Resolution Trust Corporation: Real Estate Activities in Bellevue, Washington

Published by the Government Accountability Office on 1990-11-09.

Below is a raw (and likely hideous) rendition of the original report. (PDF)


Nowrn &-I   990   -“-
                        RESOLUTION TRUST
                        Real Estate Activities
                        in Bellevue,

General Government Division



The Honorable  Rod Chandler
House of Representatives
Dear Mr.      Chandler:
On March 5, 1990, Chairman J. J. Pickle,                 Subcommittee    on
Oversight,      House Committee on Ways and Means, requested
certain    information      on Resolution     Trust Corporation        (RTC)
activities      in six geographic      areas.      This fact sheet
addresses     questions     on RTC real estate        holdings   and
property    management activities         in one of those areas--
Bellevue,     Washington,     zip codes 98004 through          98009.
Chairman Pickle        asked that we send this information
directly     to you since you represent          this area.      The five
other areas are being covered in separate                 fact sheets.
Specifically,         the Chairman asked for information    on (1)
thrifts       and real estate assets placed under RTC control;
 (2) real estate assets that have been sold and the
purchasers        of those sold for $1 million     or more; (3) the
number of real estate agents that have been qualified              or
disqualified        for RTC contracts,   and for those
disqualified,         the reasons why; and (4) the names of
managers of any high-value          real estate  properties   in the
inventory        and what they are paid.     The following  discussion
provides       this information.
The Office     of Thrift      Supervision     initially     places troubled
thrifts    under the direct        su ervision        of RTC--which     serves
as conservator1        or receiver !i --when certain        conditions,      such
as insolvency,        capital   inadequacy,       or unsafe and unsound
practices,     exist.

.lA conservator    is appointed   to, among other            things,  operate
  the thrift   as a going concern,    and preserve           and conserve
  the assets and properties     of the thrift.
2A receiver      is charged by law with the duty             of winding     up
the affairs      of a bank or savings  association.
As of June 30, 1990, RTC had resolved--sold             to new owners
or closed if no purchaser was found--two          thrifts     in
Washington     State,   neither   of which were located     in the
review area.       At this time, there are no thrifts         in
conservatorship       in the state of Washington.
We identified        one property       within  the review area that had
been sold by RTC. RTC records show that the property                        was
2.0 acres of commercially             zoned, vacant land located          at the
Northwest     corner of 140th NE and 8th Street               in Bellevue,
Washington.         The property     was last appraised         in March 1988
at $590,000.         It sold on December 1, 1989, for $480,000.
The net proceeds received             on the sale were $422,295;          the
difference      resulted     from tax credits,         commissions,    closing
fees, title       insurance,     and excise     taxes.     As of March 31,
1990, RTC's real property             inventory    listed    no other real
estate     under RTC control        in the review area.
RTC procedures       do not require         real estate        agents to
register    with it because state laws and regulations                      require
agents to work through licensed                 brokers.       However, real
estate   brokers      interested     in handling         RTC property     are
required    to register.         Brokers must certify             that their
employees or subcontractors,              including       real estate agents,
meet qualification          and integrity        requirements.         As of
August 8, 1990, 377 real estate brokers                     that wished to do
work for RTC in Bellevue            had registered         with the agency.
This figure      included      8 brokers      from within       the review area,
30 brokers with Washington State office                     addresses outside
the area, and 339 brokers            from other states.
RTC may disqualify            brokers,     or any other contractors,          on
the basis of information               provided      on the Fitness    and
Integrity       Certifications         Form that must be submitted           with
the firm's       Contractor       Registration        Request.    As of July 31,
1990, no brokers           with offices        located    in the review area
had been disqualified.               In fact,      as of that date, only 19
firms     nationwide,        of various      types,    had been disqualified
from being considered             for RTC work.         Firms may ask for a
reconsideration          of their      status at any time after         they have
been disqualified.
The fact that a firm is registered             with RTC and its name is
included      on the contractor   registry      simply enables the firm
to be considered        for RTC contracts      and receive
solicitations       for services.     Inclusion     in the registry does
not imply that the firm is qualified                to do work for RTC or
that it is an approved RTC contractor.                   RTC contracting
procedures     require     contracting     officers      to determine
qualifications       and obtain additional          ethics   certifications
from potential       contractors       each time a firm is considered
for a contract.
According to an RTC representative,    the one property that
had sold as of March 31, 1990, was vacant land not put
under a management contract    prior to its sale.
We obtained      the information         requested      by the Chairman from
various     documents we gathered and analyzed                and through
discussions      with officials         at RTC's Western Region and
Intermountain       Consolidated        Field Office.        We also gathered
data from one thrift            under RTC control.         We used RTC's
computerized       real estate       inventory      to obtain   a listing    of
assets located        in the review area using postal              zip codes
98004 through       98009 to identify          Bellevue,     Washington,
properties      under RTC control.            The inventory     contained
information      on real estate holdings              and sales as of March
31, 1990.       We did not verify          the computerized      data;
therefore,      we cannot attest         to the completeness         or accuracy
of the property         listings.
RTC has experienced          considerable     problems with its real
property     inventory      system.     It is aware that data in the
system were not always complete and accurate                 and has been
trying     to verify     the data as it updates the inventory.
Because of these data quality             problems,    RTC placed a
disclaimer      on the database magnetic          tapes and floppy   disks.
The disclaimer        stated    that
                information        contained     in the computer
     p;oiuit      is not guaranteed           and is submitted        subject
     to, without       notice,       correction,     errors,     prior    sale
     or withdrawal          from the market.         The RTC, now and
     forever,       makes no guarantee,          warranty,      or
     representation,           expressed      or implied,      as to the
     location,       quality,      kind, character,        size,
     description,        or fitness        for any use or purpose,           of
     any property         listed     and/or described        in the
     computer product."
RTC is in the process of hiring                a contractor  to develop           and
operate a completely  new system               for its automated  real
property  inventory   records.  It expects this new system to
be in place during the first    quarter of 1991. Since RTC
solicited   for a system that is currently  operational    it
does not expect the delays sometimes experienced       in systems
We did our work from April through August 1990 in
accordance with generally  accepted government auditing

Throughout the course of our work we discussed the
information    contained in this fact sheet with RTC Western
Region officials,      who agreed with the facts presented in
this document.
As agreed with the Subcommittee, no further     distribution of
this fact sheet is planned.     However, we will make copies
available to interested  parties and others upon request.
The major contributors to this product are listed   in the
appendix.  If you have any questions,  please contact me on

  Management ISSUeS
APPENDIX                                                         APPENDIX


                DIVISION, WASHINGTON,D.C.
Gaston L. Gianni, Jr., Associate    Director,   Federal Management Issues
Ronald L. King, Assistant Director,     Federal Management Issues
Stuart M. Kaufman, Senior Social Scientist
Ron Guthrie,    Evaluator-in-Charge
Alan Dominicci,    Evaluator
Nina Hammon, Evaluator


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