City land-purchase decision has quite a history
The May 4 Chico Enterprise-Record carried a front-page, above-the-fold headline and story that most likely stoked the opinions of many in Chico that the current City Council majority spends money like an inebriated sailor on shore leave.
“City to buy property for more than appraised value,” read the headline. And the story’s lead explained the outrage: “The city will pay 18 percent more for a piece of property than the lot was appraised for, following a 4-2 vote Tuesday night.”
The council voted to offer up to $100,000 for a small piece of property with a two-bedroom house that had been appraised at $85,000 less than two months earlier. And the city just wanted the dirt the house sits on, not the house, which if the deal goes through will be demolished.
Clearly this “liberal” council majority had lost its collective mind.
But the story actually stretches back at least a half-decade and contains a number of chapters.
Five years ago the city had plans to purchase the property, located near the corner of Wisconsin and Boucher streets along Little Chico Creek in Chapmantown. The city would use redevelopment funds to pay property owner Bill Carter and his partner $450,000 for the 1.3 acres of land. Carter had purchased the land two years earlier for $395,000. By the time the city showed an interest, the land was appraised at $566,000.
The city initially offered $495,000 plus two sewer rights, and Carter agreed. He held onto a two-bedroom house and the 5,500 square-foot parcel on which it stood.
The city planned to contract with the Community Housing Improvement Program to build seven houses via a self-help program in which the qualified owners help construct their homes with “sweat equity.” CHIP would arrange for low-interest loan through local banks.
But the deal began to unravel in November 2006 when Butte County Supervisor Jane Dolan stepped in and said the city failed to properly notify the county about its plans, as per agreement established in 2000.
At a council meeting in which the resolution for approving the project was brought up for what were deemed technical corrections to the wording, Dolan stepped in and convinced four council members—conservatives Dan Herbert, Steve Bertagna and Larry Wahl and progressive Ann Schwab—to deny the project. Dolan argued it was too dense, too close to the creek, too expensive, and that the county had been shut out of the process. Schwab said she needed more information.
The city went ahead and purchased the property in April 2007 for $450,000. Dolan filed a lawsuit in September. CHIP pulled out, and the property remained undeveloped.
Carter then decided to sell the house but couldn’t because a property line drawn during the initial sale mistakenly left the house partially sitting on one of the lots now owned by the city. He said the city then delayed the modification of the line, which was supposed to happen as part of the lawsuit settlement.
The modification was never done, and the sale couldn’t happen. At one point the city discovered Carter was still renting to tenants, which further delayed the sale. Carter helped relocate the tenants, and last year the house and property were appraised at $140,000. Carter said that was too low, the house had an escrow of $225,000 and he’d had a buyer willing to pay $175,000. But he couldn’t sell it because of the errant property line.
But redrawing that line had taken a back seat to other city business, including negotiating city employee wages and benefits to save the city money.
Carter asked for another appraisal, which again came in at $140,000. He agreed to sell at that price, but the delays continued. Then, in February, the council took up the matter again. At that meeting local realtor Dave Donnan told the council the appraised value was too high. Councilwoman Mary Flynn, apparently heeding Donnan’s advice, called for another appraisal, which placed the value at $87,000.
At the May 3 meeting, the council took up the matter yet again. Carter expressed his frustrations and said recapping the history of the project in his allotted three-minute address to the council was futile.
Donnan again addressed the council members, but this time said the repeated delays were not fair to Carter, that the city had not acted in good faith, causing the steep decline in the property value.
So four members of the council—Flynn, Schwab, Andy Holcombe and Jim Walker, voted to approve the property line modification and offer Carter up to $100,000 for the property. The newest council members, conservatives Mark Sorensen and Bob Evans, voted against the offer.
But adding the parcel, said Sherry Morgado, the city’s Housing and Neighborhood Services director, would improve access to the existing city-owned property and improve the overall project. And because of this, paying a higher price for the property was justified.
Now the ball is back in Carter’s court and the city is waiting for his decision to sell. He was hesitant to talk about the situation because of the politics and accompanying publicity he’s been dragged through in previously published stories.
Morgado said Carter has at least 30 days to decide.