SLACK: LR Port's slackwater harbor.
A reader, Downtowner, last night posted a comment on the open line about the collapse of a promised new industry at the Little Rock Port and taxpayers' friendly subsidy to the Indian pipemaking company that left us high and dry. Some good questions were raised, including about the reported repurchase price, and the absence of public notice of the taxpayers' welfare handout. Plus, Downtowner noted that to say Port money was used is a trick to mask use of taxpayer money.
The Democrat-Gazette followed up today with a good article on the amount spent to develop the site for the industry that isn't coming.
The key details, according to the daily newspaper's reporting so far:
* Indian company, Man Industries, bought the land in August 2008 for a total of $1.1 $2.1 million. The City Board, with no meaningful public notice and without a peep of discussion, bought the land back Tuesday for $2.3 million. A profit in a year in the worst economic climate since the Great Depression? Was a legitimate appraisal done? Might the mayor explain this windfall for our friends in India? Might he explain why the Board saw it unworthy of discussion Tuesday night? Might he explain how the news popped up only a few hours before the action and why there was a need for such a rush? Profit or no profit for sellers, why did the city have to buy the land? It didn't own it before and apparently had no interest in owning it before.
IMPORTANT UPDATE: Arkansas Business sends along its information on the original land purchase. Its records show that Man Industries acquired the land, not for $1.1 million as the D-G has reported, but for about $2.1 million, or near the amount the city paid to repurchase the property. (The assessor's records, on which the D-G relied, apparently carried an inaccurate sale price listing, so cut the newspaper some slack.) That lessens the outrage, but it still doesn't explain why the city had to buy the land in the first place or whether it did any negotiating with the company as to the broker fees, recapture of other infrastructure expenditures, etc. I'll put the original AB report on the land acquisition on the jump. Also there is a comment from Mayor Stodola, who notes D-G error on land purchase price, and subsequently answers further questions. Also a comment from a real estate developer. Here's a city of LR release on the matter. The business comunity pitch (in which no amount of money spent by government on development is wrong) is that this is a canny investment for the future. Let's hope so. Why wasn't it cannily made years ago at a cheaper price? And what about all the other vacant land out there? Buy it, too? It costs money to warehouse property without return revenue, in lost earnings potential if nothing else.
* Pulaski County has spent almost $100,000 on redesigning a road for the plant. Will the expensive project go forward in some fashion anyway? Sounds like it might. Central Arkansas Water will spend more than $100,000 to extend water service. The Little Rock sewer utility will spend some amount on new sewer service in the area, whether directly related to this project or not is unclear, though it seems likely some cost was involved. Did local officials attempt to claw back a dime of this outlay from the departed industrialists?
Someday, we're assured, this $2.5 million or so public investment in land and infrastructure will pay off with another development at the port. Promises, promises. I hope the return comes sooner than what we experienced on the vaunted slackwater harbor built by taxpayers. And don't forget, port reserves accrue from a publicly supported operation.
It was another undiscussed hurryup done-deal financed by taxpayers, who had no meaningful opportunity to give opinions. . They might have howled. The same-old, same-old gets tiresome.
UPDATED COMMENT: Clearly, lack of oversight by media contributed to this deal going through on a moment's public notice. The deal is not as bad as the daily newspaper reporting made it appear. Questions linger with me, still, why those who so vigorously defend the purchase today hadn't sought to purchase the land long ago if it's so vital to be in public ownership. Also, in today's market, I question whether the city negotiated hard enough with the seller. If the land is worth more today because of TAXPAYERS' investment, that benefit shouldn't accrue to the seller, but to TAXPAYERS.
FROM ARKANSAS BUSINESS:
About 155 acres in east Little Rock were assembled for a pipe plant in deals totaling more than $2.1 million.
Man USA Inc., an arm of Man Industries (India) Ltd., acquired the property along Zeuber Road on the south side of the Little Rock Port Industrial Park.
The sellers were Jane M. Baugus Ltd., led by Perry McKimmey, $1.14 million for 83 acres, and Butterfield Investments Inc., led by Frank Whitbeck, $1.03 million for 72 acres.
FROM MAYOR MARK STODOLA
-----it may not be a surprise to you that unfortunately, the DG got it wrong this morning in their article on this subject. The Port Authority is only willing to pay to Man Industries what they paid for the property which was purchased in April of '08, plus the costs of some engineering, environmental, soil study and survey work all of which will become the property of the Port. The property was surveyed at the time of purchase according to what I have been told. The $1.1 million price calculated is totally wrong. There were several purchases with different members of the Baugus family.
I have repeated to the mayor my various questions, including: 1) why should Indian firm be held harmless, including out-of-pocket expenses, for a bad acquisition that has cost taxpayers additonal dollars? 2) what about real estate commissions? 3) why buy land now that wasn't sought previously? 4) what was the hurry? 5) why no discussion? 6) why a lack of constructive notice? 7) was there a report on all the related investments by public in deal before board voted to make the Indian firm whole?
FURTHER RESPONSES, BY BLACKBERRY, FROM MAYOR STODOLA WHO'S AWAY:
First, I understand a follow up press release is being prepared which should give your more details. I have not seen it, but I understand the Port and LR Metro Alliance are preparing it .
As to your questions:
Port Authority in best position to answer, but I would observe that Man put the property on the market for sale at the price they paid plus the additional costs incurred. Since Port and City have no eminent domain authority for economic development , thus severely limiting future possibilities for acquisition by the Port Authorit at some speculative future price.
As an autonomous board of the city which does not depend on taxpayer $$ for their activities, the PA deliberated and voted to use their revenues, for this intended purchase at a meeting which I believe was held in April.
There is VERY little property left in the Port which is available for development and industrial recruitment . As I recollect, there is only one small 40 acre tract left which the Port owns. Property on riverside of Slackwater harbor needs to be substantially raised per Corps requirements before it can be used. Even so, it is also a very small piece of property.
The huge successes we have had over the last 2 yrs in industrial recruitment has largely occurred on Port Authority land. I believe they would tell you, it is important for the Port to own the land rather than speculate on whether it might be available in the future.
There was no fait de accompli. The matter was referred to us by the PA; we receive info from them and City Manager in our agenda books; this info was provided to us and our review at the Agenda meeting the previous week which is also covered by the press. Each member has the opportunity to have an item separately discussed at the following Board meeting. There was no secrecy concerning this item; maybe the press missed reporting on this, but there was certainly no secrecy. Usually, the press does not often cover PA meetings.
The economic team of the City, LR Metro Alliance and AEDC are actively pursing new industrials prospects. I hope this provides you with a little more information on this subject.
Thank you. Mark
FROM A LOCAL COMMERCIAL REAL ESTATE DEVELOPER
The D-G didn't blow the price of Man USA land. Assessor had the sell from Baugus to Man at $114,600, as the newspaper reported. But as for the comments from readers about scarcity of land, please see that teh Port Authority advertises having 700 acres available out of 1,500. All this land may not be Port owned.
All taxpayers are asking is for the Port Authority to aggressively negotiate a price. Was a lower offer ever submitted? I am sure if the property sat awhile, in this environment, the Port could of gotten a lower price.You would think most sellers are desperate, especially one based in India