Gwinnett's $37 million land deals questioned

Gwinnett's $37 million land deals questioned

Gwinnett County has paid politically connected developers inflated prices for parkland on at least four occasions in the last two years using questionable appraisals, including two supplied by developers, an Atlanta Journal-Constitution review of land purchases shows.

As a result, Gwinnett County taxpayers potentially paid millions more for land that has yet to be developed into parks they can use.

In arriving at its generous offers, the county often diverged from established procedures in buying parkland, saying it did not need to follow them because three of the purchases were made to settle lawsuits.

The county could not offer evidence that officials who run the parks system initiated any of the four purchases, nor is there any evidence to show that officials made serious attempts to negotiate for lower prices.

The most recent purchase was made in June, as the county struggled to fill a huge budget deficit.

The commissioners who championed three of the land deals — Kevin Kenerly advocated for two and Chairman Charles Bannister for the third — acknowledge friendships with developers who owned the property.

Former commissioner Lorraine Green, who advocated for the fourth, described the developer in that purchase as a political supporter.

Kenerly, Bannister and Green have all accepted campaign donations from the developers in their respective purchases.

The unorthodox purchases, which cost a total of $37 million, have gotten the attention of Gwinnett District Attorney Danny Porter, who said in an interview that he will ask the grand jury to investigate these and other purchases in September.

“I think the grand jury, as a group of citizens, needs to look at these expenditures of county money and try to determine if there’s anything criminal,” he said after hearing of the AJC’s findings. “If there is, it needs to be prosecuted.”

In interviews with the AJC, the county commissioners who pushed for the land buys either said they couldn’t remember how the county settled on the purchase prices or said they were not involved in the negotiations.

However, the Board of Commissioners not only approves purchases, but it authorizes how high staffers can negotiate.

The commissioners defended their purchases, saying all were good buys for the county. Some said it doesn’t matter who owned the property.

“If it’s a piece of property that the county needs to buy, I don’t care if Donald Duck owns it,” said Kenerly, who voted for all four purchases.

 

Land deals

The four land purchases unfolded in a similar manner.

Developers first tried to get their land rezoned in order to build mixed-use developments, apartment complexes or subdivisions.

The county commissioners —and in one case the Sugar Hill City Council— either rejected the rezoning requests or gave developers less valuable zonings than they asked for. The developers responded by filing lawsuits — three against the county and the fourth against the Sugar Hill.

Soon after, the county bought the land from prominent developers David Jenkins, David Bowen, Wayne Mason and Marvin Hewatt. Three of the purchases settled lawsuits.

Buying land to settle lawsuits with developers is not common practice in other metro Atlanta counties, including Cobb, DeKalb and Cherokee.

“Our attitude is not to turn around and buy their property, because we refuse to let them do whatever they want to do,” Clayton County Commission Chairman Eldrin Bell said.

Gwinnett County Commissioner Mike Beaudreau said he believes the pattern of lawsuits raises questions about some of his colleagues’ involvement with developers.

“It’s just too many coincidences,” said Beaudreau, who voted for three of the four deals, but now says he deferred to the commissioners who lobbied for the purchases. “That’s how [developers] get what they want. If they file a lawsuit, it gives some people an excuse to push the acquisition forward.”

 

Appraisals

In each case, the county paid top dollar based on questionable appraisals.

In two, the county paid a price close to the developers’ appraisals and significantly higher than the county’s own estimates of the land’s worth.

In the others, the purchase price was based on county appraisals that used a zoning designation that would have allowed a more lucrative development than was permitted by existing zoning.

Three of the appraisals — two paid for by the county and another paid for by a developer— were done by Lawrenceville appraiser Ron Foster.

The appraisals show that in the two done for the county, Foster used zoning designations that the developers had sought but the county had rejected.

In both reports, Foster acknowledged using a different zoning than was permitted, saying his “appraisal is based on the appraiser’s opinion of highest and best use of the subject property.”

The third property included 67 acres — two-thirds of which carried a zoning that is far less valuable than the other third. In his appraisal for the developer, Foster swapped the zonings, applying the more valuable zoning to the larger piece of land, records show.

Had Foster used the correct zonings, his appraisal would have been about $2 million less, according to the land values in his appraisal.

In his report, Foster notes that he uses a “hypothetical condition,” that the land could be rezoned by the city of Sugar Hill. By that time, however, a judge had already ruled that the existing zoning was appropriate.

Appraisers not associated with the park deals said it would be inappropriate to use a hypothetical zoning in a market value appraisal unless the appraiser was asked by his or her client to do so. In that case, the client’s request should be noted. None of Foster’s appraisals indicate any such instructions.

Two appraisers, including Scott Murphy of Suwanee, reviewed appraisals on all four properties for the AJC.

“It seems very suspicious to go in that direction,” said Murphy, who sits on the Georgia Real Estate Appraisers Board, which investigates accusations against appraisers. “I don’t see that as a reasonable approach.”

When reached by phone, Foster would not comment, but said he would agree to an interview if he got permission from those who hired him to do the work. He did not return subsequent phone messages.

The most recent deal, completed in June, did not involve Foster. In that one, the developer’s appraiser arrived at a value that was double that of the county appraiser’s by using land sales from 2006 — the peak of the housing market.

“That’s absolutely outrageous,” Murphy said of the higher appraisal. “There’s no basis for that.”

Most of the current and former commissioners involved in the purchases said they were not aware of the appraisers’ unusual methods.

Several commissioners also said they do not closely scrutinize appraisals, and are typically given basic information about them when considering purchases in executive session.

“The quick and dirty,” Commissioner Bert Nasuti said.

 

Standout deal

The purchase of 33.2 acres south of Dacula from developer Hewatt this year stands out in a number of ways.

County officials say they bought the land to settle a lawsuit with Hewatt.

Hewatt, whose primary business is developing gas stations and convenience stores, originally wanted to build a 91-home subdivision.

But the county, led by Commissioner Beaudreau, who represents that district, voted on Nov. 18 to allow him to build only 33 homes.

Records show the county’s efforts to buy the property began the next day when it sent out a request for bids to appraise the land.

The lawsuit was filed Dec. 2, almost two weeks later.

The appraiser hired by the county estimated the land to be worth a little over $1 million. At the time, the recession was in full swing, pushing property values throughout the metro area downward.

The county appraisal didn’t sit well with Chairman Bannister.

According to Beaudreau, Bannister brought a copy of the developer’s appraisal to a closed-door commission meeting for his colleagues to consider. That one, based on 2006 land sales, was for $2.42 million.

Bannister, in an interview with the AJC, didn’t deny bringing the higher appraisal to the meeting. He said he believes it was the more accurate of the two.

The county agreed to buy the land soon after for $2.29 million — more than twice the county’s appraisal price and just under the price suggested by the developer’s appraisal.

The property will expand an adjacent 294-acre property that the county bought in 2001 but has yet to develop into a park. It is not open to the public.

Beaudreau opposed the purchase, saying the county didn’t need more undeveloped parkland there. He also questioned the use of the developer’s appraisal.

Beaudreau said he confronted Bannister about why he pushed so hard for the purchase when Beaudreau — the commissioner who represented the district — adamantly opposed it. The board usually defers to the wishes of the district commissioner in such matters.

Bannister made no apologies for championing the purchase.

“I simply replied that the entire county was my district,” said Bannister, who is elected county-wide.

Bannister says the county got a good deal.

“I believe we obtained the land at the best price negotiable,” he wrote in an e-mail to the AJC last week. “As a matter of fact other properties within the area have been purchased for more.“

“The value of a piece of property is based on what a willing seller is willing to accept and an able buyer is willing to pay. “

 

Little negotiation

Records detailing the county’s actions on the purchases show little or no effort to negotiate for the lowest possible prices in the four deals.

In one of the purchases, the files show no evidence of any negotiation. In the others, the county provided e-mails between both sides that show the county asked for slight price reductions.

One developer wanted $70,000 an acre; the county paid $69,000.

Another asked for $16.9 million; the county agreed to pay $16.4 million, though it was later lowered to $16.26 after some rock was found on the land.

When asked about negotiations, the commissioners all said that county staffers did the negotiating.

Commissioner Kenerly, who pushed for the two most expensive deals, said he relies on county staff to tell him whether the purchases are good ones.

“I make them look at me and tell me whether this is a good deal or not,” Kenerly said.

The officials who oversee the departments that negotiated and bought the land, County Attorney Karen Gilpin Thomas and Support Services Director Steve North, refused interview requests.

The department that buys parkland, Support Services, has a manual that spells out how to do so.

Records of the four recent purchases show many of the department’s guidelines weren’t followed.

For example, Support Services, which typically buys the county’s parkland, is supposed to seek multiple bids for appraisals.

But in two of the purchases, the county did not solicit bids and chose Foster instead.

For three of the deals, county officials contend they did not have to follow the procedures because the purchases were lawsuit settlements handled by the Law Department. The Law Department is only required to follow the instructions of the Board of Commissioners in such cases, county spokesman Joe Sorenson said.

However, all four purchases are listed on county records as acquisitions made by Support Services, not the Law Department.

It’s not clear why the county determined that it was better to buy the land than fight the lawsuits.

When asked by e-mail, Thomas, the county attorney, referred the AJC to her department’s files for the purchases. The files, however, did not address the justification for the settlements.

The parks department has a master plan that identifies areas where the county has the greatest need for more parks. Only one of the four properties, located at Beaver Ruin Road and Interstate 85, is in one of those areas.

Two of the others are slated to be community parks with athletic fields for nearby schools.

County records show the fourth property is plagued with access problems. Motorists won’t be able to drive into the park, due to the land’s floodplain and topography issues. In order for people to park nearby, the county must get permission from an adjacent property owner, which it has not yet done.

 

Close associations

All four developers are politically connected men who sit atop Gwinnett’s development community.

Kenerly, who took the lead on the deals involving Jenkins and Bowen, said in an interview that he considers them both friends. He said he considers Hewatt a friend, too.

Kenerly’s relationship with Jenkins goes deeper. A real-estate investor, Kenerly acknowledged that he has been involved in three business deals with Jenkins and has gone on several group vacations to Las Vegas with him.

Bannister, who advocated the land deal involving Hewatt, said the two are friends.

Former Commissioner Green led the effort to buy the land on Beaver Ruin Road from developer and former Commission Chairman Wayne Mason. Green, who left the board at the end of 2008, described Mason as nothing more than a political supporter and said the purchase was good for her district.

All four developers have contributed to the campaigns of the commissioners who lobbied for the purchases.

Kenerly, Bannister and Green all said the personal relationships or campaign contributions did not drive their support.

The developers could not be reached for comment. Their attorney, R. Lee Tucker Jr., said in an e-mail that none wanted to be interviewed for the story.

It will be at least six years before taxpayers can enjoy any of the four parks. None will open before 2016, a parks official said.

In the meantime, Porter, the district attorney, has raised questions about another proposed land purchase.

In June, he stalled the proposed $5.27 million land purchase by threatening the commissioners with a grand jury investigation if the deal went through. Porter hinted that he had suspicions about other deals as well.

The board postponed the vote until Tuesday.

Beaudreau is not convinced his colleagues took Porter’s threat seriously.

“I’m afraid this is not the end of it,” Beaudreau said. “You would think people could be shamed into doing the right thing.”

HOW WE GOT THE STORY

Working off a tip, the AJC investigated six land purchases for parkland by Gwinnett County, eventually focusing on four of them.

The newspaper researched the history of the properties, the failed attempts of developers to build, the developers’ lawsuits and the county’s steps to buy the land.

In doing so, the AJC reviewed dozens of files in five county departments, including those that buy parkland and run the county’s parks system.

It also interviewed six current or former commissioners, reviewed all their campaign contributions over the past six years, reviewed two master plans for the parks system and watched numerous archived Board of Commissioners’ meetings dating back to 2004.

The AJC also solicited the help of two local appraisers to examine the appraisals involved in the four deals.

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