FCRA, ERC unable to agree on terms; Owen gets $15,000 bonus

story by Aric Mitchell
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Real Estate Review Committee members on the Fort Chaffee Redevelopment Authority (FCRA) were unable to reach an agreement following a second meeting with Rob Coleman of ERC Properties Inc., on Thursday.

The committee was considering a proposal from ERC for the purchase of 275 acres at the sum of $1.65 million, but ultimately, there were too many concerns about cost per acreage.

Coleman’s intention was to develop the land with an eye toward affordable housing in the $120,000 to $160,000 price range, which, he notes, accounts for 70% of the housing market in this area. Coleman’s plan also calls for the development of commercial and retail centers as well as taking on costs of renovation for turning the Maness School House into a community center.

PRICE POINTS
One point of contention for committee member Bob Bradford was the uniformity in pricing between a 235-acre tract of land in the proposal and another 40-acre plot, which would have been used mostly for mixed use purposes (i.e. commercial, retail, and residential). Bradford and committee member Linda Schmidt noted that ERC was valuing the land at the same price as the 235-acre plot, despite the fact that the FCRA has in the past been able to sell land for mixed use purposes at a higher price-per-acre.

Under Coleman’s plan the average cost per acre is $6,000, but his company would be taking on the added expenses of running water and sewage lines on the properties, an additional cost of between $600,000 and $700,000, upping the average to an $8,181 investment by ERC. The FCRA did not have all the numbers available for the meeting, but estimates from past sales have shown an ability to sell the land in smaller parcels for between $10,000 and $12,000 an acre.

“That (smaller parcels) does make a difference,” Executive Director Ivy Owen said. “When you look at the economics of it, we sold between 60 and 70 acres to Chuck Fawcett Realty for around $7,000 or $8,000. The way I look at it, when you add in your utility costs, and they’re getting more expensive all the time, I think we’re right on the brink of being equitable when it comes to the installation of the utilities. When you add in the aesthetics and the end result of what we’re going to have here, I like it.”

Committee member Galen Hunter added: “I do see some value to Rob’s proposal here, because once you’ve presented a master plan, you have a unique vision that you can follow all the way to the end compared to parceling it out, having a Reata here and a Cisterna here. But one of my concerns about selling the additional 40 acres is that it would require us to change our master plan of development for the area, and that’s why I would like to hold off at this time.”

‘MAXIMUM RISK’
Coleman was at first reluctant to go back to the drawing boards and split offers on the two properties.

“I brought you an offer on both for a reason. We’re willing to renovate (the Maness School House) and take on that financial burden from which we won’t see any profits. We’re also willing to assume all costs on utilities,” Coleman said.

He later agreed to meet with the board in the next month to see if a final agreement can be reached.

Coleman later added: “I’m not going to hold this on the table for months. This is something I’ve worked very hard on and already spent a tremendous amount of time and energy. I want to be very respectful of the board’s time as well as mine. We’ve already opened ourselves up to the public, as to the pricing and development standards, which gives my competition a chance to look at my plans. I am at my maximum risk of effort and time.”

“We understand the time and the effort that goes into a proposal like this, but if the offer had been made to Joe Blow, the exposure wouldn’t be there,” Bradford said. “But because the offer was made to this organization, Freedom of Information rules apply. We’re not trying to drag this thing out. What we’re trying to do is fulfill our obligation and duty to the trustees. We’re moving along as quickly as we can, but the price is something that should be understood, and it’s not something we can do in an hour or two.”

Owen said he would be willing to call a special meeting before the Jan. 20, 2011, regularly scheduled board meeting of the FCRA so Coleman’s concerns could be addressed and a final decision made.

EXECUTIVE BONUS
Following the committee review, the December FCRA board meeting netted an extension of service for board members Linda Schmidt and Galen Hunter. Both members were approved unanimously. Also, the 2011 strategic plan and 2010 annual report were revealed with plans to make them available online at the FCRA website by next week.

In keeping with the 2010 objective to expand historical interests, the FCRA received notice from the Arkansas Heritage Foundation that the Chaffee Barbershop Museum has been recommended for inclusion on the National Register of Historic Places. Final approval could come within the next 30 days. Meanwhile, the application has been made for 501(c) (3) status of the Chaffee historic district. Typically, the IRS takes 3-5 months to reach a decision.

The board then broke out in executive session and returned approximately 90 minutes later to grant Executive Director Owen a $15,000 bonus for 2010.

“We are overall very pleased with the direction the FCRA is going under Director Owen. We’re making great strides and looking forward to what 2011 has to offer,” FCRA Chairman Michael Milton commented.

Owen, who has a base salary of $130,000 a year, also received a $15,000 bonus at the end of 2009.

Owen’s contract received a 2-year extension.