Whatever the merits of the discord over City Council process, Mayor Ethan Strimling is correct that the city of Portland could have gotten a better price for the sale of its lot to the developers of the Portland Co. project next door. Consider the following example:

Suppose you own a 10-acre parcel of farmland. Farms in your area sell for $5 to $10 per acre. Valued as a piece of farmland, using comparables in your neighborhood, your property is worth between $50 to $100. That is how the City Council negotiated a price of $400,000 for the undeveloped city-owned lot recently sold to CPB2.

But now going back to the farmland example: Suppose there is another piece of property, directly behind yours and otherwise inaccessible, on which gold has been discovered. Is the value of your property still just $50 to $100? Of course not!

Valued as the “point of entry” to the mine, your property is worth far more. Conceptually, this would depend not on the value of other farms nearby, but rather on the value of the mine itself.

By negotiating with the developer on the basis of comparable undeveloped lots in the city, the City Council passed up a golden opportunity to get a price based on the highest and best use of its property.

Mayor Strimling, and all the other residents of Portland, have a right to think the city did not get a good deal.

Phil Steele

Portland

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