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 bought a former hospital from the city of Bath in April is now trying to sell 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 argue that city officials should have sought competing bids for the property said Friday that the higher asking price validates their concerns.

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

The city’s sale of the former Mid Coast Hospital has generated controversy, prompting the Bath City Council to hire retired Superior Court Justice Robert Crowley 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 after receiving an offer from a Phippsburg-based developer, Robert Smith. The property was neither appraised nor listed for sale by the city.

Six months later, 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.

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

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

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

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 the negative attention it has generated.

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

“It would seem that a potential profit of $851,000 ... 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 shows that he has a better idea than the city did of what the Mid Coast Center is actually worth.

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 nonissue that a person has listed a certain property at a certain price.”

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

“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” with the pending departure of tenants, 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 frustrating for city officials and especially the city councilors, who he said “acted very prudently and very wisely.”

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

(Continued on page 2)

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