Red tape ties up vacant building investors

It was red tape and ambiguity that moved one Springfield resident from potential investor to frustrated businessman.

With some high value commercial property sitting vacant on Jacksonville’s property rolls, Marlon Hubbard told me he was ready to do his part for his neighborhood.

“I think it would have been received very well- I mean we have such a wonderful community, a supportive community,” he tells me.

Hubbard and a few business partners put together a cash offer for the former 9^th & Main restaurant in Springfield, and presented it to the city just about one year ago.  Their intent was to make an entertainment complex of sorts, with one portion of the building serving as a piano lounge, one portion as a coffee bar, and one as a community theater/comedy club.

He knew that the property had been vacant for some time and would need work.  He had seen the disrepair and some vandalism first-hand, and knew some of the air conditioning units had been stolen and other machinery needed an upgrade.

“When you’re about to put that much money on the line to try  to build something and it’s money out of your pockets, you get a little nervous when you don’t know if you can even get the doors open when you buy the place,” he says.

After filing a Letter of Intent to Purchase the property from the city for $138,000 it took more than two months to get any feedback on the bid.

“There just seemed to be no accountability, you know.  It was all very vague and disorganized, it was time consuming and frustrating,” he says.

I spoke at length with Hubbard’s realtor who shared her emails with the city.  She was continually told they would be getting an answer soon to only see more time pass. When she asked for more information on what was holding the process up, it seemed that multiple layer of approval needed to even begin negotiations were getting in the way.

After finding out the city expected his to also pay the backed taxes on the building, amounting to $65,000, Hubbard lowered his bid by that value so the end value would still be the same as the initial payout he proposed.  When another month went by without any response to that bid, he because sick of dealing with the process and withdrew his intent.

So as Jacksonville now works on putting together an inventory of all the real estate it owns with the intent of deciding what to do with the parcels, it’s likely that at least some will soon be listed for sale.

But will more prospective buyers face the same fate?

“There was some question within City Hall about how development proposals were going to be managed- but now it’s infinitely clearer,” says former President of the Jacksonville Civic Council Don Shea.

Before leaving his post in Jacksonville for a new job in Louisiana, I spoke with Shea at length about bids like this.  In addition to serving on the Civic Council, he describes himself as a Downtown Development Economic Advisor to the administration, and someone who worked closely with any bids that would come through.

He told me the process was definitely ambiguous for many looking at bids, and the past year has seen “hiccups”, cases that may have met some resistance or delay because it’s been a time of restructuring.  The Downtown Investment Authority is now directly involved in real estate, even compelling a Request for Proposal on development opportunities for one of the city’s other vacant sites at LaVilla in just the past few weeks.  The City has also recently installed a new Chief of Economic Development, which Shea expects will further streamline the process.

But at the same time, he says there needs to be time to really look at these proposals.

“I think the city is very careful not to do anything that would appear to be rushing through, so the opposite of that is making sure you take a lot of time to be very deliberate about the process,” he says.

A feeling echoed by Jacksonville Mayor Alvin Brown.

“If it takes an extra 30 days or 60 days, I’d rather get it right,” he says.

Brown wasn’t sure about any bumps in the process of selling the city’s real estate, but says he is always open to ways to make government more efficient.  When it comes to real estate, however, he thinks a lot may rely on the property and the bidder.

“Some people out there would love to take advantage of property the city owns and want it for pennies on the dollar, when in fact nobody’s gunna do that,” he tells me.

He says many properties have liens, are tied in legal fights, or experiencing any one of a number of other issues that could be halting potential sales, which is part of the reason we need to accurately generate that property roll.

Hubbard told me there was little way of determining whether the city thought he offered a fair deal because of the little feedback he received.  His realtor told me the Property Appraiser valued the property around $200,000 at the time of their proposal, so given all the liabilities she believes it was, in fact a fair offer.

But that price point was not the sticking point for either of them, rather the communication breakdown.

Hubbard says he has successfully opened an art gallery in Winston-Salem before, and working with that city was night and day to what he experienced here.  While he hasn’t given up hope on what Springfield could become- saying that now it is a “diamond in the rough”- he told me there would need to be much more clear guidelines before he considered another investment attempt.

“I wish I would have been able to come in and contribute and put my mark on it in a positive way,” Hubbard says.

His realtor can’t really see herself working directly on a bid for city property, although she tells me she’s interested in helping the other way around.  She hopes when the city’s hired company begins to assess the value of Jacksonville’s real estate, they use local realtors like her to assess small pieces of the larger pie.  She thinks she can better assess and even list the properties than someone taking a look at all the property and comparing neighborhoods they don’t know.

Shea says, for whoever that task falls to moving forward, there will be a better line of communication in place.  He says already there is a better picture of where interested parties can take their bids, and a better framework from that point on how it is handled.

“It’s really the city’s obligation to make sure it maximizes the yield on its property for the benefit ot the tax payers, and I don’t think it has,” he says.

Whether that new system lives up to the potentially tall order that could be coming its way remains to be seen, but I will continue to follow its progress.  I also welcome your perspective- whether you have made a bid before successfully or unsuccessfully, or have an interest in helping to get this property on the tax rolls once again- I welcome the input to stephanie.brown@coxinc.com .