Madison’s leaders are dickering over the purchase prices of seven apartment buildings on the city’s south side, but those efforts to get the taxpayers a bargain may end up backfiring.
“It’s very possible we would take this to court,” said David Hammonds, owner of one of the buildings the city’s Community Development Authority is trying to buy in the Burr Oaks Neighborhood. “This whole process has left a very bitter taste in my mouth.”
The plan is to buy the seven properties, tear them down, then use the land for a new senior living center. The CDA is expected to agree this week on a contract with Verona-based Horizon Development Group LLC to build the center in three phases.
The city is facing a tight deadline. An application for state tax credits for the project must be submitted by mid-March, said Percy Brown, the city’s community development supervisor.
But many of the property owners say the city has not yet made a fair offer for their buildings.
The combined value for the seven properties, according to 2009 city assessments, is approximately $2.3 million. The city first offered about $1.4 million. After the owners complained, the city recently raised its offer to almost $1.7 million.
That’s still not enough, said John Lucille, owner of three of the seven buildings.
“They’re nickel-and-diming us to death,” he said. “They really can’t justify what they’re doing. They’re putting four minority landlords out of business. They have the latitude to give us what it’s assessed at. Give us what is assessed.”
The city’s 2009 budget authorized $3 million to acquire the seven buildings, and that would more than cover the properties’ combined assessed value.
But Alderman Tim Bruer, who represents the area and is a member of the CDA, said the offer has been less than the assessed value because the city can make a strong case the properties aren’t worth it.
“It doesn’t take a nuclear scientist to realize property values have fallen far below assessed values,” he said. “The majority of those buildings have been problematic, seen a high rate of tenant turnover and are blighted to some extent.
“It’s reasonable for (owners) to think the funds are there and should be used, but we’re responsible to the taxpayers.”
The city is working on another offer, Bruer said.
Dan Rolfs, the city’s community development project manager, declined to comment on the details of that offer.
If the owners reject the new offer, the city has the authority to then offer an award of compensation and take the property. Rolfs said there is no strict formula to determine what that dollar amount would be.
Although that would be the final offer from the city, the owners would have the right to challenge it in court. If the court finds in the owners’ favor, the city would then be on the hook to cover the difference of the court-decided price, plus associated attorney fees.
Bruer said none of the arguing should delay the city’s plans for constructing the senior housing, although it might change the cost. But if the matter goes to court, he said, he’s confident in the city’s chances.
“The city attorney has a tremendous track record on these kinds of issues, and I think our case would be justifiable,” Bruer said. “We’re not talking about millions of dollars of difference here, either. It might be a couple hundred thousand.”
But Hammond said a fair offer now would erase the city’s risk of paying considerably more later.
“This is what we’ve paid taxes on,” he said. “We’ve worked hard on these properties. There’s never been a murder or drugs found in a raid in my building. I walked the streets to get that community where it is now.
“I think this was all strategically planned to take advantage of the down market.”