What's happening? Five people submitted bids ranging from $53,000 to $90,250 for two properties in the first affordable housing auction held in Puerto Rico, which took place Thursday (June 25) at the Anfiteatro Justo Méndez Cabrera in Isabela. In a second round, conducted as a live auction, 39 participants registered and bid on two lots and three additional properties. Four of them were awarded properties, at final prices ranging from $39,000 to $95,500.
The seven auctioned properties had been declared public nuisances, meaning abandoned structures or lots that pose a risk or cause deterioration to the community. The municipality expropriated them and is now selling them through these auctions.
Why does it matter? More municipalities are turning to auctions to sell properties declared public nuisances and recover some of the money invested in that process. Isabela is estimated to have more than a thousand properties that could fall into that category. Of those, 99 have already been officially declared nuisances and 18 have been expropriated, meaning they have passed into municipal ownership and could enter future auctions.
Representatives from San Lorenzo, a municipality that has already held public auctions but wants to implement the affordable format, attended the event, as did representatives from Juana Díaz, which is among the next towns interested in starting similar processes. The municipality of Isabela receives guidance and support from the Centro para la Reconstrucción del Hábitat (CRH) for managing public nuisance properties.
After the proceedings concluded, Isabela's Junta de Subastas president, Javier Gutiérrez, told Platea that within the next six months they could hold a new round with between eight and 12 properties. "Within those properties, we will identify which ones will be affordable and which will be live-auction properties," he said.
Here is how each auction unfolded and the prices at which the properties were awarded.
Affordable auction: two properties, five bidders
Unlike the live auction, where the highest bidder in the moment wins, the affordable format requires participants to go through a pre-qualification process and the Junta de Subastas to evaluate offers at a subsequent meeting.
Pre-qualification. Orientations were held through the Oficina del Alcalde en tu Comunidad. Of those interested, more than 30 were interviewed in a process that concluded June 18. Of those, 11 qualified to participate and five showed up on auction day.
Selection priorities
Each participant was required to submit a sealed envelope containing their offer and the priority under which they were requesting to be evaluated:
Priority 1: Being a resident of the community where the property is located, a resident of Isabela, or a family member of a resident.
Priority 2: People with low or moderate incomes.
Priority 3: People with R3 Program vouchers.
The properties
Both are properties declared public nuisances and expropriated by the municipality, so they carry a clean title.
Item 1 (IS-96): Single-family property of 318.05 square meters at Lot 71, Ave. Lulio E. Saavedra Blasco, Bo. Pueblo, Isabela. Minimum value: $65,000.
Item 2 (IS-115): Single-family property of 481.78 square meters at Carr. 459 Km.14.4, Bo. Bejucos, Isabela. Minimum value: $53,000.
The bids. Proceedings began at 10:00 a.m. and lasted 18 minutes. After the required quorum of Junta de Subastas members was established, each of the five sealed envelopes containing offers and priority designations was opened.
Property IS-96 (Minimum value: $65,000). Received four offers:
Naira Tirado: $90,250 (priority 1)
Erica Soto: $81,000 (priority 1)
Némesis López: $69,500 (priority 2)
Eunice González: $65,000 (priority 1)
Property IS-115 (Minimum value: $53,000). Received four offers:
Némesis López: $60,150 (priority 2)
Christian Laureano: $54,000 (priority 1)
Eunice González: $53,000 (priority 2)
Erica Soto: $53,000 (priority 2)
What happens next?
The Junta de Subastas will notify winners by email and regular mail. They will meet Tuesday to begin the evaluation and have 60 days to make a decision. "We're going to work through it as quickly as possible," said Gutiérrez, who hopes to make the awards in July.
"That evaluation has to be done with the documents that the Oficina del Alcalde en tu Comunidad will provide us," he added.
Those selected will have 90 days to complete payment, which can be made through a mortgage loan. Gutiérrez explained that the municipality has already spoken with several mortgage lenders willing to handle these cases, given that the properties need investment to be rehabilitated.
Live auction: five properties, more than 30 bidders
The live auction was scheduled for 1:30 p.m., but interested parties began arriving at 1:00 p.m. Participants presented their identification and proof of a cashier's check (a check issued directly by a bank, guaranteeing that the funds are available) of $5,000 for each property they intended to bid on. They received a stamp and a number to identify them.
At 1:30 p.m. the line was closed, but there were so many interested parties that they were given a few additional minutes to complete the process before the auction began at 1:47 p.m. 39 participants registered, "from all parts of Puerto Rico," Gutierrez said.
How this format works
In a live auction, each property is presented with its minimum price. Interested bidders raise their number when they are willing to pay the announced price, or call out a higher price in increments of $1,000 to continue bidding. The highest offer wins.
"It was an extraordinary process, intense. We had excellent participation… All five properties sold, and at an extraordinary price."
Javier Gutiérrez, president of the Junta de Subastas de Isabela
The properties and the results
In several cases, the final price far exceeded the minimum value. Lot IS-54, for example, opened at $17,000 and was awarded at $55,000, more than triple its starting price.
IS-54: lot at calle Marina 133, barrio Pueblo, with a total area of 266.85 square meters. – Minimum value: $17,000 | Awarded for $55,000.
IS-62: lot at calle Marina 131, barrio Pueblo, with a total area of 500.04 square meters. – Minimum value: $34,500 | Awarded for $95,500.
IS-98: abandoned structure at avenida Lulio E. Saavedra 132, barrio Pueblo, with a total area of 406.74 square meters. – Minimum value: $34,500 | Awarded for $78,500.
IS-99: abandoned structure at avenida Lulio E. Saavedra 130, barrio Pueblo, with a total area of 266.65 square meters. – Minimum value: $19,500 | Awarded for $75,500.
IS-125: abandoned structure at calle Amapola 29, barrio Pueblo, with a total area of 235.69 square meters. – Minimum value: $30,000 | Awarded for $39,000
Their plans. Of the four winners, one plans to build a first home for his family on the two lots he acquired. Another couple wants to rehabilitate the house they bought for family members to live in. A third has plans to build a second home for vacationing. And another couple sees the property as a possibility for returning to Puerto Rico.
What happens now?
The winners signed their contract and submitted the $5,000 deposit, which is deducted from the total value of the property. They have 90 days to complete the remaining payment and receive the title to the property.
Once the purchase is complete, they have one year to bring the property out of its public nuisance status. That can involve anything from clearing the lot to demolishing the structure, depending on its condition.
Where does the money recovered at public nuisance auctions go?
The president of the Isabela Junta de Subastas explained that the money received at the auctions goes into the municipal budget for the purpose of continuing to fund the public nuisance elimination program.
"With them, we intend to continue covering the expenses and costs related to this process of declaring public nuisances, to keep this same process going and try to get even more people to come participate, invest in Isabela, develop Isabela, which in turn not only increases the population but also increases the municipality's revenue, and with that we can do more for the community," said Gutiérrez.
This content was translated with the assistance of Artificial Intelligence (AI).
