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County’s Intention To Seek Damages Over Sears Building Fiasco Belies Cozy Relations With Broker in Run-Up to Sale

| May 16, 2019

An example of water intrusion county officials discovered this week at the Sears building. (Flagler County)

An example of water intrusion county officials discovered this week at the Sears building. (Flagler County)

Last Updated: May 17, 5:56 p.m.

Flagler County Attorney Al Hadeed today sent certified letters to the real estate broker who handled the county’s purchase of the mold-infested Sears building on Palm Coast Parkway, to the building’s former owners and to the engineering company that inspected it, telling all three in stern and unqualified language of the county’s intention to seek damages.

The county discovered only this week, six weeks after closing on the $1.1 million purchase and just days after electing to turn the building over to the sheriff for his Palm Coast operations, that the structure had significant water intrusion and black mold–a repeat of the problems plaguing the Sheriff’s Operations Center in Bunnell, which had to be evacuated for that reason last June.

[See: “You Can’t Make This Stuff Up: County’s Just-Acquired Sears Building for Sheriff Has Water Intrusion and ‘Substantial Mold’

“The county will be seeking damages against you for your responsibility in this transaction,” Hadeed wrote Sheehan-Jones, citing her alleged “failure to disclose what you knew or should have known with an examination of the property and interaction with your clients.”

“There is evidence that you or those under your direction concealed these conditions,” Hadeed wrote the owners, Andre’a and James McIntyre of Palm Coast. “The County will be seeking rescission of the agreement plus an amount representing its consequential damages for having proceeded into the due diligence, acquisition, and occupancy phases of its activities.”

The letter to Universal Engineering’s Brian Pohl was similarly worded: “The county emphasized in its engagement of your services that its primary interest was to obtain an assessment of water intrusion,” Hadeed wrote. The report pointed to no such intrusion, though from county observations, Hadeed wrote, “It was of long standing and very apparent. You should have discovered the water intrusion with the exercise of reasonable professional care in conducting your inspection.”

Sheehan-Jones had been contacted Wednesday when the Sears building’s issues first broke and the county administrator said she would be among those held to account. She did not return a call. On Friday, a day after this story initially published, she emailed FlaglerLive.

“When I visited the property with several representatives of the County prior to the sale of the Sears store, the store was still operating and the space was full of inventory,” Sheehan-Jones wrote. “I had no knowledge of any issues with water intrusion at the property and the seller did not disclose anything to me that would have raised any concerns. If there was any sign of water damage on the walls or other areas, those were not visible to me or any of the County staff members that were present at that time. It is unreasonable to suggest I had a duty to disclose facts that I did not know about or had any way to discover. The County has staff with construction experience and hired an independent inspector to determine the condition of the property, which is standard practice in commercial real estate transactions. Neither the County staff nor the independent inspector found anything that was cause for concern at the time.” Sheehan-Jones noted that county officials had to “remove walls to discover the issue.”

The record also shows that the county’s responsibility in the building’s acquisition is not nil: the purchase was hurried, its purpose conjured rather than compelled (Sheehan-Jones sought out Coffey to pitch him the sale rather than the other way around, and Coffey then sought out a use for it), and relations between Sheehan-Jones and Tim Telfer, the county land manager in charge of the purchase, grew to resemble more those of associates than of broker and buyer maintaining healthy, questioning distances. The record shows no inquisitiveness so much as accommodation on Telfer’s part, and the inspection appeared to be almost an afterthought.

tim telfer

Tim Telfer. (© FlaglerLive)

On Nov. 11, Telfer wrote Margaret Sheehan-Jones: “I’m starting the inspections and due diligence now.”

Then-Administrator Craig Coffey had put Telfer in charge of buying the 8,000-square-foot Sears building after Sheehan-Jones just weeks earlier had offered the building to Coffey. The timing of the Nov. 11 note to Sheehan-Jones was significant: it was just eight days before the County Commission would be asked to approve an option on buying the $1.1 million building, even though by then none of the commissioners knew anything about it.

Telfer himself, according to his own emails, knew little about the building. He asked for building and construction plans only in late November. Sheehan-Jones told him she couldn’t find them. He didn’t press the matter. He conducted a “walk-though” of the property in mid-September (with the tax collector) but had to do it after hours, supposedly because the owners–Andrea and Jim McIntyre of the Darnell Group–didn’t want to “upset the staff,” even though the sale was being publicized: Suzanne Johnston, the tax collector for whom the county was buying the building at the time, was sent Sheehan-Jones’s sales flyer on the property on Sept. 14. The owners hadn’t told employees of their plans to retire and sell.

The consequence was that no interaction between employees familiar with the building and Telfer would take place.

In the same Nov. 11 email to Sheehan-Jones, Telfer wrote: “We’re hiring Universal Engineering to perform a building inspection. Nobody has any concerns about the structure but with recent press we’re spending more to cover ourselves. So I need to get Universal access to the building. Can you reach out to the owners and see when they prefer to have the inspection done?”

Nobody has any concerns about the structure, Telfer was reassuring Sheehan-Jones. It is odd that the county land manager responsible for the due diligence would feel compelled to reassure the real estate broker in the deal. But in the context of their frequent, even giddy email exchanges, it wasn;t odd but routine. When the second appraisal report came in at $1.1 million, Telfer again reassured Sheehan-Jones that even after the two appraisals’ values are averaged, she would still get her $1.1 million: “Normally the values don’t change so we’re likely good.” (See: “How Flagler Government Bought the $1.1 Million Sears Building Nobody Wants, With Scarce Money Needed Elsewhere“.)

But it is not clear how Telfer, who had been granted only limited access to the building, could have concluded that nobody had concerns about the structure. The email implies that the hiring of the inspection company was more pro forma than an authentic investigation of the building–that it was being done “to cover ourselves.”

As it turned out, the cover was short-lived.

Universal’s inspection report was dated Dec. 12. “The Property Condition Assessment for the property was performed based on non-intrusive, non-destructive general observations of the accessible major building systems including roof, frame, foundation, walls, HVAC, plumbing, and electrical systems,” it stated. “The Property Condition Assessment Report is not a safety, regulatory or environmental compliance inspection.” It found the roof in good condition. “There is no evidence of moisture intrusion or physical damage to the roof,” the report stated.

As for the exterior walls and structural frame, “All bolts and connectors that were readily accessible were inspected and appeared to be in acceptable condition. No damage or corrosion on the connections was observed,” an assessment county officials, based on their photographic evidence, disagree with.

But here was Universal’s more controversial assertion: “There is no evidence of moisture penetrations but repairs are necessary to prevent further
deterioration. The steel sheathing areas are in stable condition with no evidence of moisture infiltration or deterioration. Minor physical damage is present” as shown in various photos included in the report. “The exterior walls of this structure have a typical useful life of 50 years.” Universal recommended replacement of the air conditioning system and found damaged insulation, but “no evidence of excessive deterioration” of interior elements. Pohl and Building Department Manager Mike Navarra signed the report.

The county commission never heard of the building purchase or its timetable until early March, when the item was again on the commission’s agenda–not to approve or reject the sale, but to approve the manner of financing it. By then, Coffey had been forced to resign. Johnston was no longer interested in the building. Nor was the county. Commissioner Dave Sullivan wanted to get rid of it. So did other commissioners, though Sullivan was most forceful against the buy. But the window to reject the sale had closed: the county was legally bound to go through with the purchase, even though the sale hadn’t closed yet. Commissioners voted against the particular financing method presented in early March, but at their next meeting, they voted 4-1 (with Joe Mullins in opposition) to accept a different financing method, sealing the deal. The purchase closed on March 29.

Craig Coffey, left, and Larry Jones in October 2016. (© FlaglerLive)

Craig Coffey, left, and Larry Jones in October 2016. (© FlaglerLive)

In his letter to Sheehan-Jones, the broker who’s handled almost all of the county’s major real estate deals for the last half of Coffey’s tenure, including the very controversial purchase of the old Memorial Hospital that became the Sheriff’s Operations Center, Hadeed emphasized the context of the Operations Center debacle. “It is inconceivable to the county that this context would have escaped your attention,” Hadeed wrote Sheehan-Jones. “It should have alerted you to the need to present only properties to the County, including this one, which are suitable for consideration for public use.”

At the Jan. 9 special meeting of the commission where Coffey resigned, only a few people spoke in support of Coffey. One man in particular offered a long defense of the administrator. He said he’d had the pleasure of working with Coffey, “consulting” for the county since 2009 when he retired here from 42 years in Orange County government. He spoke of working with him at 20-hour stretches during Hurricane Matthew. “I watched Craig very closely,” he said. “He was outstanding.” He spoke of Coffey being “maligned over this hospital deal,” referring to the old Memorial hospital that became the operations center, “which he didn’t vote for.” He did not mention that his wife had brokered the deal, and described Coffey as “a good man, an honorable man.”

It was Larry Jones, Margaret Sheehan-Jones’s husband.

23 Responses for “County’s Intention To Seek Damages Over Sears Building Fiasco Belies Cozy Relations With Broker in Run-Up to Sale”

  1. Randy Jones says:

    Caveat emptor (/ˈɛmptɔːr/; from caveat, “may he beware”, a subjunctive form of cavēre, “to beware” + ēmptor, “buyer”) is Latin for “Let the buyer beware”.[1] Generally, caveat emptor is the contract law principle that controls the sale of real property after the date of closing, but may also apply to sales of other goods. The phrase caveat emptor and its use as a disclaimer of warranties arise from the fact that buyers typically have less information than the seller about the good or service they are purchasing. This quality of the situation is known as ‘information asymmetry’. Defects in the good or service may be hidden from the buyer, and only known to the seller.

    A common way that information asymmetry between seller and buyer has been addressed is through a legally binding warranty, such as a guarantee of satisfaction. But without such a safeguard in place the ancient rule applies, and the buyer should beware.

  2. Jaris Ingram says:

    If your going to spend 1.1 million dollars on a USED building then have to remodel to your needs, You mean you couldn’t have just built a new building for 1.1 million? My god how much money you planning on wasting here. Geez just sounds overpriced to me. Just build a new one for that much. And another thing, everyone was mad because the Sheriffs Dept considered moving out of the county seat to move to Palm Coast. Wow, really I mean its not like everyone isn’t all up Palm Coast’s rear end anyhow.

  3. Freddy says:

    Tim Telfer needs to get fired for incompetence. Sue the rest of the parties involved in the sale for concealing known defects.

  4. Haw Creek Girl says:

    Not to be confused with Larry Jones, the retired Deputy & founder of Shopping with a Cop!

  5. The original woody says:

    Absolute criminal.

  6. Edith_Campins says:

    Can we seek damages from Coffey? What a mess. And what will happen with Bing’s? Will the commission continue the pattern of bad deals?

  7. Jane Gentile-Youd says:

    Tune in Monday 5pm commission.
    Hopegully Hadeed will prove once again he is unqualified to protect us taxpayers. He never had anything to do with the deal. He did not have the contract in his office on March 6. Tim Telfer had it
    My mantra :Fire Hadeed

  8. Doug says:

    Flagler County government is making the Federal Government look good. What a joke.

  9. Agkistrodon says:

    This article should have backing music, and it should be the song “Dueling Banjos” from the Movie “Deliverance”. Sad, Sad, Sad.

  10. ConstantlyAmazed says:

    Welcome to Flagler County, Florida.

  11. Joe says:

    There always seems to be some type of nepotism involved with these property purchases between these owners and our government entities in Flagler County. Here is an honest idea for a change: Let the school board give the county the land that the FTI building was on and in return the County doesn’t charge the school board for the SRO’s until the price is met ( 5-6 years ) its a win, win! The county doesn’t have to come with millions right away and school board gets a little slack with their tight financial budget. It’s a shame that property sits there collecting dust when the county could build exactly what they need right dab smack in the middle of the city with plenty of parking!

  12. palmcoaster says:

    Get our money back with damages to cover the expenses even made in the contaminated hospital and return this crap to their owners. Sick and tired of my taxes to be wasted and then they do not give us the services that we pay for like one more pilot on stand by to cover the county emergency helicopter 24-7. And when we call reading this lack of service new manager Cameron he does not return the taxpayer that pays his luscious salary back. Same with new city manager Morton his phone or email doesn’t even show in the city web site as it should for the taxpayers communications.God forbid that we want to be called back by their staff departmental heads. Meanwhile the mayor waste our taxes paying for an IT citizens Portal. Some joke. I been asking for a public garbage disposal in Florida Park Drive by the Fern Court canal city installed bench a long time ago when Abreu head of public works was in in 2018 he promised to be in the budget of 2019 and yet I am still calling. People just litter by that bench as there is not litter receptacle as a matter of fact there is not even one all along Florida Park Drive when one block from the location is the Holland Park and pedestrians walk with the water bottles and candy or snacks wrappers and no litter receptacle around. Stop wasting pour taxes in unneeded frivolous items or benefiting your VIP’s and give us the services we pay for. County wasting millions in contaminated real estate but do not pay the needed pilot 24-7 for the Evac flight! Then we have to go to these never ending ,meetings to endure their blabber begging for the services we do not get and they have the nerve to question why “only” about 3 or more people is present in the meetings asking for the same item? We should not even need to attend these meetings asking for our services and to stop fraud! That is not what the elected ones promised while campaigning.

  13. palmcoaster says:

    By the way thank you so much Flagler Live for your courage uncovering this waste of our taxes and their fraudulent shenanigans!

  14. DoubleGator says:

    Sellers have a duty to disclose known defects. It will be interesting to locate and talk to former employees. Hope Flaglerlive is able to do that.

  15. atilla says:

    Isn’t there enough corruption here in Flagler County to warrant a state investigation? There is so much obvious stealing of tax payer dollars it’s become a way of life for these thieves. Does the state have any idea to what’s going on here? COME ON. WE NEED HELP………………………..

  16. snapperhead says:

    Tefler, another one of Coffey’s overpaid “superstars”. They really are superstars, your average worker couldn’t reach this level of incompetence and still have a job. And yes Commissioner Sullivan you ARE a bunch of idiots. In light of what happened at the SOC and the PC substation purchases the commissioners just rubber stamped a purchase for a $1.1 million dollar building without doing your due diligence. And where is the legal redress on the contractors who performed the shoddy work at the SOC and those in the County who should have been overseeing the work? Is there a county government that even remotely comes close to the incompetence of Flagler? Never seen anything like it.

  17. Dave says:

    “There is no evidence of moisture penetrations but repairs are necessary to prevent further deterioration.
    So this was in the inspection report prior to the purchase, this pretty much covers their ass by saying repairs are necessary to prevent further damage. Which is exactly what happened. Who ever got this inspection report and then went ahead with the purchase should face criminal charges.

  18. Business as Usual says:

    It is Friday, what better time to fire Telfer and anyone else associated with this purchase.
    They can start fresh next week with a new job search.
    That is how it is handled in private sector.
    BTW, where is the second appraisal as required by law?
    Having been in the building, I would not pay more than $450k for the property on its best day.
    It will be interesting to see the finger-pointing as each deceptive party attempts to weasel out of this situation, which will cost the taxpayers for litigation, and divert money from necessary infra-structure upgrades…like removing overgrown trees on county
    right-of-ways which sooner or later will fall on an adjacent home.

  19. pinelakes79 says:

    Lots of heads need to roll…and definitely time for a new realtor!

  20. Doug says:

    The sad part of this is, even though the media has shed some light on this continuous problem of wasteful spending by our elected officials, nothing will happen to them. Status quo will be the “norm” in this county. There’s absolutely zero accountability here. Spend, spend, spend!

  21. beachcat says:

    Don’t you just love it? Same engineer who inspected Captain’s BBQ housed in the county building at Bing’s Landing Park. There is mold inside that building, folks. Why is Captain’s still open for business? Why is the owner serving food from a building with mold? Doesn’t fungus get into the food? Poor employees, poor customers. Oh. I forgot. Cameron and Commissioners want a nice, new building for Captain’s owner. Why is that?

  22. Jane Gentile-Youd says:

    Hey friends…
    Sellers didn’t want employees to know they were selling and these folks would be without jobs so inspection was ‘ordered with all the appliances in the store till there – hush hush – no breaking walls that might give a clue to these folks that they were soon gonna be on the bread line
    Coffey made sure sellers would be able to keep business making money for themselves as possible.

    Hapless Hadeed ( my opinion) should have ensured that full MOLD inspection- intrusive not ‘non intrusive’ was ordered will every inch of wall accessible by inspectors. Contract clearly allowed ‘ intrusive’ inspections to be done with seller consent –
    No consent was asked…. Hadeed, once again, hadn’t even read the warnings in the no mold hush hush ordered inspection – if he did he would have done what the contract allowed:
    Cancel contract or decide to do repairs ( duh…)
    But I am just a licensed real estate not high priced overly paid lazy attorney ( my opinion)
    How can Hadeed go after anyone other than this stupid self? Even a separate pre inspection was signed NO MOLD no intrusive or damaging work – how else can you detect mold?

    If damage so visible why didn’t overpaid Hadeed go see it? FIRE HIM

  23. whoknowsflagler says:

    In a commerical building a buyer should always hire a general contractor and licensed mold inspector. A mold inspection is not the same thing as a building inspection. To inspect for mold you have to have a seperate license than an inspector license. What is really amazing is the Flagler County could have saved the inspection fees and had their own building offical and building inspectors go over all of these buildings. In a commercial inspection a GC would have cut into the walls to see if there was moisture or gotten on the roof/ in the attic space to look down the walls for moisture. Ask anyone with metal buildings, even the county owned buildings at the airport that are plane hangers and you will find it is common that these roof systems leak after 10 years in Florida. The Realtor Margaret Jones is involved in more than just the 3 buildings in questions. She exclusively represents and gets referrals from Helga VanEckert at the Dept of Economic Opportunity. There is a vacant building the Dept of Economics is promoting on US1 that they had an investor build at Margaret’s direction that no one has rented. The selllers had to have known there was a roof leak, if they told the Realtor and she did not disclose it she should be responsible . In Florida a seller is obligated to disclose any fact that materially effects the value of a property. Hopefully Flagler Commissioners will continue to clean house and remove employees that are not making sound decisions.

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