AN INDEPENDENT INVESTIGATION was conducted into the controversial sale of the Mid Coast for Higher Education building at 9 Park St. in Bath to Robert Smith of Phippsburg in May for $799,000.
City Manager Bill Giroux flouted municipal codes and violated state freedom of access rules but the City Council undertook no corrupt or illegal action in selling a cityowned building to a developer in May.
The City Council lacked due diligence in devising a sale price. But the mistakes of city officials were “honest, human mistakes,” and represented “no corruption.”
These are the findings of an independent investigation into the controversial sale of the Mid Coast for Higher Education building at 9 Park St. to Robert Smith of Phippsburg in May for $799,000.
“There is no question that the city manager failed to provide public notice that the April 8, 2013, budget meeting would involve a discussion or real estate matters in general or MCHE in particular,” the report states.
“Though no members of the public attended that meeting, it is possible that the public would have attended had proper notice been given,” wrote retired Maine Superior Court judge Robert Crowley, author of the report.
“Disappointingly, the council never undertook any real deliberations or discussions in executive session or otherwise regarding the valuation of MCHE, the advisability of the suggested listing price of $799,999, or the propriety of withholding the listing from the MLS, despite their clear obligation to do so pursuant to the Municipal Code,” the report states.
Crowley writes in the Dec. 27 report that, although his investigation relied on the voluntary cooperation of those involved, Smith and his real estate broker, Ed Herczeg, refused to cooperate.
Still, “I am highly confident that the investigation and this report are not materially affected by those limitations,” Smith wrote.
The city acquired the former hospital property on Park Street from Mid Coast Hospital in 2002 for $1.
After the sale, criticism from the public followed, and the City Council agreed to have an independent investigation into the facts surrounding the sale. They tapped Crowley, who now does dispute resolution for the law firm Kelly, Remmel & Zimmerman.
The report states that the building was leased primarily for educational uses such as the Southern Maine Community College but was difficult and expensive to maintain and “faring badly in the marketplace,” due in part to the competing available space at Brunswick Landing.
The city looked at selling the property about five years ago, Crowley noted. But with an approximately $1 million price tag, it drew no interest.
The council met Jan. 2 in executive session and reportedly instructed staff to find out if the current tenant wanted to rent the additional space and, if not, the property should be listed for sale; but no vote was taken.
The tenant declined on March 6, and on March 29, Giroux and Justin Poirier, the city’s community development director, met with real estate broker Don Spann, who recommended listing the property in a range from $700,000 to $1.25 million.
Giroux later that day met with Poirier and the city Assessor Paul Mateosian and discussed a lower price — $700,000 — but $799,999 became the listing price.
According to the report, Giroux signed an Exclusive Right to Sell Listing Agreement on April 3. On that date, tenants of the building were notified the building was on the market.
On or around April 5, Smith came to City Hall to review leases, having heard the property would be sold. Smith didn’t say who had told him, Crowley wrote.
Spann showed Smith the property April 8, after which Smith asked the property not be listed on the Multiple Listing Service until City Council acted on his offer.
More concerning than executive sessions held by City Council, Crowley wrote, was the April 8 budget meeting at which Giroux reportedly informed the council he was moving forward with a listing of the building unless the council was unsupportive.
At this point, “Giroux had already signed the listing agreement,” Crowley wrote.
Crowley’s report states, “There is no questions that the city manager failed to provide public notice that the April 8, 2013, budget meeting would involve a discussion or real estate matters in general or MCHE in particular. Though no members of the public attended that meeting, it is possible that the public would have attended had proper notice been given.”
“Disappointingly, the council never undertook any real deliberations or discussions in executive session or otherwise regarding the valuation of MCHE, the advisability of the suggested listing price of $799,999, or the propriety of withholding the listing from the MLS, despite their clear obligation to do so pursuant to the Municipal Code,” the report states.
The report further criticizes town officials: “It does not appear that the city manager or the council ever gave any consideration to Municipal Code … and the methods of sale it authorizes in relation to the possible sale of MCHE. Nor did the council deem any other method of disposition of MCHE to be in the city’s best interest as permitted by Municipal Code.”
“Instead, the decision was made in March 2013 to list the property with Don Spann for $799,999. In no way can the council’s later ‘nod’ to Giroux as assent to proceed with the listing be considered an appropriate discharge of their duties under the Municipal Code.”
However by the council ratifying the purchase and sale of the building at an April 17 special meeting, it legally remedied the violation of municipal code, Crowley writes, but “did not cure the council’s failure to provide the public with appropriate and timely information about the sale of the MCHE.”
“The council did not illegally undertake any official action in an executive session,” Crowley writes and states that issues would have been resolved had the sale and listing not taken place so quickly and had the sale process been more transparent.
“So it is now clear that mistakes were made. But they were honest, human mistakes,” Crowley concludes. “There was no corruption.”
Smith still owns the property; he listed it at $1.65 million Oct. 3.
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