Palm Coast’s Town Center mega-development started on a skewed footing six years ago. The contortions continued Tuesday as the Palm Coast City Council approved several questionable measures designed literally to clear Bulldog Drive of businesses and enable the city to build its last showcase entrance to Town Center.
The council approved spending public money to move two merchants even though they’ve already been evicted from their Bulldog Drive location. The council also approved launching condemnation proceedings, which can be long, expensive and ugly, to take a portion of a property on Bulldog Drive that the owner refuses to sell to the city at the city’s price. The city needs a 33-foot-wide swath of the property for the right-of-way reconstruction.
Debatable maneuvers have dogged the Town Center development from its earliest days. (For background on those maneuvers, see “How Palm Coast Invented ‘Blightness’ to Capture and Hoard Tax Revenue.”) Tuesday’s meeting borrow from the same pot of muscling maneuvers.
For several years, the city has been trying to buy out the properties along Bulldog Drive, opposite Flagler Palm Coast High School. Little by little all but one of the property owners gave in. One of the last—Third Coast Holdings—is supposed to sign the deal later this week. One property owner, Gus Ajram, who’s owned automotive businesses there for decades and more recently rented the properties out to other automotive businesses, refused to sell. The city had appraised his two parcels there at $466,000 in August 2009 (the county property appraiser’s just market value for the two properties that year was $249,000). Ajram asked for $1.25 million, citing the commercial value of the properties.
(The difference between government appraisals and actual selling prices can be vast: the Flagler County Commission just agreed to pay at least $3.25 million for mostly unbuildable land along Pellicer Creek that the property appraiser had listed at $500,000).
“For over three years we’ve been attempting to reach a purchase price agreement with Mr. Ajram for his entire property just like we did with everybody else,” City Manager Jim Landon said, without success.
The two sides reached an impasse. On Tuesday, City Manager Jim Landon told the city council that, while leaving the door open to further negotiations, he was foregoing the attempt to get the entire properties, and recommending that the city pursue eminent domain, or condemnation, proceedings against a 33-foot wide portion of the parcels in question.
“There was a statement made that we offered double the appraised value, and that wasn’t sufficient, he wants 1.2,” council member Mary DiStefano said. “I have a serious, serious problem with dealing with this issue. We have in good faith over the years attempted to work with this gentleman, and before we go beyond the assessed value, I think council needs to know, this is absolutely ridiculous. At the time when w e bought other pieces of property we went over the appraised value, but never, to my knowledge, we went double.”
Actually, a sampling of properties adjoining Ajram’s that the city bought since 2007 belies DiStefano’s statement. On May 6, the city bought a property immediately to the north of Ajram’s, along Bulldog Drive, for $800,000—more than four times its just market value, according to the property appraiser. In April 2007, the city acquired the property immediately north of that one, along Bulldog Drive, for $235,000—five and a half times the appraised value. The property north of that one sold for almost six times its appraised value. A smaller parcel the city acquired in the same area, about the same time, cost taxpayers $139,000, five and a half time above its market value of $25,000. Even discounting the usually big disparities between county property appraisals and sales prices, the differences are vast. Applying the same ratios to the Ajram property, the city’s offer, even doubled, falls well below the ratio other properties commanded.
Ajram is represented by Sid Nowell, the Bunnell attorney. Referring to a memo written by a city attorney regarding the case, Nowell said: “When I was reading the document last night, I was struck by the tone of it. With all due respect, commissioner DiStefano, there have been significant negotiations, but quite frankly, that appraised value has no value. There’s no way that that appraised value—and I think everybody, except maybe for the city appraiser, has agreed that this is a unique piece of property.” The result, Nowell said, will be an arbitrary decision on the value’s worth.
He continued: “I understand you are energized and want to go to eminent domain. But you can speak to your counsel. It is not a pretty process. And quite frankly, it is a very expensive and time-consuming process.” DiStefano attempted to interrupt Nowell. Jon Netts, the mayor, did not allow it. Nowell returned to the memo: “Basically if you read between the lines, what that memo says is, let’s take advantage of the landlord.” Ajram is an immigrant who speaks with a heavy accent and who’s had a few run-ins with Landon and the commissioners. “Understand what is happening. The government, you, is looking to take away the property of a private land owner. Why wouldn’t that private land-owner be passionate and concerned about his property?”
The properties Ajram owns along Bulldog Drive were rented to two businesses: GW Black Inc., and I & R Enterprises. Nowell said the city went to those tenants and brokered a deal with them behind Ajram’s back, essentially paying them off–$39,000 for GW, $20,000 for I & R, ostensibly within the parameters of a “business settlement agreement,” though that agreement would have had to be made with the landlord first. “The consequence of the city going to our tenats prior to coming to the landlord was that the tenants decided they didn’t have to pay rent, because they were going to get paid off by taxpayers dollars. So we were forced into a position to evict them. What we are concerned about is the fairness of this project and the fairness of this action, and we would hope that you keep an open mind and continue negotiating over the value of this property.”
The council voted unanimously to proceed with the condemnation process, and to pay off the two evicted businesses. Landon said condemnation should cost significantly less given the city’s attempt to go after 33 feet of property initially, rather than Ajram’s entire parcels. Landon said a court’s determination to grant the 33 feet could take place within months. The determination of the price, however, would take much longer.
“You seem to have the impression that because the eminent domain is going to be reduced to 33 feet,” Nowell told the council, “that you’re going to have a significant saving. As Mr. Landon stated, that 33 feet runs right up to an existing building, and that will impact the valuation of the property damage done to my client. The land-owner. You’re focused on the business damages of the tenant. I’m telling you, the important calculation here is the business damage done to the property owner.”