The city of Sandy Springs revisited an old controversy when council members in January requested the city look at alternatives to the city-owned former Target property for its future City Hall.
Critics said the city spent too much when it bought the property for $8 million in 2008. Sandy Springs leaders at the time said the city got a bargain.
New information released by the city about the appraisal of the property isn’t likely to end the debate. Public records show the property is about one acre smaller than the size officials regularly told the public, and the property also can’t be used for certain kinds of businesses, something that could affect its value to a buyer.
The appraiser the city hired, Dennis Carr of Atlanta-based Carr, Lawson, Cantrell and Associates, said the new information would not have affected his conclusion the property was worth $8 million when the city bought it. According to his company’s website, Carr has 40 years of appraisal experience, including work as an instructor at the Georgia Institute of Real Estate. He has also served as an expert witness in court cases involving appraisals.
The Washington, D.C.-based Appraisal Foundation publishes the Uniform Standards of Professional Appraisal Practice, known as USPAP. The appraisal the city received was conducted according to USPAP standards.
A comparison of the city’s appraisal report with the city’s survey and other public records regarding the city’s purchase shows the 2008 City Council may have acted on inaccurate information when it paid $8 million for the Target property, located at 235 Johnson Ferry Road.
City attorney Wendell Willard said only he knew the property was 6.9 acres, not the nearly 8 acres that city officials have reported over the last three years. That 8-acre figure has often been repeated in meetings and news stories without correction. As recently as Jan. 24, the city reported the parcel as being 8 acres on its website in response to questions from developers interested in the city’s downtown plans.
Willard, during the City Council’s Feb. 7 meeting, informed the City Council about the correct size of the parcel after members first heard it from a reporter. The council didn’t discuss the issue in-depth during their meeting, and members said afterward they were satisfied with Willard’s explanation.
“That was the parcel we wanted,” said Councilwoman Dianne Fries, who was serving on the council when the city bought the property. “We directed the staff to get us that parcel. Willing buyer, willing seller.”
Willard and some City Council members knew in 2008 about the property use restrictions, which would’ve prohibited potential buyers from using the property as another “big box” discount department store larger than 40,000 square feet or a grocery store larger than 10,000 square feet. In real estate lingo, this is called a covenant not to compete.
When Target relocated to The Prado shopping center on Roswell Road in 2008, it told potential buyers up front about the covenants it placed on the Johnson Ferry Road property.
A spokesperson for Target declined comment.
Both the correct acreage and the covenants weren’t considered in the appraisal report. Willard told the council on Feb. 7 that the appraiser didn’t need to know about the covenants and said city officials weren’t focused on the actual size of the property.
Willard said the appraiser’s job was to determine if the property was worth what the city wanted to pay for it, $8 million.
Carr said even if he knew the property was 6.9 acres when he appraised it, he still would’ve reached the same conclusion about its value.
“The variance in land area would not have altered our final value conclusion,” Carr said. “Only the percent of land value to total property value would have changed.”
One former councilman said the new information raises questions about the purchase.
Doug MacGinnitie, a former City Councilman who is currently the state Revenue Commissioner, was the only member of the 2008 city council to vote against the purchase. He said the latest information makes him question whether the city “had its ducks in a row” when it bought the property.
“It creates less confidence in the process,” MacGinnitie said. “At the time it seemed pretty rushed and those facts … would be consistent with the fact that it was a rushed decision. I think we overpaid for a property we don’t need.”
When the city announced a public hearing about the purchase in November 2008, it told the public the city was purchasing 7.75 acres, a number usually rounded up to 8 in meetings and news stories. The city attorney already had a survey showing the property was 6.9 acres when the city made the announcement.
Willard and former Councilman Rusty Paul said the council at the time was told the property was being marketed at a higher price. Paul said there was a competing offer on the table, but couldn’t remember who made it. A marketing brochure produced by Target’s broker before May of 2008 said Target’s suggested bid for the property was $8 million, and said the property contained 7.75 acres.
The 2008 appraisal report described the property as 7.75 acres.
Paul said he supported the purchase based on what city staff told the council.
Like Paul, other members of the City Council did not know the property the city purchased is 6.9 acres until a reporter contacted them this month. Three members of the current council – Gabriel Sterling, John Paulson and Chip Collins – were not serving in 2008.
Councilman Tibby DeJulio, who was serving in 2008, said after receiving the new information he is comfortable with the appraiser’s conclusion. When a reporter first asked Councilwoman Karen Meinzen McEnerny if she knew the property was 6.9 acres when she voted to buy it, she said she was told it was 8.
“Whoa,” she said. She said the new information is “a very salient point as to the price we paid for the property.”
Mayor Eva Galambos, who has been a staunch defender of the city’s purchase, said she did not know the size of the parcel but said the new information doesn’t affect her opinion.
“It was totally supported by the community and we got a very good price on it,” Galambos said. “We bought it at the top of the market.”
The appraisal report, dated Sept. 3, 2008, does not mention the survey finding the property is 6.9 acres. City records indicate the city had not received a copy of the appraisal by Sept. 19, 2008, but had received verbal confirmation of the appraiser’s conclusions by that date. The city attorney received the survey Sept. 4.
Records show the appraiser could not pin down how large the property is. Carr told the city in his appraisal report he went with 7.75 acres, a number given to him by the property’s broker. Because Carr could not independently verify the property’s size, he told the city he was using something appraisers call an “extraordinary assumption” as the basis for the property’s value. According to USPAP guidelines, it’s an assumption that, if proved wrong, could change what the appraiser determined the property was worth.
The appraisal concluded the property was worth $8 million by comparing its rent per square foot and land sale value to other properties in the region, including grocery stores, such as Publix, Kroger and a Super Save, other discount retail stores such as a Target, uses that would’ve been prohibited by the covenants.
Carr said the covenants would not have changed the outcome of his appraisal.
“The vast majority of the data we used … did not reflect food store or discount store uses,” Carr said. “Therefore, these restrictions, had we been furnished them, would likely have had no measurable effect on our final value.”