The Flagler County Commission this morning unanimously approved the purchase of three land parcels totaling 40 acres, one for a branch library, one for a west-side fire station, and one for the expansion of the county’s public works.
But the commission approved buying two of those parcels—one for $546,000, one for $361,0000—even though the appraisals on the properties have yet to be produced, and even though the appraised price may well come below what the county is paying for.
That drew some questions and criticism, but it did not stop the commission from approving the purchases.
Much of the commission’s discussion centered on the $361,000 purchase of a 9-acre property next to the 8-acre property slated for the library. The 9-acre property is to be used most likely by the county’s Public Works division, but when is not yet determined.
In sum, the county administrator told commissioners, the appraisals are irrelevant.
“I’m not sure that would negate the way you feel about us trying to acquire the property,” County Administrator Craig Coffey told commissioners, saying the county’s willingness to buy the public works property at $40,000-an-acre would not change even if the appraisal were to come in much lower than that. Remarkably, Coffey said the county should be willing to pay as much as $100,000 an acre, even if the property is valued at far less.
“This is an opportunity to buy high and dry land as opposed to the counter-argument for us as a particular buyer of developing other lands,” Coffey said. “Regardless of what the market says the land is worth at this point, we know it’s going to be more valuable in the future, we know we have an opportunity today, and we know if we were to develop other land on this campus, it could easily be over $100,000 an acre, making $40,000 an acre a bargain.”
It was a feat of reverse speculation: because the land might be really valuable sometime in the future, Coffey was arguing, the county’s taxpayers should be willing to pay prices closer to that value, even though the land right now may not be nearly as valuable.
The county is agreeing that if the appraisal comes in lower than what it’s offering, “we can still overpay for the property,” said Jane Gentile-Youd, a real estate broker often critical of the county’s methods because of what she perceives as their opacity. “This is a lot of money, and we want to bank the land, but do we really need this land at this very moment that we have to offer to overpay?” (There are no immediate plans to use the land.)
Commissioner Donald O’Brien was perplexed by the approach and wondered what would stop the commission from revisiting the issue after the appraisal. Nothing would, but the commission would then have to come back and vote on it again, by super-majority vote: state law requires such super-majority votes if a government agency insists on buying a property for more than the appraised value. Coffey did not want that second visit. “I’m asking you to pre-emptively vote a supermajority now,” Coffey said. “Because I thought I’d heard the feedback from the board that you’d vote on it anyway.”
Commission Chairman Nate McLaughlin was willing to go along, but not with what amounted to a blank-check vote. He wanted at least a 10 to 15 percent limit on how much lower the appraisal could go before triggering a second look by the commission. But Coffey dissuaded McLaughlin of even that much. “Even if the market as an overall market only supports a $30,000,” Coffey said of the per-acre price, “for us, it would support $100,000-something almost because we’re the buyer of choice, we have utilities, we have road access, we don’t have to wait on any of that.”
McLaughlin went along. The appraisals are “due shortly,” according to Coffey’s memo to commissioners, so it was not clear why the item had to be on today’s agenda, rather than await the result of the appraisals. Margaret Sheehan-Jones, the commercial real estate broker who represents the seller in this case, and whose name has been associated with key county purchases in recent years (she was the broker on the controversial county purchase of the old hospital property in Bunnell that became the sheriff’s operations center, for example) told commissioners that land prices “are truly escalating” along State Road 100, though she acknowledged, at McLaughlin’s prompting, that the prices are “very fluid.”
The 9-acre property is south of State Road 100, off Commerce Parkway (the road that branches off State Road 100 at Wendy’s, toward First Baptist Church). It is adjacent to what would eventually become another branch library—a library project long discussed, and that will have precedence on an expansion of the library on Palm Coast Parkway, though it’s still vague as to when the branch would be built.
Bunnell is planning to develop Commerce Parkway into a beltway around the south end of Bunnell, linking State Road 100 with U.S. 1. Once that happens, Coffey said, the land along Commerce Parkway will become much more valuable. But that project is itself vaguely in the future. Gov. Rick Scott recently vetoed $50,000 that would have paid for planning the road.
“This is a friendly opportunity purchase and we’re trying to buy land essentially while it’s available and while it’s still affordable before roads and other things get put in,” Coffey said. “The price on the library parcel, we did get a summary appraisal early on to help guide us what we should offer. The summary appraisal was much higher than the current price we agreed on, so we’re fairly confident the appraisals will come in on that. The $40,000 piece there by General Services, again, it’s more valuable to us at this point in the future, and that’s what it will be.”
“Both of those pieces of property as far as I’m concerned are critical to the future of the county,” said Commissioner Dave Sullivan, defending the purchase and the method. Commissioner Greg Hansen echoed him.
Ironically, commissioners did re-visit another land deal for a “critical” county need: the future site of the west-side fire station. Commissioners had already voted in June to approve the $570,000 purchase of the 25-acre site at the corner of State Road 100 and County Road 305 (a property bought in 2010 for $700,000 and currently assessed at $427,000 by the Flagler County Property Appraiser). The commission was revisiting the purchase because County Attorney Al Hadeed said the contract was revised to add protections for the county.
The length of time the county has to inspect the property has doubled to 60 days, an important difference because the county might want to do environmental assessments on a property used for industrial purposes. The county also has 20 days to make title objections, and all liens will be discharged, without any encumbrances on the property. “There’s a very substantial amount of creditors,” Hadeed said, “the amount owed in the aggregate to the creditors is in the millions.” The county, however, will be limited to paying the agreed-to purchase price.
“We wouldn’t want to be acquiring it and trying to put a fire station on there and do all the other things that are contemplated, and then have these problems that come after the transaction and now we’re having to sort those out,” Hadeed said. “So this is designed to make it as clean as possible a transaction for the county, assuming the trustee is able to clear all of the agreements with the various creditors.”
The contrast between the county’s due diligence on the fire house property, as opposed to the lack of such diligence on the two properties south of the Government Services Building, was left unspoken.