At an April 18 special meeting, the . After finding no takers at its earlier sealed bid auction, which required a minimum $10 million bid, it will now hold an open public auction with a minimum bid of $5 million. However, the interest of potential buyers may be clouded by the District’s ever-changing statistics relating to the building. At best, the District has carelessly publicized numbers without proper research. At worst, the District’s numbers appear to be derived based on the Board’s current political agenda, not hard facts.
The previous $10 million minimum was based on the most recent appraisal of the property. But the Board offered no explanation for how it arrived at the $5 million figure. If the District really wants to get rid of the property as soon as possible, it makes no sense to set a $5 million minimum, just as it made no sense to set a $10 million minimum for the unsuccessful sealed bid auction. It should simply sell the property and be done with it, and should not try to rule out a deal with the Park District, still the most likely buyer.
But the new minimum bid is not the only changed Hubble-related number. The Board has thrown out a lot of numbers relating to this property and its (thus far) failed attempt to sell it. A prospective buyer will want real numbers, and the District has had a tough time providing them. Sometimes, like a student rushing to finish a test, the Board seems to be guessing at its answers.
For starters, how big is the site and how big is the building? You’d think, after years of study, these numbers would be constant. But they’re not. In December 2001, the Board’s appraiser said that the site was 21.39 acres, of which 10.7 were usable. Now, the site is claimed to be 22.59 acres, but only 10 acres are deemed usable. In its May 19, 2004 Building Assessment, District architect Legat said the building was 253,005 square feet, and the Board used this figure in its “Facility Information” fact sheet. Yet the auction materials now say the building is actually 280,000 square feet. There have been no additions to the building in over 30 years, so the building’s area did not increase by 11 percent; 1.2 acres of land did not magically appear. The numbers from the District, or those it selects to advise it, just haven’t been very precise.
The alleged overall value of the property has also fluctuated wildly. In February 2006, the District obtained an appraisal stating it was worth $6.725 million, yet by October of that year (without any new appraisal) a Board meeting presentation claimed that the “low end” value of the property was $20 million and that it was worth “$20 to $30 million.” More than a year later, in November 2007, the Board did obtain a new appraisal showing a $21.75 million value based on “mixed use residential and commercial”; that value was used throughout the referendum campaign as a selling point. The same appraiser now says it’s worth only $10 million without the possibility of residential development, and even that number seems to be inflated given the lack of bids, vindicating and others who questioned it.
What if a buyer wants to demolish the building? Demolition costs, including asbestos abatement, were said to be $4 million in the 2006 appraisal, based in part on information provided by the District. The District’s web site now estimates them at only $1 million to $1.6 million. Have costs really fallen that much (despite rising prices since 2006), or is this an attempt to induce buyers to pay more?
Inherently, appraisals and estimates may be guesses to some extent, although the District hasn’t always emphasized that fact. Much more troubling are the big errors the District has made in calculating its own costs related to the building – figures that should be hard numbers from its own financial records. It claimed in February that the current building costs $300,000 a year to maintain, but its own records, obtained under the Freedom of Information Act, show that it spent only $217,000 last year, $194,000 net after considering Park District rent payments. So its estimate of maintenance costs was 55 percent too high. Back in 2006, the District claimed to have spent $4.6 million in maintenance and improvement on the building since 1999. However, the District then reduced its claimed spending to $2.7 million at the February 8, 2006 board meeting, and FOIA requests eventually documented just $1.05 million in actual spending – a total exaggeration of 338 percent.
Ultimately, the market will determine what the property is worth. Playing games with numbers won’t generate more economic value.