How will City set price for hotel land and who will bear mitigation cost?

Archeologist Andy Stout raises the troublesome issue of how the City has set the price it pays for the Randalls’ site, and who is bearing the costs of mitigation. In an email to the Mayor, City aldermen, and others, Stout calls for the price of the hotel site to be renegotiated.

Andy Stout

The December 2015 MOU says under the head Land Acquisition that the City “after satisfactory review of the PSA will accept the assignment of the PSA for the land.” [8 (i)] PSA means purchase and sale agreement, and it refers to a sale contract between Plamondon and the Randalls. The MOU is saying the the price Plamondon and the Randalls agreed on for the site will be accepted by the City’s purchase: $3,367,859 (Appendix C). The phrase “after satisfactory review” may provide the basis for the renegotiation Stout proposes.

Stout argues that the MOU “assignment” is in direct violation of the City’s established procedures for acquiring land, and he quotes Keisha Brown, City Purchasing Manager. She says the normal procedure is to get an independent appraisal of the value of the property sought, then negotiating a sale price with the property owner. The City has never gotten an appraisal of the value of the Frederick News-Post property and it has not negotiated with the Randalls.

The price for a property with substantial mitigation costs, whether hazardous materials or archeological and historic preservation is normally discounted according to an estimate of those costs. In other words normally the Randalls as present owners, would carry the mitigation costs.

Stout: “The city must go back and renegotiate the purchase price for a reduced rate given that the site can only be developed after substantial archaeological mitigation. The highest and best use for the property can only be realized after the expense of tens of thousands or perhaps over a hundred thousand dollars of mitigation costs. The city’s purchase price for the property should be reflective of a deduction for this expense.”

“Just to recap:
1. How was the price for the hotel property determined?
2. Why cant anyone produce an appraisal to justify this purchase price?
3. Why is the hotel real estate being acquired in apparent contradiction to the the city’s own best practices for real estate acquisition?
4. Knowing that the development of the property will have substantial mitigation costs, will the city now go back and renegotiate the purchase price of the property so that the acquisition can be done in accordance with the city’s own best practices?”

Plamondon in his 2014 proposal to the City in response to the RFP said that he believed on the basis of historical advice that the Birely Tannery would be found to be a “non-contributing resource” — of no historical value. As such it wouldn’t have required expensive ‘mitigation’ so Plamondon’s price assumed the tannery could be knocked down and that would be the end of the expense.


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