The Kerrville City Council is voting tonight to approve issuing bonds that will commit the taxpayers to $9,000,000 in debt, to buy 105 acres of raw land from Cailloux Foundation Properties, LLC, a Texas limited liability company, on which Cailloux will build soccer and baseball fields and associated improvements. This comes to $86,124 per acre, for land that Cailloux's own appraiser values at $16,561 per acre.
Below is an open letter that I have sent to Mayor Pratt and the council members:
500 Main St. Suite J
Kerrville , Texas 78028
Texas Board of Legal
Specialization
Below is an open letter that I have sent to Mayor Pratt and the council members:
RICHARD L. ELLISON, P.C.
Attorney at Law
Broadway Bank Bldg.
Phone: (830) 792-5601
Facsimile: (830)
792-5602
Board Certified in Civil Trial Law
E-Mail: rellison@richellison.com and Personal Injury Trial Law,
and Criminal Law
June
9, 2015
Kerrville Mayor Jack
Pratt
Councilman Stephen P.
Fine
Councilwoman Bonnie White
Councilman Gary Stork
Councilman Gene Allen
701 Main St.
Kerrville, TX 78028
Re: Contract of Sale Between Cailloux
Foundation Properties, LLC and City of Kerrville, Texas (Youth Athletic
Complex)
Dear Mayor Pratt and
Council Members:
I have obtained Todd
Parton’s letter asking Senator Fraser to request an opinion from the Attorney General
on the legality of the no-bid land purchase/construction contract. I have also
obtained the appraisal report by Valbridge Property Advisors dated April 29,
2015.
I have discovered a new problem
with this whole deal. Local Government Code § 252.051 provides “A municipality may not purchase property
wholly or partly with bond proceeds until the municipality obtains an
independent appraisal of the property’s market value.” Has the City
complied with this law? I will return to this issue in a moment.
Mr. Parton represents to
Sen. Fraser and the OAG that the City’s contract is with the Cailloux
Foundation, a “local nonprofit foundation.” This is not accurate. The contract
is with “Cailloux Foundation Properties, LLC, a Texas limited liability
company.”
Furthermore, Mr. Parton’s
letter confirms what we already knew – this is a construction contract, not a
contract to purchase land. There is an attempted sleight of hand, to compare
this to a contract to buy land with an existing building on it. However, the
letter admits that the contract is for “both the acquisition of land and the
building of the complex.” The letter is replete with references to “newly
constructed improvements,” “construction work,” and so on.
Mayor Jack Pratt et al.
June 9, 2015
Page 2
To return to the issue of
the lack of an independent appraisal, which is required by Govt. Code §
252.051, it appears that the City is relying on an appraisal paid for by the
seller. I also question whether any of you have even seen the appraisal report,
and if so, how you concluded this was a good deal for the city. The appraisal was
made for “Mr. Ben Modisett, Cailloux Foundation.” It states “The Cailloux
Foundation is the client in this assignment. The Foundation and any assigns are
the sole intended user of the appraisal and report. The intended use is for
charitable contributions.” In other words, the appraiser disclaims that anyone
except its client can rely on its report. Further, how is this a charitable
contribution when the City is paying $9,000,000?
Even more troubling,
using the seller’s own appraisal values, it is obvious that the City is grossly
overpaying. Valbridge appraised the land in two sections, as follows:
304.12 ac. - $4,410,000 $14,502 per acre
70.65 ac. - $1,170,000
$16,561 per acre
The Contract of Sale
requires the City to pay $9,000,000 for 104.5 acres, which comes to $86,124 per
acre. ($9,000,000/ 105 ac). If it paid the appraisal value of $16,561 per acre,
that would come to $1,738,905. The City
is paying $7,610,095 more than the appraised value. Why? Is this difference
the cost of the construction?
Mr. Parton told Zeke
MacCormack at the San Antonio Express that he would recommend the council
members approve the $9,000,000 certificate of obligation at tonight’s meeting,
without waiting for the Attorney General’s opinion. What is the rush? Why has
there been no due diligence? Would you spend your own money without getting an
independent appraisal? Would you pay five times market value for land?
Sincerely yours,
/S/ Richard
L. Ellison
Cc: Brenda Craig, City Secretary
Mark Armstrong, KDT
Zeke MacCormack
Who are the individual players in this deal?
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