Morgan Hill's Redevelopment Agency has purchased two pieces of property from Paul and Diana Swing for $1.9 million - probably a half a million dollars by the city's own estimates than the properties are worth. That's hard to evaluate with any certainty, because, once again, the city has purchased real estate without first obtaining appraisals.
Banks won't loan money without an appraisal. The city shouldn't spend taxpayer dollars on real estate purchases without appraisals either.
In the Swing deal, the city purchased a downtown building at 17450 Monterey Road, and a less-than 11,000-square foot plot just north of the El Capri restaurant. In addition, the Swings have entered into a 10-year lease for vacant space in the police station building on Vineyard Boulevard.
Complicated deal makes appraisals even more important
It's a complicated deal to obtain a property that city officials call key to redeveloping downtown. Perhaps the city made a wise investment in a key piece of property that will pay dividends in the future. Only time will tell.
But we're missing a key piece of information in making that assessment because the city didn't get an appraisal before a property purchase - again.
We suspect that the city's failure to obtain an appraisal is an attempt to not officially "know" information that would cast doubt on this purchase. It certainly looks bad to pay, say, $500,000 over appraised value in a roughly $2 million transaction.
Lack of appraisals destroy trust
Having an appraisal that verifies the overpayment makes life more difficult for elected officials, no doubt. Too bad. There are legitimate questions about this deal - about the price paid, about why a sliver of land next to El Capri restaurant is worth any taxpayer dollars at all - and city officials owe complete answers to the taxpayers who paid for those purchases. Appraisals are a critical components of complete answers.
Had they provided taxpayers with those complete answers, city officials might have found that taxpayer outrage at a proposed overpayment could be a useful negotiating tool when dealing with a property owner who's asking too much for a piece of property.
With the Swing property deal we'll never know.
But the problems don't stop there. In a city that's trying to build trust among voters that it manages their money well - this was a question in the recent poll trying to gauge support for higher taxes to fund increases public safety service levels - moves like this are counterproductive.
Given the city's bad track record on appraising property before purchasing it, it's time for an ordinance that requires the city and its RDA to obtain an appraisal before every real estate transaction.
Perhaps Councilwoman Marby Lee, the only no vote on this transaction, will propose that legislation.
Act now
Contact the Morgan Hill City Council at (408) 779-7271 or e-mail them by logging onto www.morganhill.ca.gov.
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