highly unlikely.

        I am sorry you didn’t get your house, but the City (i.e the taxpayer) made out like a bandit and as an enormous critic of the District government, I have to give the city credit where it is due.

        Your entire critque consisted of 3 issues. It took too long (I agreed), the city lost money (clearly not the case) and it sold for less than market value (again, as I illustrated above, is clearly not the case either).

        If there is a problem with DC’s disposition of the .1% of the homes it rehabs itself (the entire point of your post), then this was not a good example of it.

        • Go back and look at the auction results. POP posted them. Several homes sold for close to or over 400,000. The auction was open to the public and most homes sold close to fair market value.

          • Did they have clean title, is that why it was withdrawn? Tax delinquencies still need to have title issues resolved prior to disposition, and the court process can take years.

            Was the sales price set a few years ago, when the market stalled? Probably. So, it may not match today’s market, but it was market price when the disposition was agreed to.

            And, the developer typically finances rehab.

            You don’t have enough info on this case, frankly. And, I agree with Joker, you’re quibbling over minor details, without all the facts.

    • The failure in your logic is that you assume DC paid a reasonable (or even high) amount for the renovation ($250K).

      Knowing DC from interacting with it pretty regularly makes me doubt anybody actually used common sense to pay for the renovation. I’d say it’s just as likely the city paid $600K for the renovation and barely broke even.

      Before you accuse me of jumping to conclusions think about all the corruption stories that make the paper (e.g., a $300K HIV/AIDS grant being used to renovate a strip club, city tax employees embezzling $55M, the city council chairman ordering 2 pimped out SUVs) and then imagine all the less scandalous stuff that never gets reported.

  • little know it all joker.

    • Unlike a lot of posters, Joker typically provides information based on real experiences, instead of typical idealist PoP post regarding whatever the topic may be. The OP felt like he was unjustly denied a shot at a properly, and clearly looking for a sympathetic post like “That sucks! DC should not be in the property rehab business! Bad bad bad!”, which a few people have posted. Joker took each point and either agreed or disagreed, and provided reasons why. Which response is more constructive?

      • I agree. joker took hours out of his busy day to research the property in question, because he wanted to help the original poster as much as possible. And he has years of house flipping experience in DC, which qualifies him as someone knowledgeable on the subject.

        • Not hours, minutes and all the information was gleaned from the listing info, which was provided.

          It is pretty obvious from posts like these, the good deal or not posts etc, that folks just don’t actually read the post or look at the info before posting. It’s a bunch of pointless subjective knee jerking.

          For example, no one here bothered to read the listing info to glean that:

          1. It sold in a week

          2. The price was reflective of an unfinsihed basement

          3. The city dug out another basement entrance, increasing the value of the property by allowing for a C of O for a legal rentable basement,

          4. Actual comp prices versus hyperbole. Simply saying “shoulda sold for 100K more” without knowing why it should have, or didn’t is again, par for the course here.

          And yes, I’ve bought 15 and sold 13 homes in the District in the nearly 3 decades I’ve been here, condo’d 3 of them so I will take my knowledge in local construction costing, process, zoning, design, permitting etc over the average pop poster.

          • The city did none of this. The city hired a developer to do this with no information about who/how to bid. The developer likely padded the expenses and soaked the city, delivering (in the eyes of the OP) a substandard product.

            Anyone who’s done any RE speculation in this city would know that a english basement dig out would add at least $200k to the value of the property, because that would be the relative rental value.

      • Yeah, but he’s wrong as often as he’s right. He just sounds authoritative.

      • I was not looking for a DC Sucks comment – Please note, “Overall, I think the DC gov tried to do something interesting with this house and I am happy to see the house finally moving back onto the open market and making the neighborhood nicer.” I was curious to hear what people thought about the situation and that is what POP is great for.

  • Was’t there some sort of homestead program for derelict properties owned by the city? Properties would be auctioned off to a pre-qualifed pool of people – ideally workforce income level – teachers, firefighters etc. -then the govt. would insure them construction loans/mortgate at market rate interest.

    • I remember that too. I wonder if it is still in effect. Doubtful.

    • In my two years’ experience with that homestead program (not much, I realize) in the late 1990s(?), the “best” houses were also removed from auction or granted to hand-picked recipients prior to the auction. It seemed poorly run and a bit of a joke, frankly. Maybe others had good experiences but I don’t know anyone who did.

      I think the program went on hiatus for a while, and I don’t know if it ever started up again.

      • Yea, that sounds like DC in the 90’s.

        Now, instead of houses, it’s just straight up funding, graft and HIV/AIDS strip clubs.

        So much has changed. I think I preferred the grift back then.

  • bfinpetworth

    I don’t understand the whole tax sale process in this city. I have an abandoned blighted property next to me, the owner owes $40k in taxes, and nothing is happening. I know of several developers who have contacted the owner to make an offer but he is whacked and seems to just want to sit on the property. Any insight into the process would be appreciated.

    • You must live in my neighborhood. I’ve called the city several times on a few of the places, and I get a different story each time. “We sent out an inspection team last month. Oh… no we didn’t. We’re going to. Um, which property are you asking about? It’s being taken care of…”

  • Didn’t DC do a raffle for houses way back (10 years? 12 years ago?) – DC residents could buy a lottery ticket for one of the houses owned by DC. Am I just making that up in my memory? Maybe I’ve seen Spitfire Grill too many times, but I think that would be an easy way for the city to unload houses and make a pretty penny.

    • No, you’re not making that up. In the 1990s, DC was sitting on a ton of properties that had been condemned or subject to tax lien, etc., and they were sitting in neighborhoods that, at the time, were not particularly appealing places to live. I don’t know the exact numbers, but to “seed” neighborhoods, the District actually ran a lottery and gave away homes in what now are very desirable neighborhoods. If you won the lottery, you won the house. In most cases, they were wrecked shells, but still … a promise to renovate the property using local contractors and live in the house for at least 5 years got you a free house. (BTW, the tax sale records on these things are a sight … one sale at like $250, the next at $600,000+.)

      They also had other programs, like Scattered Sites, that were aimed at putting derelict housing stock owned by the District back into productive use.

      • Most of the people who “won” didn’t have the first clue how to rehab or bid out a rehab. Thus nothing was gained and the properties remained blighted.

        • I have no idea how true that is. There are two lottery properties on my street, however. One was beautifully redone by the owner — both inside and out. I never saw the interior of the other (I know it had at least one unfinished upper level 10 years after the fact), but the exterior was very nice (like “nicest exterior on the block”-nice), as were the homeowners. I therefore would say, in my limited experience with these properties, that the winners actually lived up to the expectations of the program and on my block it achieved its goals.

  • I like this blog, but it seems to be only half-heartedly maintained.

  • Joker – always the smartass….

    First off, if you think the developer/contractor did this construction for just 250K, then you obviously haven’t lived in this city long enough to realize that’s total BS. You also missed a few things in your calculations – namely taxes. By not having this property in use, the city lost about 60K in lost opportunity costs just from property taxes. Then there’s permit fees and the like which would be additional K’s (based on DCRA’s perceived cost of the renovation). These things add up. They add up enough to make your overly simplistic scenario not so rosey for the taxpayer anymore.

    Second, the developer/contractor doing this job is clearly not the most seasoned of them all considering it took him this long to get permits on something that should be an easy walk-through (particularly given the owner is the District of Fucking Columbia). When a building does not change use (ie. stays a single fam house, and there are no zoning/structural changes, the permit set can almost always be walked through (unless, of course the drawings were scribbled on a used McDonalds napkin)

    Building permits for this particular project are online:

    Lastly, would love to find out when you, “as someone who’s bought a few houses in an auction,” last went to a housing auction in the Distict? Times have changed a lot from the days when the city was literally giving houses away.

  • I like this blog, but it seems to be only half-heartedly maintained. It looks like some DCRA people actually responded to some of the postings.

    dcvacantproperties.blogspot . com

  • If it takes more than 12 months to sell, an auction will be held and it will go to the highest bidder.

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