Oh What a Web Frey Wove

On August 8, Council approved paying $900,000 for the old Alexanders parcel to be used for the Wastewater Treatment Plant improvements required by the EPA. The legislation will go into effect 30 days from passage unless Council rescinds its vote.

First, a correction to the original post Pay To Play – It was Wd 7 Councilman Langman, not Council President Holzheimer-Gail who fronted the idea to put off a vote until Council had more info. That idea was voted down and the price approved by a narrow 4-3 vote (see Pay To Play post).

In the 12 days since the legislation passed, there have been a number of interesting developments:

- It was Wd Councilman O'Hare that pushed to end the debate and vote. The day after he voted FOR the purchase at $900,000, O’Hare drew up a list of questions for Law Director Frey relating to the appraisals which Council received after the vote and the MacDonald’s lease. Too little too late Councilman.

- Some members of Council have asked for a follow up meeting to review the purchase based on new info received. In response, Council President Holzheimer-Gail sent out an email on Aug 13 saying she would hold an Executive Committee meeting, but would like it coupled with a Service Committee meeting. That meeting has yet to be scheduled. The issue though is not whether Council should approve purchase of the property. The issue is whether Council should pay almost $200,000 more than the property was appraised at. Given the 30 day window on the legislation, this matter should be considered as soon as possible.

- Regarding the appraisal that was the basis for the $900,000 offer, the Jan 6 supplemental appraisal assumed, “that the lease between 36907 Westminster Road LLC and MacDonalds USA LLC has been fully executed (signed) and was effective January 6, 2012.”  The assumption was wrong. In an email to Council Dir. Frey admitted that, “The McDonalds lease was never completed…”.  The price also reimburses Miles Carter’s LLC (the Seller) for demolition of Alexanders and carrying costs.

- The second and lower appraisal was submitted twenty days later on Jan 26, 2012 and valued the parcel at $715,000.

- Despite Director Frey’s insistence that commercial values in Euclid won’t change that much, the Plain Dealer reported Aug 20^th that in fact, commercial properties in Eucld DID go down.  

Councilperson Scarniench and Langman made a good point when they asked Law Dir. Frey why Council had not received the appraisals for their review. Frey’s response was to admit that it would have been better for Council to have appraisals, but since no one asked for the appraisal, he didn’t bother to send them. Well, given the fact that the appraisals were 7 months old and the higher appraisal was based on a faulty assumption, I can see why Frey was loathe to provide Council with the info. Council should have done its due diligence though. It should have asked for the appraisals before voting.

Councilpersons Caviness and McLaughlin are on record as saying that even if they saw the appraisals, they would probably go along with the price based on the Law Director’s argument. I wonder if they still feel that way.

In reviewing the discussion, it should be pointed out that the reason for the rush was so the City could apply for a loan from the OH Water Development Authority (OWDA) to buy the property in time for its August meeting. The loan will be financed with the sewer rate increases. The parcel will be used for the Headworks and Sludge Force Main which have EPA approval. Engineering studies need to start.  It’s a 6 year project. Why couldn’t Council wait One More Week before voting?

The fact that Caviness, McLaughlin, O’Hare and Holzheimer-Gail approved the purchase price without enough information to make an informed decision does not speak well to the council members’ judgment.  Councilman McLaughlin even went so far as to say that while every dollar counts, he shrugged off opposing Council members’ concerns by saying this is only .1% of the total project cost. This logic for overpaying by nearly $200,000 is unsettling at best and irresponsible at worst.

Council’s approval of the $900,000 purchase price was based on 1) A faulty assumption; 2) a 7-month old appraisal and 3) the need to apply to OWDA for a loan in time for its August meeting. The irony is that OWDA meets every month. By stripping the ‘emergency’ out of the legislation, the City can’t meet the August date anyway.

New sewer rate increases are coming as early as next month. If you’ve got 49 minutes, I encourage you to watch the meeting on ECTV Video On Demand. Discussion on the purchase begins two hours and four minutes into the meeting. If after watching it, you’re as uncomfortable as I am with the way 4 members of Council neglected their due diligence duty I encourage you to contact your council person and urge them to call a meeting to review this decision. Then attend the meeting and voice your concerns. It’s your money they’re spending.