Did you see that story in the Democrat-Gazette this morning, in which developer Jay DeHaven claims he's invested twice the appraised value of that sod farm acreage in the Lake Maumelle watershed? The story in which he rejected an independent appraisal of the property?
Grab some salt and sprinkle it all over anything the notorious wheeler-dealer DeHaven has to say.
An independent appraisal put the value of some 800 acres at $5.4 million. DeHaven bought the land out of bankruptcy less than three years ago for $4.5 million. (Though the money may have come from outside investors, not DeHaven himself.) Land values haven't exactly skyrocketed since then, particularly in exurban, undeveloped territory many driving miles from jobs. A profit of almost a million (20 percent) would be a pretty good return in that amount of time, particularly given long-prevailing low interest rates
So how can DeHaven claim he has twice that amount invested in the property? Here's what I believe to be the explanation: He's brought in outside investors for one of his famous development schemes (Maumelle New Town anyone?). They include steelmaker Thomas Schueck, who, as a Pollution Control and Ecology Commission member, fought pollution regulations in the watershed. (The regulations could discourage development.) DeHaven also reportedly brought in some out-of-state insurance companies for this project, which now includes some additional acreage. He's believed to have sold investment shares based -- not on the value of the raw land -- but on the value of a developed subdivision. How's he spent the investors' money since bringing them in? Don't know. But you don't see a big subdivision out there, do you, with streets, drainage, utilities, etc.?
So the question would seem to be this: Can DeHaven convince the public agencies wanting to buy the land (the state just appropriated $4 million) that the Lake Maumelle Bubble is real? Should they see a developed subdivision where raw land sits and pay him accordingly? (To get to DeHaven's valuation, you have to include his purchase price, the additional money put in by investors and, probably, a hefty sum for DeHaven's "sweat equity." It takes a lot of scheming to come up with deals like this.)
DeHaven calls the independent appraisal "seriously insane." People I know say it's already overly generous. Paying DeHaven twice that amount? That, seriously, would be insane.
What's at work is a huge bluff. The public must decide to pay too much for DeHaven's land or risk his proceeding with a development that would damage Central Arkansas's water supply. The taxpayers' side of the gamble: Can DeHaven proceed without development capital in a bad real estate market?