County aims to sell some land in the industrial park. | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

Advertizing for upset bids

Would you want to do business with the County if they're doing what it looks like they're doing?

    Beaufort County is about to dispose of some land in the Industrial Park. It's a real deal if you need ten acres in the hottest industrial property in ... well we're not quite sure of the universe but we have been constantly told by the Economic Development Commission that it is an immensely valuable piece of real estate. Never mind they are apparently selling it for fire sale prices.

    Facetious? Yes indeed. We will have more to say about this deal later, depending on the final outcome, but for now the people of Beaufort County should know that A & E Holdings, LLC has made an offer to purchase Lots 14A, 14B and part of 14C for $90,000. That's about ten acres so it's going for $9K per acre. The tracts are outlined in red in the blue section of the map.

    While the legal notice does not say so, if this transaction is like some others the EDC has pulled off, you can probably get a grant to build a building and/or develop the property. The legal notice does not say whether this purchase includes other conditions and considerations but rumor has it that it does.

The law requires the County to advertise the proposed sale for ten days before closing on it. During that time anyone with 5% of the bid price in cash can submit an upset bid. If this bid is raised the cycle begins again until the final offer is not raised. Those details are in the legal notice. What is not in the legal notice is whether the A&E bid entails other considerations.

    You can review the legal notice by clicking here.

    Commentary

    We don't know if a court would uphold this as a legal transaction but we can't imagine that it would...IF it is a typical EDC deal. If it is such a deal and it is legal then it is wrong. Here's why.

    The County bought the land that comprises the Industrial Park and then developed it, specifically with water, sewer and other improvements. The idea was that the County would then sell parcels sufficient to pay back the county for its investment. And presumably that includes improvements to the park. The concept was that businesses would be enticed to move to the park and "create jobs."

    Sounds good until you crunch the numbers. We're doing that right now but will not disclose our computations until we get more solid data. And that's the first problem with this sale.

    We asked Interim County Manager Jim Chrisman to furnish us with the data to compute the cost basis the County has in these parcels and he advises us that they have no such data. So the County is selling two parcels and part of a third without knowing how much it's got in the land it proposes to sell.

    What Mr. Chrisman does know is what Brooks Boatworks paid. Brooks Boatworks paid $15K per acre but this was ultimately reduced to $10K when the state supplied $557,000 in grants. So obviously the actual price revolves around other considerations. But we don't know what those considerations are in this case. Nor do the potential bidders. And that is a major problem as we see it.

    The second problem, as we see it, is that the County does not know what the fair market value of the land is. They have had no appraisal done.

    Now some will argue that the "upset bidding" process establishes a fair market value. Maybe. But maybe not. Ten days is not much time to attract other potential bidders. And no matter what the ultimate bids are that does not tell the County whether it should reject all offers.

    Thus, it looks like the County is selling it for whatever the first/last buyer to come along offers for it.

    But given what we have learned about the prospects of turning the land over with even a "close to break-even cost basis" price may be a hopeless dream under the circumstances. Consider the "Big Blue" building that's been empty for years, never having been sold. And now we've got yet a second "industrial park" south of Chocowinity that looks an awful lot like a cotton field to us, with no apparent buyers.

    But none of that is as bad as what we suspect on this transaction. We suspect that there are other considerations in this deal other than the 90 grand. We suspect there is a deal that the county, state or Santa Claus will kick in some money to sweeten the deal.

    So if that is in fact true--that there are other considerations--we have to ask: Why are the other considerations not advertised as is the purchase price of the land? How would a potential buyer, as an upset bidder, know what the total package is worth and thus make an informed upset bid? The answer is clear: They can't. It would seem to us that full, honest and fair disclosure of all of the considerations are not being disclosed by the County in this advertisement. To the extent that is true it is fair neither to the Beaufort County taxpayers nor to potential bidders.

    Thus, it looks to us like another of the EDC's backroom, sweetheart deals. Otherwise, why would they have struck this deal in "closed sessions" over the last few months? If A & E Holdings, LLC. Is in fact making this offer contingent upon or because of any inducements offered by the County to them then it seems to us those inducements should be disclosed in order for a potential upset bidder to have the same advantage.

    Perhaps this is an arm's length deal and the potential bidders have a duty to do their own due diligence. But it also seems to us that the County should be providing full, fair and honest disclosure of all of the consideration. If they are not doing so, this is a sorry way to do the public's business. And as we've said above, we'll have more to say about that once we get the numbers.