California county to auction foreclosed properties on Net

When it debuts Jan. 31, the online government auction offered by Riverside County through Yahoo will be the first of its kind in California, and possibly in the nation.

4 min read
In sunny Riverside County, tax-delinquent luxury vacation resorts with pools, golf courses and spas are as plentiful as the popular palm trees.

Yet when the county's new tax collector, Paul McDonnell, noticed that only a few bidders showed up at auctions to take advantage of the great deals on foreclosed time-shares, he set out in search of a broader audience. He found the Web.

When it debuts Jan. 31, the online government auction offered by Riverside County through Yahoo will be the first of its kind in California, and possibly in the nation.

"It'll be cheaper than renting out a conference room, and we'll be able to attract people from all over the world to bid on the time-shares," said McDonnell, who was an investment banker before becoming a government employee. He describes himself as "very much an outsider" among his colleagues and "still thinks in terms of the private sector."

When McDonnell took over as tax collector nearly two years ago, he inherited a backlog of tax-defaulted time-share property. Outside of the Lake Tahoe area, Riverside County is the top vacation spot in the state and houses the most time-shares.

A time-share is a home in which vacationers can buy the property for a length of time each year, usually one week. Sometimes, these vacationers fail to pay homeowners insurance and property taxes for the time they own the resort home. If taxes aren't paid for five years straight, the home goes into default, and the county tax collector auctions the time-share for whatever week taxes weren't paid to recoup costs.

McDonnell quickly realized that holding live auctions in his county probably would not attract out-of-town resort customers.

"Current paying owners are from the East Coast, Europe and Asia," he said, "not Riverside County."

In November, he was set to auction 23 high-end but tax-delinquent time-share units in the well-heeled Marriott Desert Springs Villa in Palm Desert. But before he could test his first online auction, all of the property owners came through with their tax payments.

"I think the message got through that we were serious about selling this stuff," he said.

Frequently criticized for its glacial pace and resistance to change, government has been slow to embrace the Net. Still, McDonnell's efforts are part of a tentative but growing trend among public agencies offering services online to expedite the frequently annoying business of dealing with bureaucracy.

Through Web site Ezgov.com, for example, residents can order personalized car plates in Alaska, pay property taxes in San Diego, and buy a fishing or hunting license for Idaho or Kansas.

NetClerk.com helps contractors navigate the permit application process for several Bay area cities, including San Jose, which processes about 40,000 permits a year. The online service saves busy contractors a trip to City Hall and a tiresome wait in a long line, said NetClerk CEO Jon Fisher.

Two years ago, Vice President Al Gore pushed for a plan called "Access to America" to bring government services into the digital age by making them more readily available to citizens through the Net. The plan laid out about 1,200 actions, such as offering student loan and community grant applications, providing Medicare information and payment capabilities for seniors, and giving businesses export assistance over the Net.

"In the next five years, we'll see a lot more of these kinds of services online," said Hamid Pouya, a Concord, Calif., building director. "Right now it's still in the infancy stages. People view government as being backwards and not wanting to do things differently. It will improve as cities get more money for technology."

Although online services are touted as an easier way to do business with local authorities, Pouya said few seem to be taking advantage of the nascent programs.

"People are apprehensive," he said. "There are only a few brave companies doing it."

As an example, Pouya said his office accepts construction blueprints online. But so far, only one person has taken advantage of the service: a man in Alabama issuing a set of prints for a Concord home. "Hopefully more people will start taking advantage of this," Pouya said.

Community leaders have been slow to jump into the high-tech frenzy in part because state and federal laws for the moment prohibit government agencies from doing certain things online. A contractor, for example, can take a building application off the Net but must deliver the document to city hall in person because it requires a wet-ink signature, said Scott Troyer, the permit center manager for the city of San Jose.

Even McDonnell's property auction plan for Riverside is drawing skepticism from other county tax collectors.

"I've never heard of such a thing," said Bill Gatt, assistant manager of the real estate division for the city and county of San Francisco. "I wouldn't recommend it. It doesn't sound foolproof. Someone could back out of the sale.

"When we sell a property, we get reimbursed the same day. We put the check in the bank and it starts collecting interest right away," he added.

Under McDonnell's plan, bidders wire money to the county's bank account within 72 hours of the sale. The three-day leeway allows international bidders time to pull together the wire.

"We're not concerned about earning interest," he said. "We just want to consummate the sale."