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St. Petersburg Housing Authority paid $1 million for land appraised at half as much
October 18th, 2011 5:47 PM

St. Petersburg Housing Authority paid $1 million for land appraised at half as much

By David DeCamp, Times Staff Writer
In Print: Friday, January 21, 2011

ST. PETERSBURG — Despite a historic real estate slump, the St. Petersburg Housing Authority paid double the publicly appraised value for 5 acres of foreclosed land for its new headquarters.

The Housing Authority did not seek its own appraisal — a standard government practice — before buying the land for $1 million in July.

The Pinellas County Property Appraiser's Office set the market value of the land, at Gandy Boulevard and Interstate 275, at $501,160 for 2010.

While sales prices often exceed publicly set values, Property Appraiser Pam Dubov said the office has no reason to rethink the value, given foreclosure rates and the bad economy. The value was a $91,000 decrease from 2009.

The land will be home to a 13,000-square-foot Housing Authority office for 30 employees, though three unused acres could be sold.

Plans call for the $1.2 million building to include a wellness center for employee workouts, showers for men and women, and a wall-mounted flat-screen television in the office of chief executive officer Darrell Irions. His office is to have its own covered entrance.

"This is not a Taj Mahal. This is not anything elaborate," said Irions, saying the agency tried to make the building "practical and functional."

Meanwhile, one of the Housing Authority board members who voted to approve the sale has co-owned several businesses with one of the real estate brokers who shared a $60,000 commission on the sale.

Irions says that the new office would meet future needs of the agency and help keep employees. The land deal was the best the agency could get, Irions said, having deemed rental property too costly to upgrade and having at least one bid on another parcel rejected as too low.

The headquarters project stalled this week after all 18 construction bids came in over the $1.2 million estimate. Most bids were $400,000 or more above expectations.

The agency likely will make cuts in the project, but Irions wouldn't say if the wellness center or other features would go.

After a bitter separation of the authority's joint operation with the Pinellas County Housing Authority in 2009, the St. Petersburg agency has been leasing space recently.

The break was caused by some county board members' anger at Irions' handling of a plan to build a $3.7 million headquarters.

The St. Petersburg authority bought its headquarters land from Mercantile Bank, which included the tract in a broader foreclosure against developer Grady Pridgen in October 2009. He bought the property for $266,000 in 2000.

The bank asked for $1.5 million in January 2010. The authority countered at $1 million, records show. By then, authority officials said they reviewed dozens of locations with no luck meeting their needs for parking and space.

The Gandy location is near an interstate and a bus stop and already has utility lines.

"What we've seen in rehabbing and stuff like that, it just isn't there," Joseph Lettelleir, a board member who business interests include a realty firm, said during a meeting in January 2010. "It's almost that we're better off to find a piece of property to build … what we want in the right location."

Irions said there was no way to find land at $100,000 an acre in St. Petersburg. He said it was acceptable to buy the land for $1 million with no independent appraisal because the purchase was "straight land" not involving housing or other buildings. Appraisals can be costly, he said.

But appraisals are common, if not legally required, on other housing-related purchases, including by the Housing Authority's 2010 sale of the Graham-Rogall complex in St. Petersburg. The Pinellas County Housing Authority calls them necessary in today's real estate market. However, there's no city authority policy requiring one.

Instead, the authority used comparable sales to judge the price, Irions said.

When asked by the Times to provide those comparables, the authority on Thursday produced four examples that weren't actually sales. They are asking prices of current listings — including one near waterfront and one on trendy Beach Drive in St. Petersburg. Dubov's office didn't list comparable sales in assessing the land because of the difficulty in finding them in today's market.

Government agencies like the Housing Authority "are not real estate people. So they, frankly, overpay for something," said Andrew Wright, managing partner at the commercial real estate firm Franklin Street in Tampa.

A broker for the seller, Mercantile Bank, cast doubt on the property appraiser's $500,000 valuation of the land, saying that appraising is difficult in this market and similar land has sold much higher.

"I've never seen the property appraiser land on market value. It's some percentage of it. They're all over the map," said Bill Eshenbaugh of Tampa, a broker for the bank, who did not have an appraisal of the property either.

"Bear in mind, my mission was to get the biggest pile of money for my client."

The authority land deal was brokered by Eshenbaugh and Roger Broderick, a developer and broker for the Housing Authority who evenly split the $60,000 real estate commission on the sale.

Broderick brought the idea of buying the land to the Housing Authority, where his longtime business partner, Lettelleir, heads the board's property acquisition committee. Their interests have included owning the Paradise Lakes Resort nudist site in Pasco County. Lettelleir does not have an interest in Broderick's brokerage business and received no commission, Broderick said.

Lettelleir disclosed the men's business relationship during a 2010 meeting prior to buying the land. Lettelleir declined to comment.

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Posted by Jennifer Stepanek on October 18th, 2011 5:47 PMPost a Comment

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