Reversing its vote of just two weeks earlier, the Flagler County Commission this week approved buying the old Sears building on Palm Coast Parkway for $1.125 million, a building nobody wanted or had so much as publicly discussed buying before then-County Administrator Craig Coffey foisted the option on the commission at a November meeting.
Coffey claimed the tax collector needed the space. But the building’s 8,000 square feet was far more than the Tax Collector Suzanne Johnston needs (she’s somewhat cramped in a 1,000-square-foot satellite office at the Staples shopping Center in Palm Coast).
In fact, neither Johnston nor Coffey were shopping for a new facility to buy when Margaret-Sheehan Jones, the realtor who’s brokered most of the county’s big acquisitions in recent years, wrote Coffey last Aug. 23 to let him know about the rust-colored Sears building at 4888 Palm Coast Parkway.
“The owners are retiring, so they want to sell,” Sheehan-Jones wrote the administrator. (The owners had a second mortgage on the property.) “Their current [contract] with Sears expires in January 7, 2019, so it will be vacant after that date… Not sure if you were looking for any buildings, but just in case.”
Days later, Coffey put Tim Telfer, the county’s natural resources manager, in charge of the acquisition after what Telfer described as a “brief conversation.” By then Coffey had gotten some interest from the tax collector, who’s been feeling cramped at her satellite office in the Staples shopping center in Palm Coast. Telfer arranged to walk through the Sears building. “Apparently the owners do not want to upset the staff so they’re requesting we visit after hours,” Telfer wrote the tax collector. Sheehan-Jones pressed Telfer for an update in mid-October. By mid-November, a contract was drafted.
It appeared on a County Commission agenda at a Nov. 19 meeting–on the consent portion of the agenda, the portion generally devoted to routine items that are approved in bulk, without discussion, or that may have been previously discussed at workshop meetings. The Sears building had not been. Coffey may have spoken of it to commissioners individually and verbally, but there is no written record of any documented conversations about it between the administrator and commissioners–at least none that was provided FlaglerLive, after a request. At the Nov. 19 meeting, none of the commissioners were interested in discussing it except Dave Sullivan, who pulled the item from consent to have a brief discussion–and only to lend his support for the purchase. The commission unanimously approved the contract. A Sept. 30 appraisal had placed the price of the property at $1.225 million. The second appraisal report, required by law on purchases of that size, had yet to be produced.
Sullivan would later change his mind, after finding out details of the proposal that undermined its justification, not least that Johnston was not that eager for the building, that it would be bought with a loan, and that the county had no pressing need for it, though it could always finagle one. To Sullivan, the deal was too shaded by other property deals that have gone awry, among them the purchase of the old hospital that’s now the evacuated Sheriff’s Operations Center and, more recently, the purchase of an old mortuary and bank to be converted into a Sheriff’s Palm Coast substation: that building has proved to be a lot more expensive to renovate than initially advertised to the commission.
The record does reflect a hurried move from proposal to option-to-purchase, with all the technicalities handled between Telfer and Sheehan-Jones, and with County Attorney Al Hadeed reviewing the contract and making a few edits. “We’re full speed ahead on the Sears store project,” Telfer wrote Sheehan-Jones giddily, eight days after the commission had approved the option. (“Can we get a copy of the 2nd mortgage? I believe you said it was unrecorded so it’s not something the title company is going to pick up,” Telfer wrote Sheehan-Jones. The same day, the owners let Sheehan-Jones and Telfer know that the Sears employees were “on board.”)
Heffington and Associates sent its appraisal of the property to the county on Nov. 30. It came in at $1.1 million, a shade less than what the county paid for it. Telfer was quick to reassure Sheehan-Jones: “The option contract’s price is still valid as the appraisal values are averaged, and the average exceeds the option purchase price,” he wrote her. There was no attempt to lower the purchase price. Telfer assures her the county is “on track” for a January closing. “You’re the best,” she tells him. They also discussed leasing the building to Sears, at $8,000 a month, after closing and through March. That was made unworkable since a rental agreement couldn’t be put in place before the county commission ratified the financing package on the building.
On March 4, that package was put before commissioners at a meeting. It would have entailed the county using part of a state loan to pay for the building, but would have barred the county from re-selling the building if it didn’t find a need for it. Telfer and Hadeed told the commissioners in effect they’d committed to buying the structure at their November meeting, and that they could not back out unless they had intervened in January. To do that, the item would have had to be reintroduced by the administration at a meeting at that time. (The contract had an automatic termination clause that included “the passage of one hundred and fifty (150) days from the Option Date.”)
[Hadeed in a subsequent interview on March 21 said Telfer and the finance director had brought the issue to then-Deputy Administrator Sally Sherman in January, saying the issue had evolved and commissioners could be so appraised. Sherman, according to Hadeed, said not to bring the matter to a commission meeting, thus eliminating the chance for the commission to back out. He did not proffer that explanation to commissioners either last Monday or in early March.]
Sullivan objected to going through with the purchase and convinced the commission to vote against it. On Monday, county staff returned with another proposal. It had not been posted to the web along with the rest of the agenda until much later than when the regular agenda was posted–again, a dissimulation that, intended or not, contributes to the county’s reputation for conducting business with less than full transparency.
To placate Sullivan, the financing terms were changed. The building would not be purchased with a loan, but with proceeds from the half-cent sales surtax the commission approved in 2012–money that the county has been using for major capital projects and that could have been used toward a fix for the sheriff’s operations center. The Sears building purchase now diverts a substantial sum to a less-than critical need, leaving a paltry $2.8 million in the sales tax fund.
The commission voted 4-1 Monday to approve the purchase, with Sullivan in the majority and Commissioner Joe Mullins the lone dissenter.
Closing is now scheduled for April 28. The building itself has long been vacated. Interim County Administrator Jerry Cameron cautioned commissioners that the purchase price doesn’t reflect additional costs to come, as the building needs to be renovated and fitted for whatever uses the county makes of it. If any portion of the building is to be used by the sheriff, those costs are expected to be steeper still.