Sixteen people gather at city hall at 10 a.m. on the last Monday of September.
It's on this date every year that the city auctions off properties with long outstanding property taxes. Most people in the room are just here to watch. But Edward Cheung has come in hopes of purchasing the one property still up for auction – a commercial building at 769 Pandora Ave. – though he doesn't want to discuss his reasons.
The bidding starts at $55,200, an upset price that essentially equals the taxes, interest and penalties owing on the property.
Cheung is the first to bid, but he is promptly outdone by a city representative, who offers just $1 more.
The bids volley back and forth 36 times, following the same pattern, until the city's bid of $500,001 seals the deal.
But that's not the end of the story.
The building's owner still has one year to pay the tax owing, plus interest, to redeem the property. Case in point: on the morning of the auction, two delinquent property owners rushed in to pay their overdue bills.
Municipalities across the province are empowered to hold these auctions as a means to recoup overdue taxes.
On the surface, the sales are a deal-hunter's dream come true. But the likelihood of actually taking possession of a property at a fraction of its value is slim, since most are redeemed within the year.
Nevertheless, the purchaser at the auction still stands to profit, said city spokesperson Katie Josephson.
"Since the interest paid is higher than conventional investments, tax sales have created a lucrative short-term cash investment opportunity for some individuals," she explained.
For 2012, the interest rate is set at six per cent, paid to the successful bidder on the full amount of their investment.
"We're in a low-rate environment, so that's huge," said city finance manager, Chris Paine.
For the past few years, the city has purchased the majority of the auctioned properties. "The city has some ability to make it easier for (the previous owner) to redeem the property," Paine said. "That's what we want."
Since 2009, six properties have been auctioned. All but one have been purchased by the city, and all but one of the properties were redeemed by their owners.
City new owner of auctioned property
For the first time in 12 years, a delinquent property owner has failed to meet the final deadline to pay overdue municipal taxes.
In September 2011, an empty lot at 1012 Yates St. went for auction after its owner failed to pay property taxes for more than two years.
"The previous owners didn't feel it was worth redeeming," Paine said.
Nobody bid on the problematic property, which is subject to a provincial order to remediate soil contamination. That makes the city the default purchaser, at a cost of $62,000.
On Sept. 26, the city officially took possession of the property, which once housed a dry-cleaning business.
Did you know?
• Properties are subject to tax sale that have outstanding property taxes from two years prior to the current year
• The starting bid at a tax-sale auction is the sum of all the property taxes outstanding, penalties and interest and a fine of five per cent of that amount, plus applicable Land Title Act fees.