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New Orleans sells off more tax-delinquent properties

Section: Business

Gordon Russell

New Orleans held its second online tax sale Wednesday, offering for sale properties whose owners haven't paid the taxes due on them, and representatives of the firm contracted to manage the process pronounced it a big success.

All but four of the 271 properties for sale had been sold by early evening, according to William Sossamon, chief technology officer for Strategic Alliance Partners, the company in charge of the sale.

The sale was restricted to properties in the 17 recovery zones targeted for immediate improvements by Mayor Ray Nagin's administration.

Thanks to Wednesday's sale, the city was able to collect about $896,000 in outstanding taxes, interest and penalties, Sossamon said. Roughly $46,000 -- the amount owed for the four properties that did not sell -- remains uncollected, he said.

Nearly half of the taxes and penalties collected Wednesday were attributable to a single property in the former Lake Forest Plaza shopping center, which had an outstanding liability of about $381,000, Sossamon said.

During the city's first-ever online tax sale two weeks ago, 1,944 of the 2,215 properties with delinquent taxes listed were sold, and about $4.3 million out of $6 million in unpaid taxes and penalties was collected as a result.

While officials likewise called that event a success, some people who had wanted to participate complained they were unable to do so because the Web site was unable to handle the traffic the sale generated. Others wondered why the city waited until the eve of a holiday weekend preceding the sale to announce it. Some suggested the two glitches were purposeful moves designed to limit participation and thereby benefit favored insiders.

For the second sale, the Nagin administration seemingly did little to demonstrate that it was seeking the broadest participation possible. Nagin's press office did not send out a news release about the event until Tuesday after 8 p.m. -- less than 12 hours before the sale was to begin.

Staffers in the press office did not return phone messages or e-mails Wednesday.

City officials have yet to respond to a public records request filed by The Times-Picayune asking for a list of the buyers and the properties they purchased in the November tax sale.

For its part, Sossamon said, Strategic Alliance Partners tried to fix the slowdown on the Web site that some users reported the first time around.

The company initially underestimated the number of people who would try to access the site, he said. For Wednesday's sale, the company upgraded its hardware and its software to avoid another bottleneck.

"There was a pretty good spike (in traffic) this morning, and you couldn't tell whether there was one person or a thousand people on there," Sossamon said. "It performed very nicely."

In fact, he said, 80 properties were sold in the first minute of the sale, and more than half the 271 properties for sale were snapped up within four minutes.

Overall, he said, nearly 5,500 "unique users" logged onto www.neworleanstaxsale.com, the site where the sale took place.

Tax sales provide a vehicle for public entities in Louisiana to collect property taxes that are deemed delinquent. In the past, the sales were held in the courthouse lobby in the manner of an auction. However, would-be buyers weren't able to bid against each other and thereby push the price up. Instead, the first person who indicated a willingness to pay the taxes, penalties and interest on a particular property was declared the winning bidder.

Buyers of tax-delinquent properties do not immediately own them. In most cases, the tax-delinquent owner has three years to "redeem" the property by repaying the purchaser's costs, plus a 5 percent penalty and 1 percent interest for each month that has passed since the sale.

The Nagin administration said the city is only selling properties that have tax delinquencies dating to 2005 or earlier, meaning before Katrina.

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