By MELINDA J. OVERSTREET
for Glasgow News 1
With the closing set for the following day, protests from two members of the Glasgow Common Council continued Monday against a property purchase that had been approved more than two months prior by the other seven council members.
The Sept. 9 vote to pursue the purchase, contingent upon certain details, followed closed sessions in two successive full council meetings as well as an initial one at a meeting of the council’s finance committee – a span of time one day shy of a month.
So, the actual purchase of almost 162 acres at 1573 Cleveland Ave., all within the city limits, was not on the agenda for this regular meeting of the council, nor was it on the Nov. 12 agenda. Rather, an ordinance adopting a budget amendment to move the funds for the purchase from one line item to another so the expenditure is accurately reflected in financial records, along with other amendments to the city’s spending plan, were on the agendas.
Specifically, according to the proposed ordinance, $6.3 million goes to the Purchase of Land Account, $800,000 to the Professional and Technical Account, and $700,000 to the Contractual Improvement Account, all within the Administration Department budget.
The first reading of the ordinance was Nov. 12 and the second was Monday. Both times, a 7-2 approval of the budget-amendment ordinance occurred after considerable discussion, with council members Marna Kirkpatrick and Max Marion casting the opposition votes.
During the discussion at the Nov. 12 meeting, Kirkpatrick had asked about whether the city had gotten an appraisal on the property and the amount of it, and City Treasurer Stephanie Garrett said she didn’t recall the appraisal amount off the top of her head, but Kirkpatrick was welcome to go to her office and they could look it up for her, so Kirkpatrick asked Mayor Henry Royse whether he knew the amount, and he did not.
“I just know the appraisal exists. I know it appraised for at least what we’re giving for it,” he said.
As it turned out, no appraisal was done, and this was discovered when Kirkpatrick went to the city treasurer’s office the day after that meeting as suggested, and they began to look through the documents related to the purchase.
Marion, who sits next to Kirkpatrick at meetings, asked the mayor at Monday’s meeting whether he or Garrett had been able to provide her with that appraisal.
Royse said there had been correspondence sent to Kirkpatrick, but asked City Attorney Rich Alexander to speak about appraisals, and Alexander said there is no legal requirement for a Kentucky city to obtain an appraisal prior to contracting for the purchase of real estate.
Kirkpatrick said that was correct, but she had been told at the prior meeting that there was one, and when she went the next day to City Hall, they could not produce one.
“We need to take extreme caution in deceiving citizens or council members,” she said.
“It was a mistake,” Royse said, “because so much is going on with that. It was nothing more than a mistake.”
Kirkpatrick said she didn’t take it personally, but the citizens and council members deserve the truth.
Garrett had approached the podium and asked to speak to her concern, and she agreed about the importance of the truth.
“I thought that there was one,” the city treasurer said, noting there were “many, many, many” reports about the property, and she believed the mayor also thought there was one, so she thought so, too. “I meant no ill will.”
Kirkpatrick, speaking over Garrett, acknowledged that it may not have been intentional.
“So do we need to go back and revisit this before we spend this money to buy this land because we don’t even know if it’s worth that, guys?” Marion asked.
After Garrett reiterated that it’s not required, he said he understood that, “but for us, for our knowledge, before we spend money like this, do we want to see if it’s worth what we’re paying for it?”
“Stephanie, I’m not saying it was intentional at all,” Kirkpatrick said.
Garrett said that in addition to asking about the appraisal, Kirkpatrick had also inquired about the funds being used, and Kirkpatrick read from the minutes of the prior meeting that just had been approved Monday regarding what she’d been told by Garrett and Royse.
Marion again expressed frustration with there not being an appraisal done because, he said, the council members had told it would appraise for what they were paying for it.
Garrett repeated that she truly thought there was an appraisal “in all those reports,” and she believes the mayor thought so, too.
“But I will stand here and say it now: There is nothing to hide. There’s all kinds of reports, and no, there’s not an appraisal, but, yes, we are purchasing the land,” she said, mentioning again that numerous other reports were obtained and more information will be provided at an event planned for Dec. 3. “I just want to say I didn’t say ‘yes’ because of trying to lie or anything to anyone. It was an erroneous ‘yes,’ because I thought there was an appraisal in all those reports, which are multiple.”
Royse said that when planning a purchase like that, “you have to have to go through something called due diligence.”
He said it’s not like buying a house that’s already been constructed; you have to make sure there’s nothing wrong with the property and that the city wanted it. He said the due diligence was completed roughly two weeks ago; he had also mentioned at the Nov. 12 meeting that it had just recently been wrapped up.
“All the due diligence came in correct, and so where we are right now is, we’re happy with the way the report came through,” the mayor said, also reiterating that the purchase already had been approved. “All we need to do right now is just to realize that, as much information as we handle, occasionally, we make a mistake, and that’s all it was.”
He added that there was nothing that could be hidden by getting one done or not.
Kirkpatrick said she wanted to make it clear that she has to work for the people who put her in that seat, and that’s what she was doing.
Alexander reminded the council members, not for the first time, that the ordinance before them was merely moving the money to reflect the correct source account, and the contract had been signed.
Marion said he understood that, but when they voted on the resolution to pursue the purchase, it was with the council members having been told the land would appraise for the amount being paid.
Councilman Freddie Norris said he recalled from the prior meeting a lot of discussion about what the land was worth and hearing from people who know about land acquisitions inside the city and that it was quite a good deal as far as the per-acre price.
Kirkpatrick said the comparisons made were for commercial property, not farmland like this was.
This was followed by discussion about the elements that go into an appraisal.
Councilman Terry Bunnell, a banker, said the prior usage had been as farmland, which is different from the intended usage, so it would have been difficult to get an accurate appraisal with the usage change.
“You have three aspects of an appraisal. You have market value, you have the cost approach and you have the income approach. But as people, and I deal with appraisals about every day,” he said, before Kirkpatrick cut him off and said you don’t get appraisals based on what you’re going to do with a piece of property.
“Yes, in the commercial development business you get appraisals also based on the intended use of a property,” Bunnell said.
“I wasn’t aware,” Kirkpatrick said.
Bunnell said that, in looking at that property, a prudent person would look at what properties around it have sold for, and the fact that it’s a large tract of land within the city limits gives it more value than standard farmland would have.
He said the listing price for the property was $7 million, and he didn’t think it would have had that price tag without some type of market analysis having been done.
“You’re saying think,” Kirkpatrick said. “In our positions, we need to know.”
Marion said he appreciated and respected all the explanation.
“But going backwards, we were told we had an appraisal; it was going to appraise for what we purchased it for and, now all of a sudden, you don’t have to have one,” he said, suggesting that if it had appraised for $3 million, they could have paid that instead of the $6.15 million the city is paying.
“You go talk to any Realtor, and the list price is not usually the sale price, but in this instance it was, and it was done quickly and too fast, with not dotting all the i’s and crossing the t’s. We fired on it real quick without stepping back and looking and thinking,” Marion said.
Bunnell noted that at the prior meeting, he had mentioned a property in the same general area that was for sale, at the end of Reynolds Road and West Main Street, listed for $575,000, and it closed the other day for $550,000. He said that was a pretty good comparison that asking price and selling price are typically not that far apart. Bunnell had also named some other properties and their per-acre pricing that was higher than for what they are buying.
Kirkpatrick said that didn’t take away from the fact that they had nothing in front of them that tells them what the property is worth compared with what they’re paying for it.
“There’s no factual comparison,” she said, adding that they probably need to fast forward and move on, but still inserting a final critique.
“It’s not required, you are correct that we don’t have to have an appraisal, but you would think with the city making this big of a purchase of millions of dollars that we could have done an appraisal,” Kirkpatrick said. “That’s all I’m saying. Out of respect, honesty, integrity ….”
Councilman Patrick Gaunce concurred that it would be difficult to get an accurate comparison. He said the only example he could think of was the Transpark at Bowling Green, for which 200 acres of farmland was purchased for what he called an exorbitant price, but they weren’t buying it to farm, they were buying it for commercial purposes.
Royse reiterated that saying there was an appraisal was “nothing more than a mistake, because we had to do due diligence, and we had a big long list of things that they were doing for us.” He said he presumed the appraisal was part of what the engineering firm doing the due diligence work would have, “but we didn’t need it.”
After a few minutes of discussion about what exactly was said at the last meeting when other council members suggested Kirkpatrick see the city treasurer with additional questions, the mayor chimed back in.
“We talked about, ‘Well, let’s go ahead and get one, since we didn’t look like we had one, but we can’t figure out …. It’d be a waste of money, because it’s going to appraise for at least what we gave for it,” Royse said.
“I hope so,” Marion said.
“This is the largest piece of [undeveloped] property in the city limits, period, that’s available, and when we’re all way off of this council, people are going to thank us for the foresight to have done this to give us,” Royse said.
Marion called for the question, i.e. the vote, and with no further discussion, the 7-2 vote occurred.
The Dec. 3 event to which Garrett had referred is when options for the development of the Cleveland Avenue property are to be available for viewing by the public. Although it is an “open-house” type format, notice has been provided for it as a special-called council meeting, as a quorum of the council members may be present. The event is from 6 to 8 p.m. in Council Chambers on Floor 2 of Glasgow City Hall, 126 E. Public Square.
Other business
The next item of business was the second reading of the ordinance providing for the issuance of up to $5.4 million in bonds to be used “to renovate, improve, and equip park facilities to be owned and operated by the City for the benefit of its citizens” – essentially, for part of the cost of the overhaul of American Legion Park.
Marion read aloud a specific segment: “To the extent budgeted funds are not available for said purpose, [the ordinance] orders and provides for the levy of an annual tax in an amount sufficient to pay the principal of and interest on the bonds.”
“So, after just spending $7.6 million, now we’re going to tax the citizens to pay interest on a bond? Is that really what I’m reading?” Marion asked.
At the Nov. 12 meeting, Christian Juckett, a bond attorney with Rubin & Hays who prepared the ordinance, and Chip Sutherland, a public finance banker with Baird, were on hand to answer questions.
Juckett, anticipating that that wording might cause some unnecessary concern, said then that that sentence is standard language that state law requires to be included, but the money is budgeted, so it shouldn’t be necessary.
On Monday, Alexander reminded Marion of what Juckett had said, noting that any such tax would be highly unlikely.
And Marion rephrased that as their not actually knowing whether it would be necessary.
Sutherland said at the Nov. 12 meeting that the bond sale would be scheduled for Nov. 26.
The final action item was the second reading of an ordinance rezoning approximately 0.24 acre at 808 S. Lewis St. from light industrial (I-1) to low-density residential, and it was approved unanimously.
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