BATH — Officials in Bath have agreed to investigate the recent sale of a city-owned office building that has outraged residents who say the property was sold for far less than its market value with no effort to solicit competitive bids.

The property, a former hospital on more than five acres in downtown Bath, was sold by the city in mid-April to a real estate investor for just under $800,000. City officials have been barraged with questions and criticism since then over the way the deal was reached.

Additional Photos

Some residents in Bath are outraged that the city sold a former hospital on five acres, shown here, for under $800,000 in a private agreement, when it was assessed at $6.5 million Gabe Souza/Staff Photographer

Larry Scott of Bath, a retired professional investor, said the former Mid Coast Hospital on Park Street, now a multi-tenant office building called the Mid Coast Center, is worth far more than the amount for which it was sold, based on a standard method for valuing commercial real estate.

The property’s assessed value is listed as $6.5 million by the Bath Assessor’s Office.

Scott said he doesn’t believe it was worth that much but, based on the 94,000-square-foot building’s potential to generate over $1 million a year in revenue when fully leased, it’s worth at least $250,000 more than its $799,000 sale price.

“They sold the building for what amounted to the rental value of the building for less than seven months,” he said, revealing “a kind of callous disregard for the taxpayer.”

Scott and others have been demanding an explanation since they learned about the sale, but key questions remain.

Foremost among them is why the city did not seek multiple offers by listing the property for sale in a public real-estate database known as the multiple listing service, Scott said.

Instead, city officials made an agreement privately with Robert Smith, a real estate investor from Phippsburg, without seeking competitive offers. The City Council approved the sale, 8-0, on April 17 after only a brief discussion.

Councilor David Sinclair said the public criticism of the sale prompted him to make a motion at Wednesday’s council meeting to appoint an independent investigator to interview city officials about the sale, gather all relevant documents and produce a report to be made available to the public. The motion passed, 8-0.

“I think that at this point it’s appropriate for an investigation to take place,” Sinclair said.

The council also unanimously adopted a set of procedures for selling city-owned property in the future that includes public listing and notification of the sale unless doing so would hurt the city’s interests.

Bath officials have said they did not seek competing bids because Smith made secrecy a condition of the sale. Neither Smith, City Manager Bill Giroux nor City Solicitor Roger Therriault returned calls Friday seeking comment.

Scott, who owns an office property on Front Street in Bath, said it is not common in the commercial real estate industry for buyers to require sellers not to seek competing bids.

If nothing else, the way the property was sold shows a lack of business acumen on the part of Bath officials, he said. “A child could have done it better.”

Scott said he cannot imagine why Bath officials would think it would be a bad idea to try to get the best possible offer when selling a property.

“Common sense says that if you’re going to sell a product, you want as many people as possible to know about it,” he said.

Council Chairman Bernard Wyman said Giroux and Assessor Paul Mateosian set the property’s sale price with the help of a commercial real estate broker.

Wyman said $799,000 seemed like a good deal for the city, which acquired the property for just $1 in 2002 from Mid Coast Health Services Inc.

The former hospital, built in 1910, essentially was donated to Bath after Mid Coast Health Services decided to cease operations there, Wyman said.

“We made a decision to sell the hospital as a group,” he said. “If I had to do it over again, I’d do it again.”

Wyman said the property had been losing tenants and was only briefly profitable.

He said the commercial property was a drain on city resources, and selling it was a smart decision.

“It’s been like a white elephant,” Wyman said. “We were glad to get rid of it.”

He said Smith was an appealing buyer because he had bought and rehabilitated other commercial properties in Bath.

Still, Wyman acknowledged that the sale process could have been handled in a more transparent way, and that the council is now paying for that mistake.

“They’ve been beating up on us,” he said. 

J. Craig Anderson can be contacted at 791-6390 or at:

canderson@pressherald.com

Twitter: @jcraiganderson

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