The East Baton Rouge Redevelopment Authority has set aside up to $500,000 to purchase properties at tax sales during 2014, continuing a program that started last year.
The RDA purchases homes and land that are up for sale because the owners failed to pay their property taxes.
The properties still belong to the owners, who have three years to pay the back-taxes, penalties and interest to redeem their properties. The interest is 1 percent a month until the principle is paid.
James Andermann, the RDA’s real estate director, said last year the organization spent $424,000 and bought 34 properties at tax sales. The mortgage holders paid back the taxes on 20 properties, netting $21,000 for the RDA. If the 14 remaining properties are redeemed by the end of January, the RDA would get an additional $31,000 profit, Andermann said.
“We made some money, and some good money doing this,” said John Noland, chairman of the RDA board.
The RDA could see even bigger returns if the taxes on the properties aren’t paid in three years. The organization could take control of the properties.
“That could mean a multiplier of almost 100 times of what our original investment might be,” said Walter Monsour, president and CEO of the RDA.
Andermann and other members of the RDA staff cherry-pick the properties listed on tax sales to choose the ones that have the highest market value and the best chance of being redeemed, Monsour said. In 2013, the RDA board authorized spending up to $500,000 at tax sales.
“We didn’t spend the full amount because we didn’t see enough properties we wanted,” Monsour said.