DISPATCHES FROM EXILE; Vol. 1, No. 1
November 5, 2011
Who’s the Big Winner Here?
By Brad Owens
Austin Rhodes column in this week’s Metro Spirit, ‘Incomplete Information Makes for a Bucket of Mud’ took Augusta Today, City Stink and Jill Petersen to task for what he perceived as a huge injustice we all had perpetrated on State Senator Bill Jackson when we made it known that he had traded a 0.07 acre piece of property he owned, valued at $28,000.00, for a piece that was worth $119,500.00. (City Stink would love to be able to link to Rhodes' column, but The Metro Spirit is still in the Dark Ages and has none of their content available online).
Austin’s ‘bone of contention’ was not the facts that were in Jill ‘Jilly Bean’ Petersen’s amazing and creative article posted in City Stink: The Parking Deck of Wonders, but that Jill had not given the “whole” story and that hence it led folks to come to the wrong conclusion that State Senator Bill Jackson had made out like a bandit with tax payer money.
Seems the records show it in plain black and white (links provided at bottom of this article) and the facts we posted were never in contention for that reason.
No, it is not the facts surrounding this land swap that got Austin’s attention it was that when he read it he concluded that State Senator Bill Jackson, a “close friend” of Austin’s, had done something wrong. The blog did not state that State Senator Bill Jackson had done anything wrong, in fact, I was even quoted as saying that it was not illegal, yet Austin’s own conclusions led him to feel like he needed to start damage control immediately for his ‘good friend.’
Austin’s problem with the fine piece of blogging is not, so he says, because we posted the facts of the trade, but that they were laid out in such a way that it made it look like State Senator Bill Jackson (AKA Po’ Ol’ Bill) got a sweetheart deal when in fact he did not.
In fact, to hear Austin tell Po’ Ol’ Bill’s side of it, he lost money on the deal and was forced to give up a piece of property that he didn’t want to part with. In Austin’s eyes, Po’ Ol’ Bill is a victim and we were misrepresenting the facts surrounding the deal to tar and feather him unfairly. Despite the fact he was reading into it what he wanted to see and that we were just asking questions on what looked like a part of the ParkinGate scandal that was breaking at the same time.
By the way, ParkinGate was caused by research we did into the land deals surrounding the parking deck and the TEE Center where we saw that 933 Broad Investment Co LLC owned land our new parking deck is built on. We broke that story and made it public that the county did not own the property I might add. I digress.
I guess in the interest of ‘fairness’ Austin allowed Po’ Ol’ Bill to get on the radio and tell his “side” of the story on Austin’s radio show (The Austin Rhodes Show, WGAC 580 AM, 15:00hrs to 18:00hrs Monday through Fridays). It seems that although the land was listed as being owned by a Mr. Goldberg, and the paperwork shows it was valued at $28,000.00 for ten years, and ownership only shifted to Po’ Ol’ Bill just a month before Augusta-Richmond County swapped a piece of property valued at $119,500.00 (see HUD link) for it, that in fact Po’ Ol’ Bill had owned it since 1969.
Po’ Ol’ Bill claimed that he was partners with Mr. Goldberg and the property had been owned by them both for a long time. The $24,000.00 listed for the sale from Po’ Ol’ Bill to Mr. Goldberg was what he paid to get full control of the property and cannot be called the “fair market value.” Po’ Ol’ Bill went on to say that he didn’t want to sell it and that the county threatened to start a condemnation action, he even had a paper to “prove” it.
Po’ Ol’ Bill claimed that he was partners with Mr. Goldberg and the property had been owned by them both for a long time. The $24,000.00 listed for the sale from Po’ Ol’ Bill to Mr. Goldberg was what he paid to get full control of the property and cannot be called the “fair market value.” Po’ Ol’ Bill went on to say that he didn’t want to sell it and that the county threatened to start a condemnation action, he even had a paper to “prove” it.
Ok, fair enough, no one ever said that was not the case, well, I can’t say no one ever said that, but I can tell you that no one from our group disputed that the county wanted the property and got it from him.
Dost Thou Protest Too Much?
It seemed odd to us that for simply telling the facts of a very odd land swap deal that took place that we would be called all sorts of names like “wannbes” and “amateur journalist.” It seemed to me that anything looking as shady as the land swap deal with Po’ Ol’ Bill in conjunction with the ParkinGate scandal that had been unfolding at the same time would have been local radio talk show gold.
I mean the facts didn’t line up over the city’s failure to own all the land a $12,000,000.00 parking deck the county owned was sitting on. Why was Po’ Ol’ Bill’s land bought with a swap at what appeared to be a much greater value when 933 Broad was not forced to sell or trade too? As far as I was concerned, it merited further investigation and what is wrong with asking questions when it is dealing with our tax dollars?
Would that deal that gave the apperanace of greatly inflating the value of the land the parking deck is built on going to cause the County to have to pay what would amount to $1,700,000.00 per acre? What was the reason that the County did not just buy the land from Goldberg at fair market value? Why was Po’ Ol’ Bill allowed to dictate the terms in which he was going to give up his land in the swap? Was he given special treatment because he is a political figure? All of these are valid questions given the ParkinGate scandal in my opinion.
Austin’s opinion is that we were trying to smear Po’ Ol’ Bill and it was out non-professional media skillset that caused this. I think it was our much more professional research that uncovered all this rot, but then again, opinions are like assholes, and everybody has one but sometimes your opinion makes you one. I digress again.
My Opinion and Rebuttal to Austin’s Column on Augusta Today
This is my opinion that has been articulated by me from facts presented by members of Augusta Today and City Stink. I hope folks will look at the data, the links and see that it seems Austin left out some pretty major parts of the story and is missing many facts that don’t help support his opinion.
Maybe he was not aware of these facts, but research seems to be a strong point of this group and so I will give him a pass on shooting first and asking pertinent questions later, I mean after all, Po’ Ol’ Bill is a dear friend of his and emotions could have played a part in his vision when looking at these facts.
Austin said, "Bill paid 24k for the property, which was listed as the 'value' because 'that was what he paid for it.” Here Austin is trying to say that what someone pays for a property is not valid and cannot be used for calculating “fair market value.”
That is not really exactly true, but first let’s addresses the listed values and then we can look at fair market value of the property. It was listed as $28,600.00 and had been for the previous 10 years. It was $30,000.00 in 2000, but had declined somewhat. The $24,000.00 only came up when he was buying it from his (dead?) partner Mr. Goldberg and remember, Po’ Ol’ Bill already knew the deal he was getting in the $119,500.00 land swap. Did his partner's estate know? I mean one of Austin’s major arguments is that the swap was fair because it was rental property and hence the values were jacked way up due to the loss of that revenue stream to the owners.
He said, "Ignoring rental income when condemning a property...MAJOR NO-NO." I don't believe that in the first place, and go tell it to the Goldbergs, but the fact is, this was not a condemnation anyway now was it?
Austin elaborated that false point on Augusta Today when he posted this little gem, “Brad...in a condemnation, the total value of the property (rental income) is taken into consideration. BTW...I have been told that you compute such value at between 10 and 20 times annual income.” Oh REALLY? Then let’s look at that and see if Po’ Ol’ Bill was cheated, or was someone else?
He said, "Ignoring rental income when condemning a property...MAJOR NO-NO." I don't believe that in the first place, and go tell it to the Goldbergs, but the fact is, this was not a condemnation anyway now was it?
Austin elaborated that false point on Augusta Today when he posted this little gem, “Brad...in a condemnation, the total value of the property (rental income) is taken into consideration. BTW...I have been told that you compute such value at between 10 and 20 times annual income.” Oh REALLY? Then let’s look at that and see if Po’ Ol’ Bill was cheated, or was someone else?
First off, the property was not acquired through a condemnation action, and Austin’s assertion that rental income is always taken into consideration on a condemnation is just not the correct statement about this, that is in fact 100% wrong given the fact this was not a condemnation. In fact, on commercial properties rental income is already a part of the appraised fair market value.
Also, what is "fair market value?" While it is not explicitly in the value, but the fair market value is the highest price one willing seller would sell the place for to one willing buyer. It is fair market value that takes into consideration rental values and it is not related to a condemnation in this case because the land was NOT CONDEMED!
That's in theory, of course. Now look up a 1033 conversion (forced conversion). That would deal with eminent domain and capital gains, which was NOT the case here as claimed by Austin and Po’ Ol’ Bill (his excuse as to why he didn’t want to sell and wanted a swap was because he didn’t want to pay capital gains taxes).
In fact Bill got a 1031 conversion (land swaps). This whole deal is just not the norm and Austin misses the ever loving point. This is about the fact that SOMEONE was so desperate to get this parking deal done that they were able to force the city to do this out of the ordinary swap and it was NOT an eminent domain issue, otherwise ALL the land would have been purchased or swapped in the same way. Bill did NOT have to do the deal.
Google is a Good Friend
Now, related to rental values and values on a condemnation, some quick online searches produced this gem.
From the article..."As stated, the city contends that the practice of capitalizing earnings to arrive at enterprise value is not acceptable in Louisiana, citing Rapides Parish School Board v. Nassif, supra. In that case the school board expropriated an owner's property in order to remove the building and construct a school.
The court held that the owner was entitled to fair market value computed on the value of the land plus value of the building on a cost of replacement less depreciation basis.
The owner urged that he was entitled to a valuation of the building on the basis of capitalized rental income plus the value of the land.
The court rejected this contention by stating that rental income and the value of the business are not sole criteria but are material to the extent that they assist in determining the fair market value."
After all, Reggie's Hot Dogs was bringing in for them the princely sum of $7,200/annum. How was Po’Ol’ Bill’ able to get away without compensating his partner's estate for that dried up revenue stream (something Austin did not mention even in passing in his Spirit article), but he did say "Oh, but of course the city should pay through the nose for such a fabulous producer of rental income."
Austin’s reasoning here is garbage when he says “he (Jackson) was losing (against his will) a property generating a minimum of $7,200 a year in revenue." According to his logic, Po’ Ol’ Bill should be compensated for that, but for some reason not his partner's estate? Remember, the land swap deal had already been worked out when he did the deal to get 100% ownership of the property. Austin’s own reasoning at the very least makes Jackson look like a Scrooge.
Hot Dogs and Hot Property
Seems like one of the “forgotten” parts about this deal was that not only was Po’ Ol’ Bill Jackson sorted out, so was his tenant on the property, Reggie’s Hot Dogs.
The Commission minutes from the called meeting where this buyout was approved say they compensated Reggie's Hot Dogs $32,000.00 as part of this deal as well. That proves that when Austin brought up the ‘booming business’ Reggie was doing it’s a red herring argument to defend Bill’s compensation.
Po’ Ol’ Bill Jackson had no part in it (unless he was a silent partner), and Reggie was compensated separately to the tune of a lease buy out for the $32,000.00 listed in the minutes.
Land Values and the Big Winners
Regarding market value and sales, there's this item from earlier this year;
"Also, for the first time, Senate Bill 346 allows a recent sale to be considered a property's fair market value, Ross said."
So Austin’s assertion that you cannot assess values based on recent sales is also not correct. He is just flat out wrong on that one too.
State Senator Bill Jackson voted to pass SB 346 so he knows about this. That means that theoretically the deal he did could have the effect of raising the value of the property the parking deck is built on to $1,700,000.00 per acre!
So given that Austin challenges our assertion that Bill’s deal can cause the values of the property under the parking deck to go up let’s revisit the land values argument Austin made once again, but this time from a point of view of how this screws us twice.
If the stated value was $28,000.00 that Bill was paying taxes on for over ten years and as Austin says "When condemnations take place, they ALWAYS are based on the appraised price of property BEFORE any condemnation action or consideration is announced..." it proves the point that Bill got a sweetheart deal.
If it was valued at $28,000.00 then that is what Bill should have received for the property according to Austin’s ‘absolutes’ of land purchases. Not $119,000.00 plus the $32,000.00 buyout of Reggies.
Thanks for making my point Austin that Bill was given a great deal and it seems everyone jumped through hoops to make sure they did NOT need any condemnation action Austin, otherwise he would have only gotten $28,000.00 in compensation, well, according to your logic.
Let's stay on topic here. Was the property worth $28,000.00 or $151,000.00 which is what we ended up paying to own it?
Fair market value CAN be based on recent sales (as the law says now) so 933 Broad has a good argument now because of what was done with Bill. That property is worth MORE now because of the trade and that cannot be debated so the values could be raised up considerably. It doesn't mean it WILL happen, but according to the law it could happen.
The odd swap, and puffed up values given to Bill means if they try a condemnation action 933 Broad can argue that what was fair for Bill is fair for them too? Again, no one has said it’s against the law and no one is saying it will happen, but it CAN, and the law DOES allow it.
I mean, why was Bill given the option to force a swap instead of a regular condemnation action where we would have gotten the property for $28,000.00? Bill could have been able to claim a loss given what he paid for it and the loss of revenues form rent, hence no "capital gains" taxes would have been owed so that is a hollow argument as well. I guess the parking deck just should have not been built, because if Bill didn't want to sell, I don't think we have the right to force him to, right? Not according to “Imminent Domain” in Georgia.
Eminent Domain or Imminent Dough-train?
Eminent Domain or Imminent Dough-train?
Austin’s entire argument really makes no sense when he keeps talking about condemnation when it did not happen and this is what is not making sense to me about the eminent domain argument. How can the city threaten eminent domain against Jackson when they were not acquiring the parcels owned by 933 Broad Investment LLC?
In fact the 0.07 acre parcel acquired from Jackson is the only piece of land where the parking deck sits that owned by the county. The rest of the land is owned by 933 Broad Investment LLC.
In fact the 0.07 acre parcel acquired from Jackson is the only piece of land where the parking deck sits that owned by the county. The rest of the land is owned by 933 Broad Investment LLC.
The city built the deck on private property.
Maybe Bill Jackson could now say he was tricked into selling (heck maybe he could have kept control of his 0.07 acre parcel and the hot dog stand could have been incorporated into the new deck). I mean how can you threaten eminent domain against Jackson to get his land but not do that for the vast majority of the land where they built the deck?
The fact is the city should have gotten all of this land together before building the deck. As anyone can see they went to rather great lengths to acquire Jackson’s small parcel but neglected to get the remaining 90%. Has anyone asked why it was a must that they buy Jackson’s parcel? I mean doesn't seem fair to me that Jackson has to relinquish his land but 933 Broad LLC gets to keep theirs.
Speaking of eminent domain, after the US Supreme Court's notorious Kelo decision, the Georgia legislature created an act to limit the definition of the "public benefit" that justifies taking by eminent domain.
"The Act specifically defines "public use" as;
(1) literal possession by the general public or government entities;
(2) use for public utilities;
(3) use for roads and channels;
(4) acquisitions in instance of clouded title;
(5) friendly condemnations; and
(6) takings of "blighted" property.
The legislation specifically excludes economic development from the definition of public use. As has been the case in many states, the restrictions on public use have a loophole in the "blight" exception.
Blight is to be determined on a property-by-property basis. The only specific direction in the Act is that the subject property must be "urban" and must also meet certain conditions, such as abandonment, environmental contamination or illegal activity on the property."
Could construction of a public/private parking garage justify using eminent domain? I doubt it considering they did not condemn all the land and the very narrow definitions in the act. Anyway it would have been interesting to see.
But since they did not use that but wanted the property (I think they knew they could not force Bill to sell without forcing everyone to sell too) it looks like they had no choice but to buy him and his partner out.
Does anyone else think it is funny that the city was only dealing with one member of the partnership? The agreement states something like; we will trade you this $119,000.00 property so long as you can get your partner's interest in your joint property first. So Jackson did. Austin claims that Bill Jackson and his former partners are settling up lots of deals behind the scenes. How did that conversation go about this property I wonder?
"Hey, the city wants the trade a $119,000.00 property for our property. I know you guys just want to get out of Augusta, so I'll tell you what. Our property is appraised at 28,000.00. I'll buy you out by paying what is very nearly the market value on the place, $24,000.00. Deal? Deal."
It was very generous, really, and I'm not sure why Austin thinks they are settling things up behind the scenes, hell, this was in plain sight. If the Goldberg heirs were looking to cash out of Augusta according to Austin, why would they take less than the property is valued and get no compensation for the loss of rent?
It's weird that Jackson's partner's estate settled for so little. I mean, the city had already made the deal with Jackson that they would trade him the $119,000.00 property (and compensate the partnership's tenant $32,000.00 for terminating his lease) before Jackson obtained his partner's interest in the property.
I'm no fan of eminent domain in any but the most urgent case of public need, but if they've changed it so that now a property owner is entitled to 20 years projected income free and clear without regard to 20 years of maintenance costs, taxes and insurance, I just may change my view of the whole thing. And get another rental property to boot? Sweet! Well, sweetheart of a deal!
Oh well, I guess Bill’s partners just wanted to cash out, like Austin says, or did they even know? I will assume Jackson told them everything in the interest of full disclosure.
The Big Loser
So who really lost here? The tax payer did, as usual when dealing with the CABAL.
And who benefitted? The majority beneficiaries are; 933 Broad, Riverfront, the Marriot and of course, State Senator Bill Jackson, much to Austin’s obvious chagrin.
OUT FOR NOW, B.O.
NOTES;
Called Commission Meeting August 9, 2010:
William S. Jackson's Settlement Statement (HUD)
SB 346
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