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Monday, March 30, 2009

It’s a church; it’s a government center; no — it’s a special interest, tax payer rip-off




The investors make more than $1,000,000 on their investment and the Hays County government would have functioned as a bank for the City of Wimberley and purchased property appraised at $1,350,050 for $2,400,000, and spend an additional $600,000 for renovations

Wimberley Ctiy Council Special Meeting tonight, 6 p.m. See the agenda.

Send your comments and news tips to online.editor@valleyspringcomm.net

or to codell@austin.rr.com

By Charles O'Dell, Ph.D.


Here’s how it works.

In anticipation of building a new facility, the First Baptist Church in Wimberley sold its land and existing buildings to a group of investors who operated as Wimberley Crossroads LLC. The purchase price was $1,350,050. Wimberley Crossroads paid $350,050 down; the church held a note for $1,000,000. Wimberley Crossroads also agreed to lease the property back to the church so the congregation would have a place to meet while the new facility was under construction.


Enter the first of the deal makers, the realtor/investor …


On March 12, 2007, Tim Fulfer, the local realtor who represented the Wimberley Crossroads investor group and who was, himself, one of the investors, wrote a letter to Wimberley Mayor Tom Haley. In that letter, Fulfer suggested that the Wimberley City Council give consideration to purchasing the property. After all, as Fulfer argued, an abandoned church facility could serve as a perfect city hall and government center.


Enter the second of the deal makers, Precinct 3 County Commissioner Will Conley …


The next thing we know is that Commissioner Conley was on board, roaming all over Wimberley proclaiming the benefits of a combined county-city government center. The City of Wimberley, in the form of City Manager Don Ferguson and his slick power point presentation in a couple of community meetings was proclaiming the many benefits of such a center. Just think of it — city and county satellite offices, and even some state offices, in one centralized location. Sounds good — right? Maybe it sounds like a good idea until you look at the numbers and the behind the scenes shenanigans.


Consider the following:


-- Conley’s original proposal was to have Hays County purchase the property for $2,400,000 and spend an additional $600,000 for renovation. The City of Wimberley would then enter into a lease-purchase agreement for half of the property.

-- Wimberley Crossroads LLC had an appraisal dated January 10, 2007, indicating a market value of $2,585,000.

-- The City of Wimberley commissioned an appraisal; its appraisal dated April 14, 2008, yielded a market value of $2,642,000.

-- But what about Hays County? What did the Hays County Central Appraisal District say? That’s where the problems begin to surface.


As it turns out, the Central Appraisal District had never appraised the church facilities. At first, that may sound normal — after all, it was a church, a tax-exempt entity. But let’s look a little closer.

Over the years, the Central Appraisal District had been appraising the church land, but the church didn’t have to pay taxes because of its tax-exempt status. The buildings, though, had never been appraised. And even when the property changed hands — when it was sold to Wimberley Crossroads LLC, a private entity, there was no change in the appraisal value. The Wimberley Crossroads group owned the property from July 20, 2006, to June 7, 2008, without having to be assessed for any taxes on buildings that are now taxable property.

Meanwhile, Commissioner Will Conley was planning and advertising a community meeting in Wimberley. It would be a time for the public to learn more about this plan for a joint city – county government center. The date of the meeting was June7, 2008. For some reason, and we can only assume that the approaching community meeting that made it necessary to tidy up any questionable matters, the Central Appraisal District finally appraised the buildings. Remember the dates: The community meeting was June 7, 2008; the date of the first full CAD appraisal was June 6, 2008.

So what was the Hays County Central Appraisal District market value? The value for June 6, 2008, was shown as $1,977,720. Eventually, Conley, on behalf of Hays County, and without any formal approval from the Commissioners Court, entered into a contract to have Hays County purchase the property for $ 2,400,000. That’s right; Conley was proposing that Hays County purchase the property for $2,400,000, even though the Hays County Central Appraisal District value was $1,977,720.

That’s bad enough, but it gets worse. A month later, the Central Appraisal District dropped the appraised value by more than $600,000. As of July 18, 2008, the appraised value was reduced to $ 1,350,050…the land dropped to $276,910, and the buildings dropped to $1,073,140.


At the risk of asking the obvious, did your property appraisal drop some 32% last year?

Here’s where we stand now…

The City of Wimberley City Council is holding a special meeting on Monday (this evening), March 30. The City Council will take another look at the proposal. The owners, Wimberley Crossroads LLC, are placing a value of $3,000,000 on the property; the property is appraised by the Hays County Central Appraisal District for $1,350,050.


Commissioner Conley’s plan hasn’t changed. The County would pay $3,000,000 for the property and its renovation. The money, of course, would come from the pockets of tax payers throughout the county. The City of Wimberley would, though a lease-purchase agreement, get space for a bigger and presumably better City Hall.

The long and short of it is this: The investors make more than a $ 1,000,000 on their investment and the Hays County government would have functioned as a bank for the City of Wimberley and purchased property appraised at $1,350,050 for $2,400,000, and spend an additional $600,000 for renovations. As someone from San Marcos said, “It’s a great deal for Wimberley. The folks in Wimberley still don’t pay property taxes, but we do. Why should we finance their new city hall?”

Stay tuned.


As co-founder of Hays Community Action Network (HaysCAN) in 2003, Mr. O’Dell strives to carry out the mission of ensuring open, accessible and accountable government. He is a long time and close observer of the workings of the Hays County Commissioners Court. He earned a degree in Agricultural Education and a Masters in Ag Economics at Texas Tech, and, later, a Ph.D. at The University of Maryland while employed as a Research Economist with the U.S. Department of Agriculture (USDA) in Washington, D.C. Texas born and raised on a family farm, O’Dell is a Hays County Master Naturalist and a board member of the Ethical Society of Austin.

5 comments:

Anonymous said...

Yes! Indeed, the world has gone mad and blind!! Haven't we enough on our backs with the Feds and AquaTexas taking some much of our hard-earned dollars away from us...now the locals are getting in on the act...Is no one out there paying attention? The Commish has gotten waaaaaaaaaaaay too big for his britches (have you seen him lately?)and he needs to be taken down a peg or two...his having been re-elected has gone to his head and someone/something else has gotten into his pocket!!! Hopefully, yhe City Council will see through this mess and throw it out with the dirty dishwater!!!

wandering pilgrim said...

Charles' work as an economist doesn't come much into play when it comes to real estate. Charles, I can probably find a reason to maybe (MAYBE) agree with you on the business of the County/City purchasing something like this for $3 million if they don't really need to, that is one matter altogether. Another is that when you say that the property isn't worth the asking price simple economics is that ANYTHING is worth what the seller asks for it, and the buyer is willing to pay for it. It is the intersection of supply and demand (the selling point). That doesn't mean that to you and me that it is worth that much. The Appraisal District doesn't apparently think it is worth that much for property tax purposes, but (assuming that the appraisals that YOU mention are authentic and prepared by bona fide appraiser) if an appraiser goes out and prepares an appraisal based on market comps, then there is a basis for saying that a property is worth an appraised value. Two independent appraisals came back within close range of one another, though neither was $3 million (which is also interesting why the County would be willing to pay almost $400K more than their own appraisals said that the place was worth - why pay for the appraisals then?).

The Appraisal District in my understanding has an appraisal of one's property that is what the property is taxed on (perhaps best to describe it as "fair market value"?), though this is hardly ever the same as what it will sell for in the market at the same time. Sometimes the market value is more than the taxable value, and sometimes it is less. Go figure. Wouldn't it be great though if the County (if it had any business buying the building and land to start with) could get it for the Appraisal District's price? (Not realistic though since they are wanting to buy it from investors.)

Of course, the County could go into Precinct Three and buy a piece of dirt, and build a brand new building, and put in a septic system that is designed by a private third party engineer (all the while there are paid staff members at County Environmental who can design the same for nothing since they are already PAID) and then have an installer install the system, and have cost overruns. (Just like they did in Precinct Four!) btw - how come you never wrote about that one? ~ but i digress, you have some good points, but also again your bias shines through - go after Pct 3 for wanting to spruce up their digs just like Pct 4, but without a single mention of Pct 4's recent boondoggle (though it is a pretty building), or the County's surefired overbudget project waiting to happen with the consolidation of County offices in far southwest San Marcos...i hope your non-profit group will investigate these two expenditures of public funds the same that you have spent time on this one...

Charles O'Dell said...

Pilgrim,

You missed a number of points that would have a bearing on your argument about market real estate transactions.

First, this was NOT an arms length transaction between the church and the insider LLC. The same attorney represented both the buyer and seller...so whose interest did he represent in terms of a market transaction? It wasn't a market transaction. It was a transaction of convenience.

Second, both of the so called "independent" appraisals were paid for by vested interests who desired an appraisal value higher than the asking price. This was public money being spent...not the buyer's money.

Third, the CAD isn't for hire and its appraisals are aimed at establishing a comparable fair market price to be applied by taxing entities. There were no exemptions.

Finally, it was the shell seller (Wimberley Crossroads LLC) who protested the original CAD appraised value because the lower artificial selling price would require a smaller tax cost. The protest occurred AFTER the change from tax exempt to taxable status was discovered.

Your argument assumes the buyer is striving for the lowest possible price and the seller for the highest, and that both are negotiating in good faith.

You should reread this article and read my October 5, 2008 original Roundup article and not confuse sound economics with collusion and wasteful public spending at best.

Anonymous said...

Charles didn't go after the building cost overruns in precinct 4 because his minion, Karen Ford, was running that office then and one of his cronies was designing the elaborate sewer system, rainwater system, and landscaping for the building.....so that automatically passed muster with The king of righteousness Charles.

Charles O'Dell said...

“Charles didn't go after the building cost overruns in precinct 4 because his minion, Karen Ford, was running that office…”

Ok, what’s your point?

For the record:
min•ion
–noun
1. a servile follower or subordinate of a person in power.
2. a favored or highly regarded person.
3. a minor official.

–adjective
5. dainty; elegant; trim; pretty.

I’m not a person in power so Ford can’t be my minion.
Ford doesn’t consider me a highly regarded person.
Again, I don’t hold office.

I’ll let readers determine if the adjective describes Ford.