October 4, 2013

Recent buyer now aims to ‘flip’ disputed Bath property

The developer who purchased the former Mid Coast Hospital for $799,000 is listing it for twice what he paid.

By J. Craig Anderson canderson@pressherald.com
Staff Writer

The developer who purchased a former hospital in Bath from the city is now trying to “flip” the property for more than twice what he paid.

click image to enlarge

Bath officials sold the former Mid Coast Hospital, valued at $6.5 million by the city assessor’s office, for $799,000 in April after receiving an offer from a Phippsburg-based developer. The property was never listed for sale.

Gabe Souza / Staff Photographer

Critics who believe the city should have sought competing bids before selling the property in April said the higher asking price validates their concerns.

But city officials said the new listing price is meaningless unless a buyer agrees to pay that amount.

The city’s sale of the former Mid Coast Hospital has generated controversy, prompting the Bath City Council to hire retired Justice Robert Crowley to act as an independent investigator to look into whether the city acted properly.

There is no set deadline for Crowley to produce his report, but there is a budget limit of $7,500.

Bath officials sold the property, valued at $6.5 million by the city assessor’s office, for $799,000 in April after receiving an offer from a Phippsburg-based developer, Robert Smith. The property was neither appraised nor listed for sale by the city.

Critics of the sale, including Bath residents Michael Wischkaemper and Larry Scott, have said since April that the property, now an office building called Mid Coast Center, was worth at least $1 million.

Wischkaemper said purchase documents released by the city prove the property was worth at least 20 percent more than what Smith paid.

The reason, he said, is that Smith was able to get a real estate loan for $794,000, nearly the property’s entire sale price. Most lenders require a buyer to have at least 20 percent equity in financed properties, Wischkaemper said.

Smith’s real estate broker, Edward Herczeg of KW Commercial, has listed the property for sale on Maine’s multiple listing service for $1.65 million.

Smith could not be reached for comment but has said in media reports that he decided to sell the property sooner than he had planned because of all the negative attention it has generated.

Scott said the much higher list price is a sign Bath residents did not get what they deserved for the property.

“It would seem that a potential profit of $851,000 in a four-month period should give you pause to rethink your earlier evaluations,” Scott said Thursday in an email to city officials.

In an interview Friday, Scott said the fact that Smith had the property appraised before setting a price signals that he has a better idea than the city did of what Mid Coast Center is actually worth.

However, Bath City Assessor Paul Mateosian disagreed.

“It’s a free country. A person can ask anything they want for anything they own,” Mateosian said. “To me it’s a total non-issue that a person has listed a certain property at a certain price.”

Mateosian said the city was in a hurry to sell Mid Coast Center because a number of tenants had announced their intention to relocate to the Brunswick Landing development at the former Naval Air Station Brunswick.

“The city was a motivated seller, because we were faced with a lack of commitment on the part of tenants,” he said.

Mateosian said the city opted not to appraise the property before selling it to Smith because it was “in flux” due to the departure of tenants, thus making an accurate appraisal difficult.

He said Bath officials considered selling at prices ranging from $700,000 to $1.1 million and opted for about $800,000 out of a desire to sell quickly.

Mateosian said the aftermath of the sale has been a frustrating time for city officials and especially the city councilors, who he said “acted very prudently and very wisely.”

As for Smith’s selling price of $1.65 million, Mateosian said it’s likely to mean the property will remain on the market for a long time.

(Continued on page 2)

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