ERC: 275-acre Chaffee deal is stalled

story by Aric Mitchell
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Those hoping for a deal between ERC Properties and the Fort Chaffee Redevelopment Authority on a 275-acre phased development are in for a disappointment.

Rob Coleman of ERC told The City Wire on Thursday (Feb. 24) that negotiations have stalled.

“We’ve made two offers based on current market conditions, and with foreclosures at 66%, and this being a 10-year investment for us, we’ve done all we can do. The current offer is going to be staying on the table until we can hear more about what the Real Estate Review Committee is thinking,” Coleman said.

The FCRA’s Real Estate Review Committee considered in December ERC’s offer to purchase the 275 acres for the sum of $1.65 million, but ultimately felt the $6,000 price per acre was too low. ERC’s additional investments for running water and sewer lines on the property would require $600,000 to $800,000 before any profits could be realized, bringing their total cost per acre to approximately $8,181.

“We’re (ERC) always going to be interested in Fort Chaffee,” Coleman said. “We feel that it is the future of Fort Smith’s growth and development, and we’re definitely interested in building it up as best we can, but the developer has to be successful. Our material costs are spiking all the time. We have spent a tremendous amount of money on this offer already. Infrastructure costs will be huge, and we don’t feel the committee has given that number the respect it deserves.”

While Coleman would not rule out working with the FCRA in the future, he did state that for anything to move forward, all parties involved would have to realize that developing the land is a collaborative effort.

“One party won’t make this happen, so it all comes down to what the vision of the trust (FCRA) is,” Coleman said.

At the January meeting of the FCRA, Executive Director Ivy Owen said that the board was still hopeful an agreement could be reached, and that he hoped to reenter negotiations later in 2011.

In December, he voiced support for Coleman’s offer: “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 an acre. 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 end result of what we’re going to have here, I like it.”

The end results Owen referred to includes a commercial and retail center on the land, as well as affordable residential housing in the $120,000 to $160,000 range, which, Coleman notes, represents 70% of the housing market in the Sebastian County area. In addition to this, ERC was willing to renovate the old Maness School House and turn it into a community center.

Committee members Linda Schmidt and Bob Bradford, however, felt ERC’s offer did not value the property highly enough. They also believed 40 of the 275 acres should receive a separate bid as the land is zoned as “mixed use” (commercial, residential, and retail), which typically brings more on the open market. Committee member Galen Hunter added that while he did value the ERC proposal, one of his concerns about the 40 acres was that “it would require us to change our master plan of development for the area.”

If the board is hoping for ERC to budge on its current offer, however, there is little possibility of that happening, according to Coleman.

“We have no plans on changing anything at this time. Truthfully, I’m an Ivy Owen fan. I think he’s done a great job with the Trust. I think the world of him, and he’s really supported us in what we’re doing. The only hang up is how does the Real Estate Review Committee want this land to be developed? If they want to parcel it, that’s one thing, but if they want a master plan effort, that has to be reflected in the price. There are a lot of great things happening at Chaffee, things that are needed. But we can’t try to be appraisers.”

Coleman did thank the people of Fort Smith, however for their interest in the project.

“I think, in general, the people of Fort Smith are looking for something beyond the norm. They need to see something be successful, whether it’s at Chaffee or Downtown, and you could really feel that at the stockholders meeting when the public came out and gave their input on what they wanted to see for the development. It really exceeded my expectations, and those who participated really had more knowledge of Fort Smith and its idiosyncrasies than I did. It was truly an honor to be a part of that.”