A $5,200 unpaid water bill let two German real-estate investors lay claim for a brief moment to a cherished piece of Baltimore real estate: the Ravens football stadium.
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The arrears landed M&T Bank Stadium in Baltimore's annual tax sale, in which bidders vie to pay a property owner's municipal debt, in return for the right to collect up to 18% interest, plus the principal from the owner. If the debt remains unpaid, the lien-holder can eventually foreclose on the property.
The stadium's water-utility debt was put up for auction by the city because its water bill was delinquent at least three quarters and it totaled more than $350 for a nonowner-occupied property.
On Monday, German-born Herbert Baeuerle of Home Trust Inc. and a colleague scored the winning bid by paying the $5,200 water bill and agreeing to pay $21 million for the 71,000-seat stadium if it reached foreclosure.
Another bidder hit a home run with a lien against Camden Yards stadium, home to the Baltimore Orioles, which the city says owes $53,000 for unpaid water.
"We already told them we will switch it to a soccer place, we will sell it to a German soccer team," Mr. Baeuerle joked in an interview on Tuesday, a day after the online auction.
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But the Maryland Stadium Authority didn't see the humor and said it didn't plan to pay a penny of interest. The state agency that is landlord for the two downtown stadiums didn't think the city could legally put a lien on state-owned property, said David Raith, its chief financial officer.
Later on Tuesday, the city's public-works department said including the football stadium and its baseball neighbor, Oriole Park at Camden Yards, on the auction list had been a mistake because the facilities are exempt from the tax-sale process.
"The properties went to tax sale due to a computer coding error," a public-works spokesman said.
"Oh, OK," said Mr. Baeuerle, after hearing the news.
In reality, he said even before the city's announcement Tuesday, Switzerland-based Tax Liens Investment AG, which owns Home Trust and buys tax liens in the U.S., wouldn't likely wind up as the stadium's owner. Though he did expect to collect at least modest interest payments.
Mr. Raith said the city never warned that either arena was headed for tax auction, which involved thousands of other properties whose owners are in the red. "It's a complete shock to me," he said earlier Tuesday, that "either one of these went to tax sale."
Mr. Raith suspects the billing confusion stemmed from the city's switch last fall from monthly to quarterly water bills.
He said despite discussions with public-works officials for the past six or seven months, he hasn't been able to get water bills from the city to pay off what the authority owes.
He said he only discovered how much the stadiums allegedly owe and their inclusion in the auction after being contacted by a Baltimore Sun reporter after the auction.
"I knew I owed money to the city for water bills, I just never received anything to pay," Mr. Raith said.
A public-works spokesman directly respond to questions about Mr. Raith's statements but said he understands that the city's Finance Department issued tax sale notifications for the stadiums. A city website says a list of properties eligible for tax sale is published twice in March and that the city mails a notice to the properties in April.
"It was very strange when we discovered the stadium was on the list, really, really, really strange," said Alexander Diener, asset manager for Tax Liens Investment, who works with Mr. Baeuerle and flew in from Germany for Monday's online auction.
Mr. Baeuerle, a permanent U.S. resident and vice president of Maryland-based Home Trust, said he typically bids on properties in Baltimore and other U.S. cities with debt between $3,000 and $10,000 and whose values exceed $300,000 -- a combination almost guaranteed to generate interest payments but not result in foreclosure.
Baltimore's tax sale system has faced criticism because low-income homeowners risk losing their homes for sometimes relatively small sums. Mr. Baeuerle said he has no interest in buying liens in such cases.
As part of their bid for the football stadium's debt, they offered to pay $21 million for M&T Bank Stadium in the unlikely event it reached foreclosure.
Mr. Raith said that would represent a "tremendous return" considering the stadium is valued by the city at over $300 million. Oriole Park at Camden Yards is assessed at $255 million.
But he still maintained that "nobody can go out and buy Camden Yards or M&T Bank Stadium on a tax-lien sale from the city."
Mr. Raith said he was pleased to hear the city agreed.
The Department of Public Works said the city will void sales of the liens on the stadiums and refund the purchasers' money. A spokesman said officials will review a list of state-owned properties and correct any errors to ensure they don't end up in a future tax sale.
(END) Dow Jones Newswires
May 16, 2017 19:18 ET (23:18 GMT)