[Editor’s note: Cecil Bothwell submitted the following commentary unsolicited, not knowing that we were planning a special feature on the basilica in this issue. This piece represents Bothwell’s opinion; it is not an Xpress editorial.]
The Catholic Diocese of Charlotte recently low-balled the city of Asheville with an offer to buy property across the street from its elegant Basilica of St. Lawrence. The initial offer was for $2 million — sort of — the devil being ever in the details. Actually, the offer was for $1 million, with the stipulation that the city knock down vacant buildings on the property and install surface parking, which the church could then operate at a profit until such time as it executed some as-yet-unspecified development plans. Somewhere down the line, the city would receive another $1 million. In late February, the offer was increased to $2.6 million to cover demolition and paving costs.
The deal was an obvious nonstarter, not only because of the bargain-basement price but because the city is constrained by law from selling property on the open market without an auction. In order to consider selling to the diocese, we would have had to implement open bidding, and the church would have had to come in with the top offer.
What the church’s offer did accomplish was to reawaken a dormant deal cooked up between the city and the McKibbon Hotel Group in 2008. Back then, as the country slid into what we now call the Great Recession, McKibbon was the lone respondent to a request for proposals to redevelop the 0.8 acre parcel.
The difference between a sale on the open market and an RFP is that under the latter, a municipality stipulates the conditions for a sale; therefore, it’s permitted to select a buyer based on adherence to those conditions. Theoretically, it's a good way for a city to shape use of property it deems critical to its overall development objectives.
But since McKibbon was the only bidder, it came down to whether to accept their offer. The city gave the developer a tentative nod in 2008, stipulating that the project be designed in accordance with the RFP and the Downtown Master Plan.
McKibbon offered $2.3 million for the site, or about $66 per square foot, and agreed to knock down the existing structures. At first blush, that might seem like a good deal — certainly better than the diocese’s offer. But there's another way to evaluate the deal: the tried-and-true real estate measuring stick of comparable sales.
Hmm… where else in downtown Asheville have we recently seen a parking lot and a decrepit building sold for redevelopment?
I know! There's that great deal the city made at 51 Biltmore, where we partnered with Public Interest Projects and the selfsame McKibbon Hotel Group in developing a hotel and parking deck. Why, I’ll bet you couldn't find a better comp in the whole history of real estate valuation!
That deal, too, dragged on for years before finally getting approved. And while its complexity (involving multiple parcels, construction costs, capital gains, air rights, condominium rights and numerous other factors) makes simple comparisons difficult, it's clear that the city paid a great deal more than $66 per square foot for its share of the property.
I would argue that a property that’s across the street from the Civic Center (Asheville's principal entertainment venue), the Basilica of St. Lawrence (Asheville's world-famous architectural wonder) and the Grove Arcade (described at the recent State of Downtown luncheon as Asheville's "crown jewel”) is worth at least as much as the property across the street from Barley's, no matter how many local brews are on tap.
We should further consider that McKibbon's offer on the Haywood property was made at a time when smart money was backing out of the markets, smelling disaster brewing as Lehman Brothers, Bear Stearns and other financial houses of cards were teetering or collapsing. And the city purchase at 51 Biltmore was finalized near the bottom of the slump.
It is patently absurd for Asheville to reach back and accept an outdated, uncompetitive, inadequate offer from the McKibbon Group at a time when real estate sales and prices are rebounding, when Asheville's international reputation is huge and growing, and when there’s no reason whatsoever for a fire sale. If we sold the Haywood property on the same terms that we purchased the 51 Biltmore parcel, the city might make three times the money that’s currently on the table.
In the meantime, the city of Asheville should proceed as we were before the church stuck its foot in the door: tear down the old buildings, build surface parking and start raking in an estimated $75,000 per year in parking fees. Oh, and under our current development laws, the city will be required to plant trees as well.
That's at least a little bit like a park.
— Cecil Bothwell serves on the Asheville City Council.