Flagler County government on Friday filed suit against the inspection company that the county claims misled it about the soundness of the former Sears building on Palm Coast Parkway. The county bought that building for $1.125 million in 2019, discovered severe water intrusion after the sale, and eventually sold the building to a church for a steep loss last June, after a previous potential sale to a dance studio fell through.
The Sears fiasco was an embarrassment for the county, which was struggling to rid itself of another costly white elephant, the former and five times as costly Sheriff’s Operations center, for the same reason: water intrusion and mold. The county sold that building last July for $400,000 less than it paid for it, and was saddled with a debt of between $4 and $5 million–county officials obfuscated the precise figure when asked–from the cost of renovating what had once been a hospital.
The county bought the Sears building in a tortuous and opaque process even as county commissioners themselves attempted to stop the purchase. Then-County Administrator Craig Coffey had initiated the process after he was approached by Realtor Margaret Sheehan-Jones, once Andre’a and James McIntyre, who’d owned the Sears building since 2005, decided to close shop and retire.
Universal Engineering of South Daytona was on contract with Flagler County to conduct building inspections. “We issue them a work authorization under our contract to examine this site and to ascertain if there is any problems with respect to the foundation, the floors, the walls, the grout, and any evidence of moisture penetration,” County Attorney Al Hadeed said. Universal carried out the inspection for a $7,600 fee.
“They provided us a report that found no such evidence of moisture penetration or problems with those structural elements, based on that we went ahead with the closing. Shortly after the closing, there was significant water intrusion into the building that had not been identified as a risk factor, and we found that there was significant damage in the past to those structural elements, because of repeated water penetration.”
In May 2019, the county threatened to sue Sheehan-Jones through her firm, Parkside Realty, the McIntyres and Universal Engineering to make back its money. The county renewed its threat in April 2020.
Last April the county and Parkside Realty agreed to settle, in change for a hold-harmless agreement from the new purchaser.
At the time the purchaser was to be Brie Valenti-Crane and Braham Logan Crane, who own Mia Bella Academy and the dance studio company known as Artists Simply Human. They were near buying the building for $1 million. But they pulled out. The building was sold to Bunnell Apostolic Church of God, for $900,000, enlarging the loss to the county in three ways: the net loss between what the county had paid for the building and what it was selling it for, the accrued costs to the county since buying the building, which bring the total deficit to between $300,000 and $400,000, according to Hadeed, then the unspoken loss of future tax revenue, now that the building is in the hands of an untaxed church. The property had generated just over $9,000 in tax revenue in its last year as Sears, $3,900 of it to the county.
The county is leaving the door open to suing the McIntyres, who have a sales contract in hand that clearly shows that they were selling their building to the county “as is.”
“[T]he Contract presented by the County and accepted by Darnell Group expressly states that the County purchased the building in its ‘AS-IS’ condition. As everyone knows, this means that any risk of a problem (if any) is on the Buyer,” Andre’a McIntyre wrote County Administrator Jerry Cameron last April, refuting the county’s claims against her company, called the Darnell Group, by claiming that what water intrusion problems developed did so after the county bought the building–a claim the county rejects.
“We have video showing the water cascading into the building from an ordinary rainstorm,” County Administrator Jerry Cameron wrote the McIntyres and others involved in the issue. “This was clearly not an isolated event but a continuing or repetitive stream of water intruding into the building. There was ample evidence of deteriorating sheetrock and insulation that had become moldy and otherwise water stained. We also found what appeared to be a hasty patch repair on an interior wall in the retail area. The repair concealed sheetrock that the owner or its agents had removed that was in the immediate vicinity of other water damaged sheetrock. The sheetrock had collapsed or become waterlogged. The replacement material was plastic melamine with the same coloring of and made to look like sheetrock. It was more than a cosmetic repair, presumably because the sheetrock had deteriorated so much that it was not functional. The owner performed or had the repair done in such a manner as to blend with the existing sheetrock and conceal the condition of the building. The gaping gutter and resulting water intrusion were well known to the owners but never disclosed to the County.”
McIntyre had her own rejoinder to the county’s claims: “Instead of Buy Low, Sell High, the County seems bent on a Buy Low, Sell Lower strategy. The County’s decision to now sell the Sears Building by a new contract with a third-party entered into in April of 2020, deep into the Coronavirus Economic Depression, also ensures the County will get a price well below fair market and well below what it could have gotten if it had sold sooner– or perhaps waited to sell after the Coronavirus Economic Depression. Darnell Group has zero responsibility for the County’s decision to sell or the timing of selling. Darnell Group also has no responsibility for the County’s puzzling campaign to malign the good reputation of its own Building’s condition in the public eye.”
The county’s decision to sue the engineering company first may also reflect a little strategic realism: the engineering firm has deeper pockets than do the McIntyres.
“So we’ve sued the company that we hired with the purpose of giving us their best professional estimate,” Hadeed said. “They failed to do that, to apply standard procedures for making these evaluations, so we’re charging them with breach of contract and negligence and we are looking to recover damages that we’ve not been able to recoup from the resale of the building.”
Hadeed said the sale to the apostolic church netted the county $840,000 after costs. “We have about $300,000 to $400,000 in additional damages that we’re looking to be reimbursed for based on this lawsuit that we just filed.” Hadeed is not representing the county in that lawsuit, which was filed on behalf of the county by Ormond Beach attorney Abraham McKinnon.