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APR 07 - APR 14, 2015

Bradt Urges Special Meeting on Trio of Buildings County Purchased
Approval of Deal by 17th Will Save Taxpayers $12-15K

April 07, 2015

Niagara County Legislator Randy R. Bradt, R-North Tonawanda, called on Niagara County Legislature Chairman William L. Ross, C-Wheatfield to convene a special meeting to approve the purchase of a trio of downtown Lockport buildings by the county, and move promptly to close on the sale in order to avoid paying several days’ rent on the facilities.

Bradt, an accountant by trade, reviewed sale documents last week and discovered that under the current timetable, county taxpayers would be liable for an additional $12,000 to $15,000 in prorated rent —figures he verified with County Treasurer Kyle D. Andrews - if they close based on a likely timetable if the Legislature convenes at their next scheduled meeting on April 21.

If Ross agrees, it would be the second special meeting inside of a month.

County lawmakers also met at a March 19 special meeting to watch and potentially bid at the close of a two day online auction of the three properties.

At that meeting, the legislature voted unanimously six times in the last 10 minutes of the auction to raise the county’s bid as the numbers on the online auction website's screen kept rising.

The auction closed and the county was high bidder at $3.6 million.

Two of the three buildings the county bid for - 111 Main St. and 20-40 East Ave - are being leased to the county and County Manager Jeffrey M. Glatz said, even at the $3.6 million price, plus the repairs the properties need, and the loss of county taxes a private owner might pay, the county will still save at least a half-million dollars annually by owning rather than renting.

The Social Services Department occupies 20-40 East, and a motor vehicle office, the Board of Elections, Probation, Human Resources, Veterans Services, and Aging occupy 111 Main Monthly.

Bradt noted that, as the final purchase of the buildings came about through the process of negotiations, county lawmakers still needed to ratify the $3.6 million deal.

The county pays about $2,500 per day for leases and rents for the two properties; typically at real estate closings, rents are pro-rated by the day.

By issuing approval no later than April 17, county government would be able to wire the necessary payments to close on the properties, located at 111 Main St., 50 Main St., and 20-40 East Ave. before the next rent was due.

The Reporter has called the auction procedure into question in a published story shortly after the auction closed.

The mandatory minimum bid was published at $1.5 million which was assumed to be the reserve price - - the minimum price a bidder must bid to purchase the properties - in the event there are no other bidders.

But in this auction the true reserve price was kept secret and possibly shifted during the auction, as the seller, C-III Capital Partners of Irving, Texas, may have been testing the highest figure the County was prepared to bid.

It is not unknown in auctions for a seller to place shill bids to game up the price.

C-III Capital Partners acquired the three buildings last fall from 37 Holdings-Lockport LLC, owned by an elderly couple in Sherman Oaks, Calif., who stopped paying the mortgage on the properties about a year before.

Despite the county paying more than twice the initial starting price of $1.5 million, the online auction site showed the "reserve price' was not met at the county's bid of $3.6 million at the close of the auction.

It was only after the auction closed that the seller's agent informed the county that they would accept the $3.6 million offer.

The rules of the auction were that bidders were kept secret from one another, and there was nothing to stop the seller from entering its own bids to inflate the price.

Based on the Reporter's evaluation of the three Lockport properties - heavily influenced by the fact that the county warned all bidders that it was not prepared to enter into a long term lease for a private owner who might outbid them - our estimated value of the three properties was not more than $2 million and probably closer to $1.5 million.

The county leases on 111 Main and 20-40 East expire in 2018, but totaled $920,000 a year.

If the properties lost the county leases - their value would be drastically diminished.

It seems inconceivable that an actual buyer would pay $3.6 million for these aging properties without a guarantee of long term government tenant income.

We call upon C-III Capital Partners to refute our suspicions that there was no other bidder and that the seller fudged up the bid at the cost to the taxpayers of Niagara County.






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