Jan 6, 2016 Tavares, FL
This is a continuing FiscalRangers.com investigation. We will post updates on this page so bookmark it.
Search terms: Acie's Barber Shop, 1884, Michael Holland, Carla Gnann-Thompson, Eustis sweetheart deal
Update July 2, 2018 - I recently talked to the Eustis City Manager and the 1884 buyers reneged on their contract and the city repossessed the property. This is a never ending issue, and to take the cake, former Mayor Mike Holland was reinstated to the City Council by the liberal Council when conservative Anthony Sabatini resigned to run for FL House Rep. in Dist. 32 in south Lake County. This boondoggle doesn't stop. I will add an update when I get one, or ask Ron Niebert, City Manager. The Acie's building has sat vacant since 2016.
Update July 27, 2017 - The purchase is over 18 months old, and I believe the contract terms required the new owners to start paying a monthly payment, and also to have completed about $90,000 in renovations to the building so it can be occupied. Today I sent an email to the Eustis City Manager to determine if the owners are complying with the contract, or the status. PS: The three city council members who pushed this deal through in late 2015 were former Mayor Mike Holland, and City Council members Karen Leheup-Smith (no longer on the Council since 2016) and Holland's relative Carla Gnann who is still on the City Council in 2017. Holland is no longer Mayor or on the City Council because he resigned to run for another office in 2016, which he lost. Thus the only supporter of this sweetheart deal still on the City Council as of this date is Carla Gnann. VJ
Update Saturday, Jan 9: The Press officer for the City of Eustis told me that both the purchase of the historic building by the City, and the sale at a lower cost were closed. The terms could be changed, so I will examine the deal documents next week.
Update Thursday, Jan 7, 6:00 pm - BOTH deals are closing tomorrow, Jan. 8th. Before, the sale of the building to Mayor Holland's friends was due to close Jan. 13 but we understand that was moved up to tomorrow, Friday, Jan. 8. The payment of $250,000 in City (taxpayer) cash to the seller will occur at 9am tomorrow, Jan 8, and the sale of the building at a loss from the City of Eustis to the 1884 owners at a much lower amount will be closed ot 2pm, I was told verbally. Both closings will be at Eustis City offices. Readers who don't think this is an appropriate use of Eustis City funds or that it is cronyism and not ethical should contact Mayor Mike Holland at the Eustis City offices at 483-5430 or post on his Facebook page and tell him to kill this sweetheart deal.
Original Story
Tomorrow, Jan. 8, 2016, the City of Eustis, directed by Mayor Mike Holland, will close a real estate deal and use city general fund reserves to pay $250,000 for the building and lot in the picture shown that are appraised at only $175,000.
- The appraisals (attached below) say they are only valued at $175,000, incurring an immediate loss using taxpayer funds of $75,000.
- Then days later, on Jan. 13 (note- this has been moved up to Jan 8 at 2pm in the City offices), the city will turn around in a sweetheart deal and sell the building, valued at $140,000 to friends of Mayor Holland for $160,000 plus imputed interest for a five year loan. The friends, owners of the 1884 Restaurant (Troy D. Teems & Leigh A. Pippin, both are realtors), will only have to pay $500 down, and will not have to run credit checks or perform due diligence to show they have the ability to pay.
- The result is the city gets a lot appraised at $35,000 by paying out $250,000 CASH and then selling the building for $160,000 plus imputed interest for a $500 down 5-year mortgage. If you subtract $35,000 and $160,000 from the $250,000, you can see the city threw away $55,000 in this sweetheart deal.
- Neither the seller or buyer's contracts indicate a licensed real estate broker is involved.
- The "seller" (the city) will pay all closing costs - they are not split.
Imagine a friend writing a check on your account for $250,000 to buy a historic building and lot next door when the building is appraised for $140,000 and the lot for another $35,000 or a total of $175,000. Thus, right off the bat, your friend lost $75,000 on the appraised value.
Then the friend keeps the lot, and sells the house for $160,000 to a close business leader without asking for bids from other interested buyers. The business leader also is granted a five year loan without "due diligence" (i.e. examining credit and the ability to pay) with only $500 down, and no payments for a year.
That is what Eustis Mayor Michael Holland pushed through the Eustis, FL City Council meeting of Nov. 19, 2015 in one meeting. He had staff create this convoluted plan to overpay for the 17 Magnolia building and adjacent lot that was rushed through in one meeting and conveniently, online videotaping was not working for four months and no video tape was made. (However, audio recordings were made and I have them).
See more pictures of this downtown Eustis, FL area at our Facebook album HERE.
I have read the Nov. 19, 2015 and Dec. 3 agendas, and the Nov. 19 supporting documents for the purchase and sale deals, listened to the audio recordings of the related segments of the Nov. 19 & Dec. 3 meetings, plus obtained the land and building appraisals for the deal. I have also talked to four local citizens who provided background. However, all the info you need to know is in the documents posted online by the City.
At the subsequent meeting of Dec. 3, Commissioner Linda Bob attempted to delay the deal for more review time, but she and Bill Brett were voted down 3 to 2 by Mayor Michael Holland, Karen LeHeup-Smith and Carla Gnann-Thompson ( separated wife of Holland's cousin BE Thompson).
This is small town politics at its worst.
On Nov. 8, 2015, Mayor Holland had a fundraiser at the 1884 restaurant for his campaign for Lake County Elections Supervisor. On that date, "1884 Restaurant" gave him a donation of $500 just before the Nov. 19th meeting where this sweetheart deal for the owners of 1884 was pushed through the City Council.
So, in a few days, the City of Eustis will take $250,000 of taxpayer funds from city general fund reserves and overpay the seller for a building and lot valued in the appraisals at a much lower $175,000, losing $75,000 immediately. Then they will keep the $35,000 valued lot for city events, and also sell the $140,000 appraised building to the buyer, owners of the 1884 Restaurant in downtown Eustis for $160,000 plus about $27,000 in imputed interest for a five year "interest free" loan.
The buyers will only pay $500 down, and will not have to undergo "due diligence" or credit checks to verify ability to pay. The sale contract DOES include a requirement for the buyers to spend about $97,000 to improve the building, but they don't have to prove the spending with cleared checks, but perhaps handwritten "receipts". (I cringe at this weak provision.)
As a former internal auditor and anti-corruption advisor in Iraq, this deal stinks with cronyism and sweetheart deals. The seller gets way more than appraised value for an all cash deal. Holland's 1884 buyer friends get the property at about appraised value but below what at least three local buyers told me they would pay and I assume they may not ask for city financing. The city did not advertise the building or attempt to find other buyers who perhaps would bid more.
At this time, no one has told us that the city did a thorough examination of the building's condition, which I am told leaks, not all the electrical works and it has mold in the walls.
So, the future scenario could be the new owners of the building could decide to stop payment, the city forecloses, and inherits a building with unknown, expensive condition defects.
THIS DEAL STINKS FOR EUSTIS TAXPAYERS AND SHOULD BE KILLED BY MAYOR HOLLAND AND THE CITY COUNCIL BEFORE IT CLOSES tomorrow, Jan 8, 2016.
- The City staff should obtain a thorough, not cursory examination of the building condition, electrical, roof, leaks, mold, etc. We have heard there was no such examination or no documentation has been provided. (IF I get it, I will revise this and attach them).
- Holland received a $500 campaign contribution from the 1884 owners and beneficiaries of this deal just before it was approved, which leads to questions about campaign ethics.
- Holland also received $2000 in campaign contributions for the Elections Supt. race from the City Attorney and his firm. The City Attorney also signs the purchase and sales contracts for this deal.
Below is my two page overview of the deal I presented to the City Council during public input on Jan. 5, 2016. I told them I would be sending it out but they could call me with any explanations or factual corrections. As of today, Jan. 7, at 1:00 pm, I have not received added information from Mayor Holland or other Council members or staff or involved individuals.
NEW Jan 8: Link of MY public Input at the Jan. 5, 2016 Eustis City Council meeting on this purchase deal. This is a better version than my own video. This is the official Eustis video of the meeting. Scroll forward to 16:10 to see my input.
Link to MY video of the Jan. 5, 2016 Eustis City Council meeting where I gave public input near the front of the meeting asking them to kill the sweetheart deal. Use the Jan. 8 version above which is better.
Documentation & references:
Nov. 19, 2015 meeting where the purchase and sale of the land and building were approved
You can get some of these documents attached to the Nov. 19 Council meeting agenda here for resolutions 15-97 and 15-98.
Here is the staff overview of the proposed purchase deal:
Download 2015-11-19 15274 - Staff Report - Res 15-97
Here is the purchase contract for the building and lot indicating the City will pay $250,000 for the building and land.
Download 2015-11-19 15274 - Commercial Contract Rock Pickle 17 East Magnolia Final
Here is the resolution 15-97 authorizing the use of City taxpayer funds to buy the building and lot appraised at $175,000 BUT it did NOT POINT OUT FOR THE COUNCIL THAT THE COMMERCIAL CONTRACT WOULD PAY THE SELLER $250,000 FOR BOTH PROPERTIES. Thus an unsophisticated official would not clearly understand the city was buying the two properties for $75,000 over the appraisal property. They play word games by saying the "total purchase amount not to exceed $250,000" but not clearly specifying that amount would actually be paid.
Download 2015-11-19 15274 - Resolution No 15-97
The detailed minutes for the Nov. 19 meeting are HERE and include details of the approval discussion.
Audio of the Nov. 19 meeting. I have a copy or you can get it from the City Clerk. It is too big to attach here.
Dec. 3, 2015 Meeting where Linda Bob made a motion to delay the transaction for review. She and Bill Brett voted Yay, and her request for more time was voted down by Holland, Smith and Thompson. This topic was not on the agenda so you don't need it. It was brought up by Bob during her end of meeting verbal comments.
HERE are the minutes of the above Dec. 3 meeting which download when you click it. Skip to the end where Council members comments are raised and read Bob's comments.
Again, you can get the audio from the City Clerk. I also have a copy and listened to it. The minutes are good enough to rely on.
Appraisals for the land and building are attached below. I obtained them using a public records request. They are both about 70 pages in length and not posted on the City website. I have not verified who SELECTED the single appraiser that was used. (The owners of 1884 are both realtors and own a real estate broker office, so they know deal structuring and appraisals.).
The appraisals indicate the building is worth $140,000 and the lot worth $35,000 or $175,000 total.
Download Appraisal - 150801A City of Eustis (improved)
Download Appraisal - 150801B City of Eustis (vacant land) (2)
Vance Jochim
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