Originally Posted Online: Nov. 22, 2012, 10:59 pm
Last Updated: Nov. 23, 2012, 9:58 am
R.I. agrees to above fair market value price on property
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By Eric Timmons firstname.lastname@example.org
Rock Island apparently is paying a substantial premium over assessed fair market values for properties the city is purchasing at Watch Tower Plaza to create a home for a new Walmart Supercenter.
The city has agreed to a price of $1.75 million for two key properties, at 3720 and 3800 11th Street. That's $1.3 million more than the properties were sold for three years ago, and about the same amount above the fair market value of $419,000 according to South Rock Island Township Assessor Susie Carpentier's assessment.
The properties are among nine that the city council agreed to buy this week for a total of $4.8 million.
The city plans to demolish the buildings at Watch Tower and some adjacent properties and then sell the site to Walmart for an as yet undisclosed price. City officials have said the price will be lower than the city's costs to prepare the site.
Kevin Wittenauer, an investor from Coal Valley, purchased Watch Tower in late 2009 for $442,000.
The $1.75 million price approved by Rock Island's City Council this week was negotiated on behalf of the city by Ted Rebitzer, a real estate broker based in Davenport.
City officials had worked to keep the proposed Walmart deal under wraps for months, with Mr. Rebitzer working in the background with owners of properties in and around Watch Tower.
Mr. Rebitzer said the $1.75 million agreement for the 60,000 square foot shopping center and 1,700 square foot out-lot, was based on an "arm's length" appraisal of the property by the owner's bank.
"They had a bona fide appraisal that was commissioned by their lender," Mr. Rebitzer said. "It's a legitimate number."
The property was in decline and headed for foreclosure in 2009 when Mr. Wittenauer stepped in with financing to buy it. He said he put "a ton of dough" into the property and increased the occupancy rate from 30 to 70 percent by bringing in new tenants.
New rental revenue had boosted the value of the shopping center as shown in the private appraisal of the property, Mr. Wittenauer said.
"It was very hard to argue with the appraisal, and he did put money into the building," said Jeffrey Eder, the City of Rock Island's economic development director.
Mr. Wittenauer said he was unaware the site was being purchased by the city to bring in a new Walmart until he heard about it through the media, although he had "some inklings" about who might be behind the offer for his property.
"I certainly didn't get a Walmart premium," he said. "If I had known they were interested the price would have been 20 percent higher."
Between 2011 and 2012 the assessed value of properties in South Rock Island Township including Watch Tower fell by 2.5 percent, according to Ms. Carpentier.
Watch Tower would have been reassessed if substantial improvements had been made that could have increased the value of the property, Ms. Carpentier said.
At Monday's council meeting, nine purchase agreements for lots at the Watch Tower site on the west side of Rock Island were approved.
They included agreements for four houses along the 9th Street at the back of the shopping center, all of which had shown declines in assessed value.
The houses at 3917, 3923, 4003 and 4009 9th Street each had fair market values of less than $52,000, based on assessments by South Rock Island Township. The city has agreed to buy the homes for $125,000 each.
Another property the city has agreed to purchase is the State Farm insurance agency at 3700 11th St. Aldermen approved an option to buy the property from Christine Elsberg for $450,000.The fair market value of the property, according to the assessor's office, is $303,720.
The $450,000 is estimated as the cost to Ms. Elsberg to replace the building. She also will get $50,000 for moving expenses and up to $30,000 for architectural and engineering fees for the new structure, according to the agreement published by the city.
Also agreed this week by the city council was a $600,000 agreement with VFW Post 1303 at 3715 9th St. No assessed value is available for the property as it's tax exempt. Post Commander P.J. Hymes said the Post will close Dec. 30 and a new location has yet to be found.
The Walmart Supercenter, once open late next year or in 2014, will generate an estimated $1.3 million in sales tax revenue for the city.