I am writing in response to newspaper accounts regarding a real estate transaction between the city of Chattanooga and a partnership of which I am a part owner. It has been alleged that our partnership received some unfair advantages in this transaction.
It is important that these allegations are addressed.
First, it is alleged that a piece of land our partnership purchased “quietly ended in our domain.” The RiverCity Company’s public Request for Proposals pertaining to this property was for interested parties to compete for the exclusive right to negotiate with the Chattanooga Downtown Redevelopment Corporation for the purchase of the property. We outbid our competitor by $195,000 and thereby were given the exclusive right to negotiate the purchase.
The option to purchase an additional adjacent parcel is one of the terms we negotiated during the process. In consideration for the option to purchase this adjacent property, we are required to install all utilities at our expense that could be used by future development of that property. This provision enhances the value of the city’s property for future sale if the option is not exercised.
The only other competitor to bid, Mr. Bill Sudderth and Chattanooga Land Company, also stated in a public CDRC meeting that the prevailing competitor should have option rights to insure that future surrounding development would be compatible thereby protecting their investment. The only two parties to bid both wanted options to protect their considerable investments and it would be reasonable to assume any other qualified purchaser would require the same.
Another contention is that we received an alley at no cost. This particular alley is between the property we purchased and the optioned property now owned by the city. Currently we do not own the alley, but only have a non-exclusive easement and when we exercise the option to purchase the adjacent property we are obligated to purchase the square footage of the alley as well. This easement allows the flexibility for the city to have alley access to their property in the event the option is not exercised on this adjacent property. The city abandons alley rights on a regular basis usually dividing the property between the adjacent landowners at no charge. In our case we only have a non-exclusive easement or we have to purchase the alley.
Another contention is that we have received unreasonable payment terms on the sale of the land. We bid $195,000 more than the only other party that showed interest in purchasing the property. It is noteworthy that there was only interest from one other developer even before the downturn in the real estate market. It is not unusual in real estate purchases that terms are negotiated particularly when the purchaser is offering more money than other interested parties and the market is down.
In summary, we paid $195,000 more for the land than our only other competitor and the city will realize about $100,000 more a year in taxes by choosing our proposal over our competitor because our project offers a higher per unit value. The city’s position is well collateralized. We negotiated the terms of the sale within the process available to us with the CDRC. The results of these negotiations were approved in an open public meeting, and at no time did we ask for or in our opinion receive any special terms that would not have been given to our competitor if he had bid more money for the property and had been chosen to build his proposal.
Dale Mabee
Chattanooga
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It is known that no matter who the mayor is, his friends and family are going to get special privileges from the city.
I would like to purchase property with a no interest loan from the city and then develop it and sale for 10 or 20 time profit. Tell that one to your friends not me.
Donald Carroll
doncarroll1968@yahoo.com
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If a million-dollar interest-free loan, no-bid land options, and free property don't count as "special favors", I'm curious to know what does.
'Course, Dale Mabee plays fast n' loose with the facts and language surrounding the transaction. Note that Dale cites RiverCity Company as the author of the RFP (clever). It's true, RCC did develop the RFP, but the mayor and the CDRC made the decision on whose proposal was accepted. RCC, being the experts, are often contracted in this manner. Take the Wheland Foundry property, wherein RiverCity is handling the public process and planning aspects of the project (and perhaps eventually the RFP), but the property owners will make the decisions on which developers actually enact the plan (and where and how).
Dale cites his "higher bid" as warrant for his receiving the project. Who wouldn't be comfortable bidding higher on a piece of property if they knew the seller was going to front the cash, and without any personal liability.
Further, as Dale makes mention of later, his project was much larger than his competitor, hence the price difference. It wasn't as if Dale was offering to pay more; he was offering to 'do' more (on the taxpayer dime). The price difference is functionally irrelevant.
Dale also calls the alley in question (aka the "free property") "non-exclusive" given that were Dale not to exercise his exclusive option on the adjacent property that someone else would have rights to use the alley. Well, of course, but the option is exclusive and Dale would gain sole rights/ownership of the alley if the did exercise the exclusive option.
Finally, Dale states:
"...at no time did we ask for or in our opinion receive any special terms that would not have been given to our competitor if he had bid more money for the property and had been chosen to build his proposal."
What Dale is "arguing" here is that since he didn't call the terms of the agreement "special", they aren't. Right. Further, Dale offers the dubious claim that had he not gotten the project, his competitor would have been given the same terms. Right.
Any Baylor students out there taking Informal Logic who want to guess which fallacies Mr. Mabee has committed?
Josiah Roe
josiah@coptix.com