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Posted on: May 9, 2018

Salvage auction added to buyout process

The Minot City Council gave final approval at its May 7 meeting to the first auction of its kind under a new policy that will create a salvage contents auction for structures earmarked for demolition after being acquired through the flood mitigation buyout program.

The goal of this program is to generate additional funds for use by the City in support of the flood mitigation efforts being funded through the city’s HUD Community Development Block Grant National Disaster Resilience grant. Funds generated by sales of structures and through this new salvage initiative offset potential city funds from its tax revenues that otherwise could be needed. To date starting in 2017, the city has generated almost $350,000 in revenue from auction sales of structures to offset city costs for the flood mitigation efforts.

HUD rules encourage this type of initiative and require that all funds generated must be used for flood mitigation measures.

Chris Owen, federal compliance officer for the City of Minot, said the new policy adds a step to the process of clearing the properties for flood control measures to allow removable items in structures, primarily homes, which are slated for demolition in the buyout zones to be salvaged through auction purchases.

“It’s an all-inclusive bid, meaning the winning bidder, if there is one, purchases the rights to the advertised contents of the entire structure,” Owen said. “Then they’ll have 30 days to remove what they want before the remaining structure moves into the demolition phase.”

The old system was set up in this manner:

  • The City purchases a structure
  • A review by a team led by city staff assesses whether a structure can be auctioned for relocation or is unstable and requires demolition
  • The structure is put up for auction to be moved if determined to be stable
  • If the structure is sold, the buyer is responsible to move it to a new location and the City demos the remaining basement or foundation
  • If the structure doesn’t sell, the City demos the entire structure with no salvage of reusable items such as refrigerators, stoves, etc.

The new policy:

  • The City purchases a structure
  • A review by a team led by city staff assesses whether a structure can be auctioned for relocation or is unstable and requires demolition
  • The structure is put up for auction to be moved if determined to be stable
  • If the structure is sold, the buyer is responsible to move it to a new location and the City demos the remaining basement or foundation
  • Structures determined to not be stable enough to be relocated then undergo a second assessment by the team led by city staff to determine if there are sufficient items within the home which can be auctioned as salvage
  • If the structure doesn’t sell after four separate bid opportunities, it goes into the demolition category subject to a second team assessment to determine if eligible for the salvage auction program
  • Sealed bids are taken on the contents of homes earmarked for demolition, which could include cabinets, fixtures, appliances and other items
  • The winning bidder would have 30 days to remove the contents
  • The City demolishes the remaining structure along with any basement or foundation

The City’s current process for structure auctions remains the same. Homes and commercial structures are auctioned using a minimum bid based on a percentage of tax assessed value. Garages and sheds have no minimum bid prices. Once a structure is determined not to have any sale interest, it enters the demolition category for review for the salvage auction phase.

Owen said the salvage auctions will be advertised in The Minot Daily News, and there will be an open house for each structure before sealed bids are accepted.

“There may be bidders who want to salvage specific items from a structure after they walk through the open house, like a furnace, water heater, or kitchen cabinets,” Owen said. “Under this program, those items can be removed and repurposed before the structure is demolished, which ultimately is a win-win situation because the items are still useful and fewer things end up in our landfill.”

 Owen said the new program is expected to begin at the end of May. Structure auctions will be conducted on separate days from salvage auctions

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