During the past year, MDHA has defended against allegations it paid property owners too little. Now the agency finds itself facing allegations it paid a land owner too much. The confusion underscores the fact that real estate acquisition can be complicated and emotional.
In the case of the recent story about Rocketown and the Music City Center, NewsChannel5 gets it wrong. NewsChannel5’s story pits the claims of a former employee against the agency without ever offering an outside, independent, third party review. The responsible thing would have been to seek a third opinion on the validity of the allegations, as MDHA did in determining the property’s value.
MDHA followed the same process with Rocketown as it followed with other real estate purchases by the agency. The process goes like this: MDHA researches the value of a property, makes an offer and then works to find a mutually acceptable purchase price. Following this process, MDHA has reached a mutually acceptable purchase price with 14 of 17 property owners in the footprint of the Music City Center.
Let’s look at the specifics of the Rocketown purchase.
Rocketown, knowing their building was in the footprint of the Korean Veterans Boulevard (KVB) extension, contacted Metro and MDHA to request advance purchase of their property. MDHA then executed an agreement with Public Works to make the purchase. Most of the property will be used by Public Works in the extension of KVB. A portion of the property is also being used for the relocation of an NES substation for the Music City Center project. In addition, there were public safety concerns regarding the children who used the Rocketown facility and the proximity of the convention center construction project.
Before MDHA could make an offer, the agency hired a real estate expert to conduct an appraisal of the property’s value. Rocketown, utilizing an independent real estate appraiser, also obtained an appraisal and asked to submit it for consideration. As is customary, MDHA agreed to consider it. It’s important to note, MDHA agreed to consider owner appraisals on the properties purchased at the same time for the Music City Center. Many owners in the footprint of the Music City Center had been at their location for decades and didn’t have a good idea of the value of their property. By allowing the owners to submit their own appraisals, MDHA could provide the owners peace of mind that the agency’s offers reflected the market value. Rocketown’s appraisal ($6.2 million) determined a higher value than MDHA’s appraisal ($4.1 million). The agency ordered a third appraisal to further refine the value of the building and land.
At no point did an employee bring to MDHA supervisors concerns that the Rocketown appraisal should be discounted. MDHA’s third appraisal of Rocketown’s property placed a value of $5.1 million. The agency negotiated a final sale price of $5.6 million. The purchase price of Rocketown was not based on a single appraisal, but was the result of three separate appraisals by three different real estate appraisers, two of which were hired by MDHA.
The former employee interviewed on NewsChannel5 alleges that Rocketown’s appraiser used a bad comp to inflate the total amount of the appraisal and therefore the entire document was flawed. This is not accurate. Rocketown’s appraisal concluded a total land value estimate of $70/square foot, which is well within the range of values placed on other properties around the site. MDHA’s appraisals placed the land value estimate at $60/square foot and $50/square foot. TDOT, who purchased much of the land for the KVB extension, paid approximately $69/square foot for the land and easements they purchased which further confirms the land value.
The reporter incorrectly compared the purchase of Rocketown to a building of lesser value. Rocketown was a recently upgraded and unique facility with a music venue, coffee bar, skate park and other improved community areas while the other building was an industrial warehouse.
MDHA paid the same price for the land that Rocketown was located on as the agency paid for surrounding properties. What made the cost of Rocketown’s property more was the improved building.
John Quinnan, the gentleman interviewed by NewChannel 5, is a former MDHA employee who was part of a workforce reduction on June 30, 2011. The lay-offs were the direct result of Congressional budget cuts. His allegation that MDHA targeted older employees for lay-off is simply false. MDHA hated to lose all of the employees that were part of the June 30 lay off, however the agency must live within its budget. Congressional budget cuts have a very real effect on both the people who are served by our programs and those who work for us. MDHA vigorously denies Mr. Quinnan’s allegations.
To those whom much is given, much is expected. MDHA takes the responsibility of purchasing property for community projects very seriously and works hard to handle the sometimes volatile situation fairly. Rocketown was treated no differently than any other property owner. Real estate acquisition is a difficult business. MDHA offers fair market value for all properties it acquires. It is unfortunate that some are trying to besmirch the good name of both MDHA and Rocketown in the interest of vindication of a perceived wrong.