Appraisals for Old Hospital Place Value at $1.5 Million as County Moves Toward Acquisition
FlaglerLive | July 25, 2013
Last Updated: Friday, 2:15 p.m., with Administrator Coffey’s comments.
Two independent appraisers have placed the market value of the old 81-bed Memorial Hospital in Bunnell at $1.5 million, and an engineering firm that surveyed the hulking 60,000 square-foot property found no overt issues with the building aside from asbestos.
The Flagler County Commission called for the appraisals and engineering reports after approving a $1.23 million option to buy the property, which has been vacant since it stopped being used as a hospital in 2003. Two commissioners voted against the option, which is controversial because of the cost of the building and its condition, and the appearance that the county was providing a sweetheart deal for the building’s owners, who have been unable to unload the property through difficult economic times.
The hospital belongs to a consortium that has changed its name once, and changed some, but not all, of its owners: Mike Chiumento, the Palm Coast attorney, has owned the building since 2003, when it acquired it for $750,000. Other current owners are Bruce Page, the banker, and James Newslow of Ormond Beach.
The appraisals were conducted by Hamilton and Jacobs of Port Orange, and by Cooksey and Associates of Ormond Beach. They are based on the former hospital as a “shell” building, and the assumption that “no further interior or exterior demolition work is required,” as one of the appraisals states. “We understand that this is the basis for the current purchase negotiations.” The assumption is virtually untenable, based on the commissioners’ own walk-through of the property, the administration’s estimate of needed—and rigorous—site work, and the engineers’ assessments.Still, the reports’ conclusions buttress the case of the county administration, which put the purchase deal together and pushed hard for approval. The administration is looking to move the Flagler County Sheriff’s Office to the old hospital, where the sheriff would occupy about 23,000 square feet of the building after significant repairs, bringing the total cost of the acquisition and repairs to at least $5 million. That money would cover repairs only for the 23,000 square feet portion of the building. More money would be needed for the rest of the building.
Cooksey gave a market value of $1.5 million, while Hamilton placed the value at $1.49 million, an essentially insignificant difference.
Those appraisals were conducted without the information provided by the engineering reports, which would most likely lower the value of the building.
Craig Coffey, the county administrator, said deadlines made it impracticable to turn the engineering analysis over to appraisers and ask for renewed appraisals, which cost around $5,000 each. “They put caveats in the appraisals to accommodate for that,” he said Friday.
Analyses of the building also revealed that the roof must be replaced at a cost of about $368,000.
The property’s certified assessed value in 2012 was $353,952. That figure nearly doubled for 2013, when it was published on the property appraiser’s website not long after discussions about the county’s acquisition of the building became public. That value is currently listed as $661,453, an 87 percent increase over the previous year and the highest value since 2009.
The Flagler County Commission will be evaluating the appraisals and the reports at an Aug. 1 meeting. Cooksey conveyed its appraisal to the county administration on July 2, Hamilton and Jacobs on July 5, and the engineering consultants on July 17. When FlaglerLive requested the appraisals on July 9, and again on July 11, a county spokesman replied on the 11th that the appraisals were not in yet.
At one point, the administration had been appraised of the documents and their conclusions, but asked that the documents in printed form not be turned in yet, according to people familiar with the exchanges.
On Friday, Coffey said he will possibly have a recommendation to the commission when the commission meets to decide its next move next Thursday (Aug. 1). But the hospital option is far from the only one. Coffey said he is preparing an analysis that will list six options, one of which includes tearing down the hospital building and constructing anew.
But commissioners will have to decide on Aug. 1 whether they want to proceed with buying the hospital. “I will ask them if they want to rule the hospital out or to rule it in,” Coffey said, because of the expiration of the buying option. The option can be renewed, however, by agreement between all the parties, essentially lengthening the time for the commission to make up its mind.
Coffey is not yet ready to make a recommendation, but he said “it’s going to be very close on a few things,” as the commission will have to make its decision with the future of the county in mind, when the population will have doubled, and sheriff’s operations will be more extensive.
Jacksonville-based Universal Engineering Sciences Inc. was hired to provide an analysis of any presence of asbestos, lead-based paints, visual mold and hazardous materials in the old hospital building. The firm also analyzed the presence of asbestos in the smaller, 4,500-square foot community services building on the property
Asbestos was originally surveyed and found in 2000 and asbestos-removal conducted in 2006. Based on 10 samples collected from each of the two buildings after walk-throughs in early July, asbestos was found in each. The samples were collected “from readily accessible and representative materials” considered suspect for asbestos.
The county unofficially knew that the building still contained asbestos, and its presence is not threatening “unless disturbed,” according to the engineering report. But the extent of its presence may be more of a concern, as its removal is expensive and raises further questions about the viability of the structure itself as a salvageable hulk. The engineering firm did not collect samples from fire-rated doors but assumes those contain asbestos, as do other areas not samples. The county was planning to remove those anyway.
No lead paint, was observed, nor were hazardous materials. But mold is a problem “throughout the structure,” the report states, “mainly on the interior of the building exterior walls” and in concentrations “around penetrations to the exterior of the building.” The exterior insulation is damaged “and potentially cause mold related issues.” Mold was not observed in the smaller building. But that building is not currently part of the county’s calculations for the sheriff’s office.
“It must be emphasized that it was not possible to observe all areas within the building(s) and that unreported asbestos and lead may be present within the machinery, wall voids or other areas not accessed by our field personnel,” the engineering report cautions. “The scope of this survey was not intended tio provide the detailed information generally necessary to appropriately determine the scope of work for a particular abatement operation.”
The same firm provided an environmental assessment of the property.
An oil spill occurred on the 7-acre property in 1989 and was remediated. Some 23 monitoring and recovery wells dating back to the oil spills are on the property, but have been abandoned. The engineers found no “obvious surface discharge” of hazardous waste. They found 13 leaky underground storage tanks within a periphery that extends more broadly than the property itself—as required by standard surveys of the sort—but none was found to be hazardous, or a “recognized environmental condition,” or REC. Three facilities within that range had handled hazardous materials, but none is considered as an REC.
There were no overt surprises in the appraisals, which follow a standard template.
“There is limited new commercial development at this time,” the Hamilton appraisal states. “This new development is primarily in small owner-occupied medical offices and new dollar stores. Additionally, there have been a number of new retail and restaurant development in the most appealing commercial hubs in the Flagler County/Volusia County markets. Otherwise, sales and rental activities, although generally higher than just a year or so ago, are still rather slow and will likely remain that way until the economy begins to pick up speed. In this type of market, value conclusions become less reliable than in times of an active and stable market.”