Be our guest: Land swap skepticism
By Eric Olson
Stevens Point, WI
As a taxpayer in both the city and the county, I am deeply skeptical of the proposed real estate swap with Portage County. I am also concerned about the apparent lack of controls used by the city in acquiring the land in question and subsequently offering to trade it with the county.
In the past two years, the city has acquired a fairly large amount of land, including over $400,000 for a downtown site considered for a new city hall, $340,000 for land east of Parkdale Park with no specific plan, $300,000 for the Belke property downtown, $91,000 for three acres in the East Park Commerce Center, and $2.5 million for the 80 acres in the Commerce Center that was to include the O’so brewery on the southern portion. With the exception of the 80 acres in question, the finance committee reviewed the purchase agreements and descriptions for all of these acquisitions before the sale was finalized. Why was the purchase agreement for the 80 acres not brought back to the FInance Committee before being executed? Where did the purchase funds come from?
The explanation given by city staff is that the development agreement from 2012, updated in 2014, requires the city to buy land from the seller in larger parcels, and that the development agreement with O’so required the city to initiate a purchase; the two together constitute implicit approval to buy 80 acres. That may be so, but it still seems odd that the purchase was not explicitly approved by the finance committee like all the others. What if the purchase price for the 80 acres was $4 million rather than $2.5 million? Would staff have been authorized to spend that amount without council approval? Maybe $4 million sounds crazy, but that is the amount paid by Meijer for less than 30 acres just next to the land in question. That raises another question: why $2.5 million? Was that price a bargain? A ripoff? Compared to Meijer’s purchase, it seems to be a bargain. Was the seller implicity expecting something more from the city in the future by selling at this price?
My second question is also about money: the finance committee approved borrowing $1.2 million to purchase the O’so land. Where exactly did the balance of the purchase money come from? Presumably from additional borrowing for the TID. If that’s the case, how does “swapping” this land with the county aid in gaining the taxable value growth needed to pay back the TID borrowing? The county land would be off the tax roll. Also, since the Finance Committee needed to approve borrowing the $1.2 million for O’so, why didn’t they need to approve the balance of the purchase amount?
These questions raise doubts about the serpentine path that the city used to own the land being considered for the swap. To my eye, the whole swap endeavor appears rotten at the root. Add to this the departure of the two staff people most credited with this idea (the county purchasing director and the city community development director) and we are left with a cocktail-napkin-proposal that might make sense in a tavern but doesn’t pass muster when subjected to sunlight. Finally, who exactly has the authority to initiate the swapping proposal? This horse seems to be out the barn with no one in particular holding the door handle. Is that really good practice when dealing with millions of dollars in public assets?
The Finance Committee could consider adding additional controls to the spending of public money on real estate, including a requirement that staff present an appraisal to committee before negotiating a purchase price, and limiting the purchase of real estate by city staff where explicit approval is lacking to those transactions under a reasonable amount, say $500,000. The Finance Committee may also need to develop a process or protocol for initiating land swaps of the type being debated, ideally maintaining the flexibility to envision creative solutions to wicked problems while also preventing either party to the swap from expending money on serious design studies before swap ideas are thoroughly vetted by the city.