The city of Cape Coral’s venture into pay-me-later land speculation now has a price tag: $8.2 million dollars. Pricey sundries to which the city is obligated, such as attorney’s fees and expert opinions, have yet to be determined but are expected to tack on another million-plus.

In opting to take possession of a 14-acre parcel owned by VK Development in late 2006 via a seldom-used eminent domain condemnation process sometimes called a “quick take,” which lets the courts decide fair value after title is transferred, the city gambled on two things: land prices would continue to rise and voters would OK the issuance of general obligation bonds to fund a proposed $110 million public safety complex.

Unfortunately for the city — and its taxpayers — neither gamble paid off. Property prices have plummeted and voters overwhelmingly rejected the idea of a long-term tax obligation for a project they dubbed Taj Mahal.

Meanwhile, the wheels of litigation have turned slowly.

With four appraisals valuing the property at anywhere from $5.65 million to more than $12 million, VK asserts the site should be valued at the high end of the scale. The city insists that the parcel for which VK paid less than $2 million should come in toward the bottom. VK points to its appraisals, Cape officials tout theirs and the fact the city bought a parcel two blocks west of the VK site near the current police station for $1.9 million. That site is about half the size of the VK parcel with better zoning, mixed use as opposed to commercial. Multiply by two.

The city deposited $5.22 million with the courts as the price it determined was fair to pay. VK’s still waiting for its money.

Mediation, and some subsequent haggling, has now resulted in the $8.2 million price tag, which council will consider Monday. Their choices? Pay the negotiated price, make another offer, or go to court and let the courts determine fair value. Backing out of the acquisition is not an option; VK has already declined to take the site back.

We don’t envy council its task.

The $8.2 million is likely much higher than current value. What’s more, the city is not sure it will build even a smaller complex on the site it wanted so badly that it opted for the riskiest of acquisition methods, one which locked in the value at the point of transfer but left the price in limbo. It’s also a process that adds the property owner’s legal fees — set by law at 40 percent of the difference between what the city offered and the final price — and expenses to the tab.

Under this scenario, unless it needs cash very badly, VK has little to lose by holding out while, given its track record on this one, the city needs to think twice before rolling the dice again.

One way or another, the city is going to take a loss. The only question remaining is how much.

We urge our elected officials to look at time and taxpayer money already spent and to heed, carefully, the advice of its own legal team which points out that the mediated price is lower than the midpoint of the four appraisals, which is $8.85 million.

We have no objection to City Council offering less than the mediated price — in fact, we urge them to do so –but we ask that the board be realistic as a slightly lower court-determined price and much higher costs will benefit no one should this issue continue to go unresolved.

It’s come time to settle up.

Meanwhile, let this one be a lesson learned. Not every gamble pays off. And it’s the taxpayers who bear the risks — and the costs.



— Breeze Newspapers