Government auctions: Towns Put Their Surplus on the Block
By C. J. HUGHES Published: July 20, 2008 found at nytimes.com
Kirk C ondyles
BETHPAGE, N.Y. KICKING THE TIRES
Most of the vehicles had been seized in arrests for drunken driving.
A TIP-OFF that the used cars for sale on a recent June morning here
were not the typical variety came from the location: a lot ringed by
barbed wire, on a dead-end street.
Up close, too, were clues, like “7th DWI” scrawled on one car’s
window. Indeed, most of the 57 vehicles assembled for the Nassau County
Police auction, run by Auctions International, had been seized in
drunken-driving arrests. These included some cars with shattered windows.
“But that’s not my concern,” said Alex Greene, a musician from
Merrick, as he nosed under the hood of a dark blue 1986 BMW, which,
ultimately, he did not buy. “I’m just trying to find something
reasonably priced.” find government
There have been more such opportunities of late, as towns, cities and
counties around the metropolitan area have stepped up their efforts to
unload surplus goods, including lawn mowers, metal safes, garbage trucks,
lost luggage, even land.
That these oversize tag sales can raise substantial funds is an
immediate benefit, municipal leaders say, and one that is especially
important in a stressed economy, as taxpayers put more pressure on their
elected officials to be frugal.
At the Nassau auction, for example, the police and the district
attorney’s office will split about 70 percent of the money — a haul of
$101,000 — with the rest going to the state, assuming no victims need to
be compensated first.
But a bigger upside may be improved bond ratings. Over the last three
decades, which roughly coincide with the time span for the growth in
government auctions, municipalities have increasingly turned to bond
issues to underwrite projects, according to public finance experts.
Thirty years ago, municipal bond sales accounted for a fifth of the
national bond market; now, they make up half, said Ehsan Nikbakht, a
finance professor at Hofstra University.
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As a result, municipalities are under the scrutiny of bond-rating agencies.
Demonstrating that municipalities can wring value out of, say, used police
cars, and are mindful of the bottom line, Dr. Nikbakht said, can enhance their
“By showing that they don’t keep a lot of junk in their backyard, their
ratings will get better and better,” he said.
Auctions may be the most efficient way to clean out the garage, said Jim
Potyra, a supervisor at the Connecticut Department of Administrative Services,
which handles mostly state-owned surplus goods. Prison lathes, handbags lost
at Bradley International Airport near Hartford, and police cars, which often
end up as New York City taxicabs, are common items, he said. The auctions,
held six times a year, raise up to $1 million combined, he said, which is
divided between state agencies and Connecticut’s general fund.
Until 1996, the agency put a price tag on most surplus items and sold them
out of a warehouse in Wethersfield, “but we were never sure if we were
getting the best value,” Mr. Potyra said.
But all auctions may not be created equally. For years, Westchester County
requested that used-furniture dealers submit sealed bids for its unwanted desk
chairs, for example, but received few takers, said James Ferrara, a purchasing
agent. Westchester wound up losing money, as the cost to dispose of the chairs
was usually more than their value.
In 2004, Mr. Ferrara turned to eBay, which allowed the county to rake in
$93,000 in 2007 for furniture and other surplus goods, he said.
Westchester-owned backhoes and tractors, though, are still sold at a White
Plains garage through live auctions twice a year; last year, 60 vehicles
brought in $300,000, he said.
Nationally, online auctions account for about 10 percent of government
surplus sales, but that number is growing, said Craig Robbins, marketing
director at Buffalo-based Auctions International, whose clients include Nassau
County, Scarsdale, N.Y., and Stamford, Conn.
“I used to take winters off,” but now there are too many online
auctions, Mr. Robbins said. He said that online auctions cost less to operate,
adding that “some items are hard to sell at live auctions, like a pile of
Outsourcing sales to a Web-based business or another third party is not
preferable when it comes to land, however, said Brian Williams, an
administrator in Bridgeport, Conn. The city recently revised the way it sells
Decades ago, outside brokers would market properties one at a time on a
multiple listings service, and buyers had to get necessary permits before
closings, which could take months, Mr. Williams said. Only three properties
would trade hands in a year, he said.
Since 2005, though, the city has taken over the process and secures all
necessary planning board approvals before selling the land in one fell swoop.
In the last three years, an average of 30 properties have sold annually, he
said, for a total of $6 million. It might have taken a decade to take in that
much before, Mr. Williams said. “And we are getting nonperforming assets back
to work,” he added.
Before December 2007, there had been no official land-bidding process in
Newark, where many impoverished residents, as in Bridgeport, are prone to
default on city bills, said Stefan Pryor, the deputy mayor for economic
development. He also said there had been a huge inventory of abandoned property.
To turn it over, the city created a three-tiered sale system. For large
properties, like a 50-acre parcel at the Broad Street railroad station,
developers submit proposals by a certain date, and, in this case, 10 had done so
by the May deadline, Mr. Pryor said.
At a separate winter auction, which took place over a month, 104 parcels,
each about an acre and priced from $2 to $18 per square foot, received 90 bids,
though most were for blocks of parcels, Mr. Pryor said. The bids, which he said
could bring in $2 million, await Municipal Council approval.
Hundreds of undersize lots that cannot support buildings but could make
decent yards for existing homes will go on the auction block soon, he said, with
40 listings likely by the fall. All proceeds will be funneled to a special city
real estate fund to be used to buy, say, waterfront property in Newark’s port,
Mr. Pryor said.
“Bringing more revenue into the city is a key objective,” Mr. Pryor said.
Every September, Long Beach holds an annual sale at City Hall, with abandoned
bicycles lined up outside, and copy machines, computers and printers on display
in a room upstairs, said Marianne O’Toole, a city purchasing agent.
Though $1,500 is taken in, a larger public relations purpose might be served.
“Taxpayers want to know you’re not just throwing things away when you no
longer need them,” Ms. O’Toole said. “You’re also showing there’s no
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