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Development company sells land for new school at lower price 'to get this done for the community'

September 22, 2012|By ARNOLD S. PLATOU | arnoldp@herald-mail.com

The development company that sold land to Washington County’s government for a new school Friday did so as part of its business aims but accepted a lower price “to get this done for the community,” the firm’s attorney said.

“It is indeed a shame when the president of the Board of County Commissioners considers it a ‘brutal day’ when the county votes to acquire a piece of property, deemed to be the most suitable and cost effective for a new state of the art elementary school, for $900,000 less than the asking price,” attorney Jason Divelbiss wrote in an email sent to The Herald-Mail on Thursday.

Commissioners President Terry Baker’s “comment that ‘nobody is getting three times the assessed value of a property in Washington County’ may be a fair statement in the world of existing, single family homes, but not in the world of real estate development,” Divelbiss wrote.

Told of the letter Thursday night, Baker shot back.

“Mr. Divelbiss should have bought the property himself for what the county paid for it and then, he could have sold it for the $2.4 million” the development company had asked originally, Baker said. “He could have sold the land himself.”

With Baker and fellow commissioner Jeff Cline in opposition, the commissioners voted 3-2 last Tuesday to pay nearly $1.6 million for a 16.5-acre property where the new West City elementary school is to be built.

The land, which is behind the Centre at Hagerstown shopping center in the city’s western fringe, was sold to the county government Friday morning. The seller was Hagers Crossing Multifamily LLC, which Divelbiss represents and which purchased the property last November for $525,000.

The difference between the $525,000 Hagers Crossing Multifamily LLC paid and the nearly $1.6 million the county paid for it sparked criticism from Baker before Tuesday’s vote. “This is a brutal day for the taxpayers of Washington County,” he said.

He said paying the company “three times” the property’s $496,000 assessed value is a deal no other local property owner has gotten.

But in his letter, Divelbiss said, “the reason why the negotiated price was so much higher than the assessed value and the Seller’s purchase price is the intervening re-approval of a 240 unit multifamily housing project.”

In an interview Friday, Divelbiss said that when the company’s partners, David Lyles and Doug Moul, made a contract offer last fall to buy the property, it wasn’t clear whether the land still retained city government approval to build as many as 240 homes there.

So, Divelbiss said, he and Lyles met with city officials to see whether the city’s 2006 site plan approval was still valid. It was but, he said, then the company still had to get other officials to sign the site plan document, as  normally is done but wasn’t in 2006 before the plan was approved.

Doing that, he said, gave the property the “entitlements to build” and far greater value had existed previously.

When the county government first asked to buy the property, Divelbiss said in his letter, it had already attracted a contract offer of $2.4 million. When that person backed out “based on the uncertainty of future market conditions in Hagerstown for multifamily development,” Divelbiss said, he called the county to start purchase talks.

After negotiations, the county was saying its top offer was $1.5 million and company partners Lyles and Moul were divided on whether to accept so much less than the $2.4 million they’d so recently been offered, Divelbiss said in his letter and the interview.

Moul wanted to keep the land on the market, but Lyles, “having deeper roots in  Washington County, wanted to get this done for the community,” the attorney wrote. “Mr. Lyles convinced Mr. Moul that the right thing to do was to sell the land to the county and it got done.

“For anybody, least of all members of the Board of County Commissioners, to cast negative aspersions, make outright accusations of misconduct or be generally disgruntled because my clients were able to make a profitable business decision while at the same time doing the right thing for the county and the future of its public school system, is a shame,” Divelbiss wrote.

He wrote that he is thankful most of the commissioners focused “on the reality... and the positive nature of the objective site selection process and good faith negotiations.”

In the interview, he said that “when we embarked with the county, our heart was really in the right place. The county expressed to us a strong desire for this site and we really tried to do our best for that.

“To sell it for less than that ($2.4 million), it wasn’t easy,” he said. “The criticism we’re taking over that is difficult.”

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