CITY HALL — Officials are evaluating options for several damaged hillside properties currently owned by the city after attempts to auction two of them off last week were unsuccessful.
The city acquired five hillside properties as a result of a $12 million settlement to homeowners whose homes were damaged in a January 2005 mudslide.
The mudslide in the 1600 block of Gladys Drive came down onto Glenmore Boulevard during heavy rains, causing severe damage to several homes and forcing residents to evacuate.
Nine residents filed lawsuits against the city, alleging shoddy construction of storm gutters with inadequate capacity to handle the rains led to the damage.
Officials have planned to sell the properties in order to help fill a deficit in the city's liability insurance fund, which was hit hard by the payouts.
The city has also filed a lawsuit against American International Group, claiming the insurance company failed to cover and investigate the claims. The litigation remains ongoing.
One of the properties — a 9,260-square-foot parcel at 1338 N. Jackson St. containing a residence and detached garage damaged during the mudslide — was auctioned by the city last year for $464,000.
But when city officials attempted to sell two additional parcels — 765 Glenmore Boulevard and 1652 Gladys Drive — as a single property, they received no bids.
The minimum bid price for the properties, which both contain homes that remain yellow-tagged and have not had their damaged slopes repaired, was set at $40,000.
“We have had no bidder on this property at all,” Christina Sansone, general counsel for the Public Works Department said last week. “We have advertised on the Web. We have put out public notices.”
Now officials say they are evaluating options for the properties to bring back to the City Council for consideration.
“There are some options that staff would like to consider as to either rehabilitating the property or putting the sale price at a different figure,” Sansone said. “That all needs to be analyzed.”
City spokesman Tom Lorenz said the sale of the properties is likely affected by the protracted recession, but officials are hopeful they will eventually sell and recoup some money.
“We’re a homeowner trying to sell a property, like many people,” he said. “The caveat to it is, it is a damaged property.”