The Gwinnett County school district paid $1 million more for a piece of land than a prominent developer had paid for it seven months earlier, an Atlanta Journal-Constitution investigation has found. The deal for 26 acres that became an elementary school is the latest in a series of land purchases the AJC has studied in which the school system paid developers far more for property than the developers paid months or even days before.
The district bought the 26 acres from developer and former state Rep. Keith Breedlove’s company in 2006 for $105,000 per acre — the same land that Breedlove had acquired from several property owners for about $65,000 per acre, property records show.
“That’s pretty extreme,” said Steve Palm, president of Marietta-based research firm SmartNumbers, which analyzes and forecasts real estate trends in metro Atlanta. “Do you think something should go up [that much] in seven months? No.”
Jim Steele, the school district official in charge of land purchases, said last week that the district, and taxpayers, got a good deal on the property.
“We bought a great school site in the exact location where it is needed and for a price less than the appraised fair market value,” he wrote in an email to the AJC.
“You can say that we paid $1 million more for land than Breedlove paid for it 7 months earlier, but this is misleading. What he paid for the land includes not only the price he gave the former owners but money and time he invested prior to his closing on the land and our acquiring it.”
In September 2005, Breedlove’s company assembled 88 acres of raw land just south of I-85 near Hamilton Mill, in the fast-growing northeastern part of Gwinnett. As with most tracts of land, the portion that fronts on a road is the most valuable, and Breedlove paid far more for the acreage that lies along busy Braselton Highway than for the parcels that make up the back portion.
Two months after Breedlove acquired the land, the school district offered to pay him $105,000 per acre for the more valuable acreage in the front — $5,000 an acre more than he paid for it — to build an elementary school. But the school system eventually paid that same price for 26 acres in the rear of the tract, handing Breedlove $40,000 an acre more than he paid for that portion of the property. The rear tract also has a creek running through it, which significantly affected its development potential.
Steele said the stream, which may have been a challenge for a developer, is great for a school. The land, he said, “was perfectly usable, and in fact desirable for this elementary school. Our schools would all like to have streams on their property.”
The AJC also determined that building a school in the back of the property meant that Gwinnett taxpayers had to spend $1.2 million to pave a road that leads into the subdivision and to the school behind it. By arrangement with the school district, county government pays for road work at new school sites.
A four-month inquiry
The AJC has been investigating the Gwinnett school district’s land purchases for four months. This article marks the 10th land acquisition scrutinized by the AJC in which developers bought property and then sold it to the school district at significantly higher prices. Many of those transactions took place just months after the developers acquired the property; in some cases, the newspaper found, they bought property and sold it to the school district on the same day.
As a result of the AJC’s reporting, the school district launched its own investigation into its land purchases, hiring a former U.S. attorney to conduct the probe. It is expected to be complete within one to three weeks. District Attorney Danny Porter, meanwhile, has said he is considering convening a special grand jury to review the transactions.
Steele, the school district’s chief operating officer, defended the purchase.
“It was perhaps the fastest-developing area in the county,” Steele said in an email. “Land was appreciating in value on a monthly basis.”
Steele has consistently refused to meet with the newspaper to discuss land acquisitions but instead answers questions by email.
He described Breedlove as an unwilling seller who had to be threatened with condemnation before he would discuss selling the property.
“He offered to sell us a school site on the back part of his property for $105,000 per acre, the same amount as we had offered for the front,” Steele said. “Rather than condemn and try to get in a court battle with an unwilling seller, we agreed to move on the back property.”
Breedlove, CEO of Breedlove Companies and a state representative for 10 years, did not return numerous phone messages seeking comment at his office and home.
The subdivision economy
Located north of Dacula, Puckett’s Mill Elementary School now sits at the end of the road that the county paid to pave.
On two sides of the school property sits Breedlove’s unfinished project, Pucketts Manor, which shows all the signs of a subdivision that met the wrong end of the economy.
The frontage property, closest to Braselton Highway, is lined with about a dozen homes. The back portion has roads knifing through it, but they are blocked by metal gates. Piles of bricks and gravel sit unused along the roadside.
Breedlove’s company bought the land in September 2005 to build a subdivision. The total cost for 88 acres: $7.5 million.
But just a few months later, he agreed to sell nearly a third of the property to the school district, which paid him 60 percent more than he paid.
“Someone made a lot of money in a short amount of time,” said Palm, the real estate analyst. “All of a sudden, it’s over 100 [per acre]. That’s too much.”
In his email, Steele said, “It would be very inaccurate for someone to come along now, years later, and make the case that our price and independent appraisals were too high.”
Board approves deal
Steele took this proposed land purchase to school board members on May 12, 2005, school records show.
Board policy requires Steele to provide the board with at least three possible sites for school land purchases.
But, whether he wanted it or not, the odds were in Breedlove’s favor that his land would be chosen. Of the three that Steele offered up to the board, two were on the same tract that Breedlove had under contract, documents show.
The board unanimously authorized Steele to select and buy the “most suitable” parcel.
At first, he pursued a 23-acre tract fronting Braselton Highway. His staff obtained two appraisals for that property. One appraiser determined the land was valued at $100,000 per acre — the same amount that Breedlove paid for the land. The other’s valuation was $120,000 per acre.
In November 2005, the school district offered to buy that land for $105,000 per acre. But Breedlove didn’t think it was enough, according to district records.
At that point, the district decided to condemn the property, Steele said. Faced with that prospect, he said, Breedlove came to the table with a compromise: Would school officials be interested in the back portion of his assemblage?
District records indicate that both sides agreed on the land and sale price by January 2006.
‘Highly desirable’
In a letter dated March 6, 2006, appraiser James Cook wrote that the $105,000 per acre price for the rear property “would be consistent” with his original valuation of $120,000 per acre for the front property. Cook, however, noted that several acres were within flood plain or creek buffers and had “no value.”
The district did not pay less for that land, though. Based on the purchase price — $2.7 million — it paid $105,000 for all acres that it bought, including the flood plain, wetland and creek buffer.
“According to the files,” Steele wrote, “approximately 3 acres is covered by streams and stream buffers, all of which are an amenity and highly desirable for this school.”
In his original appraisal, Cook’s decision to value the frontage property at $120,000 per acre relied primarily on three other land sales and Breedlove’s transaction.
The properties involved in those other sales, however, were already zoned for much denser development — at least double the number of homes per acre that Breedlove could build — making those properties more valuable.
Cook did not return a phone message seeking comment.
The same month Breedlove closed the deal with the district — April 2006 — he went to work getting permission to build on the rest of the property.
He got approval to start grading and installing roads and utilities in November 2006.
By early 2008, Breedlove was ready to start building the first phase of Pucketts Manor. But only a handful of homes were built before the lender foreclosed on Breedlove’s remaining land in May 2009.
A real estate company bought it a few months later for $2 million, or about $35,000 per acre — a bargain compared to what the school district paid for the raw land.
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