At the November 21, 2016 City Council meeting, the Council approved the sale of a piece of city land to CPB2 in an 8-1 vote (Strimling opposed). I received multiple emails asking me to explain my vote in support of this sale, so I thought it would be good to follow up with a blog post. Here it is.
The Sale of City Land to CPB2: A Few Clarifications
Much of the confusion and consternation around this sale stems from a Portland Press Herald article in which Mayor Ethan Strimling claimed that the land was worth $900,000 but that the city was selling it for just $400,000 which, in his opinion, wasn't "getting good bang for the buck for Portland taxpayers.”
The problem with the Mayor's statement is that the property was not, in fact, worth $900,000, and citing that figure as the land's true value is misleading. That appraisal was based on what the property would be worth if the road leading to it (Thames Street) were already extended and if all of the public infrastructure were already in place. That is not the case, so the land is not, in fact, worth $900,000 at present.
The problem with the Mayor's statement is that the property was not, in fact, worth $900,000, and citing that figure as the land's true value is misleading. That appraisal was based on what the property would be worth if the road leading to it (Thames Street) were already extended and if all of the public infrastructure were already in place. That is not the case, so the land is not, in fact, worth $900,000 at present.
So...where did that $900,000 figure come from?
The $900,000 figure came from an appraisal the city had done to determine what the lot would be worth under ideal circumstances—a best case scenario in a perfect storm, so to speak. To better understand this, it's helpful to think about the way people buy cars, houses, or other large items.
There is a particular dance that is done between buyers and sellers in these transactions. The seller begins with a high price, the buyer starts low, and they work from there. That's what this $900,000 figure was—the city's starting point for negotiations. It's not a price the city ever expected to get and it was intentionally set high (again, the potential value of the land under ideal circumstances) for the purpose of negotiation.
The estimate for the property "as is" is actually less than the $400,000, and that is true according to both parties involved in the sale. At the city's estimate of $33 per square foot, the developable portion of the land is worth $132,000; by CPB2s estimate, based on a higher price per square foot, it's worth around $185,000. By either estimate it's clear that the city is getting more than a fair price, and—in truth—a pretty good bang for the buck.
Even if we were to use the city's $33/square foot figure to determine the value of the entire lot—not just the portion of it that can be developed—the land value comes in at approximately $396,000, meaning that at the very least, the city is receiving fair market value for the land. However, the entire lot is not developable, which adds another complexity to the equation, and that is around the extension of Thames Street.
There is a particular dance that is done between buyers and sellers in these transactions. The seller begins with a high price, the buyer starts low, and they work from there. That's what this $900,000 figure was—the city's starting point for negotiations. It's not a price the city ever expected to get and it was intentionally set high (again, the potential value of the land under ideal circumstances) for the purpose of negotiation.
The estimate for the property "as is" is actually less than the $400,000, and that is true according to both parties involved in the sale. At the city's estimate of $33 per square foot, the developable portion of the land is worth $132,000; by CPB2s estimate, based on a higher price per square foot, it's worth around $185,000. By either estimate it's clear that the city is getting more than a fair price, and—in truth—a pretty good bang for the buck.
Even if we were to use the city's $33/square foot figure to determine the value of the entire lot—not just the portion of it that can be developed—the land value comes in at approximately $396,000, meaning that at the very least, the city is receiving fair market value for the land. However, the entire lot is not developable, which adds another complexity to the equation, and that is around the extension of Thames Street.
The Thames Street Extension
Once they purchase the land, CPB2 will be completing a large section of a roadway which, while it will lead into their planned development, will also be used by the public to access commercial lots to the west of the planned development, one of which is owned by the city. This road will also be used by the public to access the Amethyst Lot—a planned public park space on the waterfront that will give the public permanent access to prime waterfront.
It is important to note: This is a road the city has always intended to build. If the triangle of land in question weren't sold to CPB2, the City would still develop this road. However, since the land is likely being sold, CPB2 will be developing the section of the road that crosses through that triangle, thereby picking up some of the cost for previously planned infrastructure improvements in addition to paying $400,000 for the land.
So again, doing the math with the correct variables in place shows that the city has, in fact, gotten great bang for its buck.
It is important to note: This is a road the city has always intended to build. If the triangle of land in question weren't sold to CPB2, the City would still develop this road. However, since the land is likely being sold, CPB2 will be developing the section of the road that crosses through that triangle, thereby picking up some of the cost for previously planned infrastructure improvements in addition to paying $400,000 for the land.
So again, doing the math with the correct variables in place shows that the city has, in fact, gotten great bang for its buck.
A Little More on the Amethyst Lot & Wrapping Up
The Amethyst Lot is a parcel of land next to Sail Maine and in front of the Portland Company which is currently comprised almost completely of a dirt lot. During last year's budget process, the city allocated money to plan and design this space for the public. This parcel will, eventually, be transformed into a public park area where citizens will have access to the waterfront in perpetuity, which is one of the goals of the Eastern Waterfront plan.
So, in summary, the city is selling the land for more than it is worth, and CPB2 will be constructing a portion of a road that will give the public greater access to the city's future waterfront park.
Yes, the city will be constructing a portion of the Thames Street extension, but it's important to note that this extension has been planned for a long time (over a decade), and the installation of public infrastructure is something the city has been budgeting for as part of the Eastern Waterfront plan. In fact, the city also intends, at some point in the future, to create another street at a right angle to the end of Thames Street that would connect up to Fore Street. For that to happen, this extension of Thames Street must first be realized.
I hope that explains my position (and my vote) to you. I don't expect everyone to agree with me, but I do hope that you can see that I take great care in casting my votes on each and every issue that comes before me, and I only do so after serious deliberation. In short, I always try to do what's best for our district and for the city overall. And if you ever have a question about one of my votes, you can always just ask me about it.
I get a lot of email, but I try to respond to each and every inquiry as quickly as I possibly can while also working my day job, maintaining my sanity, and keeping up relationships with my family and friends.
Cheers, and take care,
Belinda
So, in summary, the city is selling the land for more than it is worth, and CPB2 will be constructing a portion of a road that will give the public greater access to the city's future waterfront park.
Yes, the city will be constructing a portion of the Thames Street extension, but it's important to note that this extension has been planned for a long time (over a decade), and the installation of public infrastructure is something the city has been budgeting for as part of the Eastern Waterfront plan. In fact, the city also intends, at some point in the future, to create another street at a right angle to the end of Thames Street that would connect up to Fore Street. For that to happen, this extension of Thames Street must first be realized.
I hope that explains my position (and my vote) to you. I don't expect everyone to agree with me, but I do hope that you can see that I take great care in casting my votes on each and every issue that comes before me, and I only do so after serious deliberation. In short, I always try to do what's best for our district and for the city overall. And if you ever have a question about one of my votes, you can always just ask me about it.
I get a lot of email, but I try to respond to each and every inquiry as quickly as I possibly can while also working my day job, maintaining my sanity, and keeping up relationships with my family and friends.
Cheers, and take care,
Belinda
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