The Forney City Council tabled the Forney Economic Development Corporation's (EDC) purchase of 110 East Main Street at their January 21, 2014, meeting citing concerns about the property's appraisal and inspection.
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The EDC recently sold and funded approximately $2 million in bonds it plans to use to purchase buildings downtown to spur economic development and the revitalization of the downtown corridor. 110 East Main is the first of several planned purchases.
Forney City Council member Andy Parker first raised the concerns after noticing the date of the appraisal was before the date of the inspection – which could directly impact the appraisal value. Currently, the building and adjacent property at the rear of the building used for parking are appraised for $487,500. The negotiated purchase price is $400,000.
“On the face of everything it looks like we're making a bargain purchase,” said Parker. “But I'm troubled by a couple of things … The appraiser presumably did not have the benefit of the results of the inspection. Some of the items noted in the inspection could be fairly expensive to renovate.”
Parker also noted the building would need to be brought up to ADA compliance and the contract states the buyer, the EDC, would be responsible for paying the ad valorem taxes for 2013 on the property. All of which, he says, “reduces the apparent bargain.”
EDC Director Kim Buttram stated the taxes equate to approximately $4,000 which was figured into the negotiation. The EDC also plans to keep the current tenants in the building until they vacate at which point the ADA compliance issues would need to be addressed before a new tenant could occupy the space.
When asked about the estimated costs to renovate the building and bring it up to code, Buttram said, “It's possible the EDC would not even end up renovating this property and through property collection we transition to a developer. We are in discussions with a downtown developer.”
However, the EDC could possibly end up renovating the building. Concerned about protecting the EDC, Stephens said, “You look at the deficiencies, it could cost you another $250,000 to get gutted correctly and set up the way you want it set up so now you're looking at a $650,000 building.”
The inspection also reveals the need for a new roof, said Parker, which could ultimately impact future negotiations with any potential developer purchases and also affect the EDC.
“If we have an appraiser take the inspector's report and marry those two together, we'll have a better understanding of what we're looking at. The EDC will have better understanding too,” said Mayor Darren Rozell.
“The EDC is well aware this is a lemon building,” said Buttram. “That's part of the methodology - the properties that aren’t being taken care of, that have the absentee owners, the question they have to ask themselves is if we don't do this will someone else?”
The council tabled the purchase pending an update on the appraisal which will be presented at the February 4, 2014, council meeting. If approved, the closing date on the contract for the property will be February 15, 2014.
Forney City Council member Andy Parker first raised the concerns after noticing the date of the appraisal was before the date of the inspection – which could directly impact the appraisal value. Currently, the building and adjacent property at the rear of the building used for parking are appraised for $487,500. The negotiated purchase price is $400,000.
“On the face of everything it looks like we're making a bargain purchase,” said Parker. “But I'm troubled by a couple of things … The appraiser presumably did not have the benefit of the results of the inspection. Some of the items noted in the inspection could be fairly expensive to renovate.”
Parker also noted the building would need to be brought up to ADA compliance and the contract states the buyer, the EDC, would be responsible for paying the ad valorem taxes for 2013 on the property. All of which, he says, “reduces the apparent bargain.”
EDC Director Kim Buttram stated the taxes equate to approximately $4,000 which was figured into the negotiation. The EDC also plans to keep the current tenants in the building until they vacate at which point the ADA compliance issues would need to be addressed before a new tenant could occupy the space.
When asked about the estimated costs to renovate the building and bring it up to code, Buttram said, “It's possible the EDC would not even end up renovating this property and through property collection we transition to a developer. We are in discussions with a downtown developer.”
However, the EDC could possibly end up renovating the building. Concerned about protecting the EDC, Stephens said, “You look at the deficiencies, it could cost you another $250,000 to get gutted correctly and set up the way you want it set up so now you're looking at a $650,000 building.”
The inspection also reveals the need for a new roof, said Parker, which could ultimately impact future negotiations with any potential developer purchases and also affect the EDC.
“If we have an appraiser take the inspector's report and marry those two together, we'll have a better understanding of what we're looking at. The EDC will have better understanding too,” said Mayor Darren Rozell.
“The EDC is well aware this is a lemon building,” said Buttram. “That's part of the methodology - the properties that aren’t being taken care of, that have the absentee owners, the question they have to ask themselves is if we don't do this will someone else?”
The council tabled the purchase pending an update on the appraisal which will be presented at the February 4, 2014, council meeting. If approved, the closing date on the contract for the property will be February 15, 2014.