SUNDAY EDITION | Developers could pocket city funds under Walmart deal
LOUISVILLE, Ky. (WDRB) – In announcing a new Walmart Supercenter for west Louisville, Mayor Greg Fischer said the city would spend $1.8 million on six parcels of land needed to make the deal at 18th Street and Broadway a reality.
The money to buy the six small lots adjacent to the main store site – combined with a $500,000 city grant to Wal-Mart – was enough to convince the retailer to come to the underserved area.
Yet, a closer look at the deal reveals details that weren't disclosed at the March 24 announcement:
For one, the city is not actually buying the six lots near the Walmart site. Instead, it's giving the $1.8 million to the developers of the project, Teresa and Frank Bridgewaters, in an arrangement that would allow them to pocket any funds not needed for the land purchases or other final work to complete the deal.
Meanwhile, it's unclear if the $1.8 million contribution was based on fair-market appraisals of the six lots, which have a combined value of only $268,000 for tax purposes.
Metro government denied WDRB.com's request to see any real estate appraisals involved in the deal, saying such documents are not public records until the developers acquire all of the land for the project.
Fischer spokesman Chris Poynter said the $1.8 million contribution was "negotiated" with the Bridgewaters – though he didn't know if appraisals were involved. He said the money represents the city's contribution to the "holistic development" rather than a precise reimbursement for the land costs.
The agreement, obtained under the Kentucky Open Records Act, requires the developers to repay the money they spend on the land if the Walmart is never built, but stops short of saying any unneeded funds must be returned to the city.
"If they (the Bridgewaters) spend less than that ($1.8 million), then that's just money for them because they have spent a lot of money there over the years clearing the land, etcetera," Poynter said.
Regardless, Metro government is paying about 10 percent of a $25 million development, and "we think that's a good return to get significant retail to west Louisville," Poynter said.
To be sure, the agreement says the $1.8 million is also for the developers to perform other work in connection the project. And in the three sales the Bridgewaters have made so far using the city funds, they have paid significantly more than the tax assessed values of the properties.
How the deal works
Through their company Newbridge Development LLC, the Bridgewaters own the main 17-acre tract where the Walmart is planned at 1800 West Broadway.
It had been an abandoned Philip Morris plant containing several buildings, which the developers demolished after acquiring the site from the city for $1 in 2006. At the March 24 announcement, Teresa Bridgewaters said Newbridge has spent "millions" preparing the site for redevelopment.
Newbridge now has a contract to sell the site to Wal-Mart for the new store, pending the acquisition of the adjacent land and some other requirements.
Though the public announcement came only last month, the city agreed to the $1.8 million contribution last year and cut the initial $1.1 million check to Newbridge on Sept. 19.
Pending approval by the Metro Council, the remaining $762,700 could be handed over as soon as July 15, assuming the Newbridge sale to Wal-Mart is completed.
Land records show Newbridge has paid $297,000 so far in acquiring three of the six needed parcels. And they have to yet to close on the most valuable piece – a day care building at 1912 W. Broadway with a $195,270 assessed value.
The agreement says Newbridge is also to use the city money for "other activities as required" by its purchase contract with Wal-Mart, a separate document which was signed Aug. 19, 2013. The "other activities" are not specified, except for the relocation of a gas line that could cost as much as $253,106.
Metro government denied WDRB's request for the purchase contract between Newbridge and Wal-Mart under an exemption in the open records law, and a Wal-Mart spokeswoman declined to provide the document or to elaborate on its specifics.
The Bridgewaters also have not return multiple from calls from WDRB since March 27.
Metro Councilman Kelly Downard, a Republican who represents northeastern Jefferson County, doesn't think the Bridgewaters will end up pocketing any excess money from the city.
While he was not involved in negotiating the city subsidy, Downard recalls meetings last year in which the Bridgewaters told him and other council members such as Jim King and Cheri Bryant Hamilton that the deal with the big-box retailer had stalled, and they were looking for a way forward.
"I have not, nor has anybody, been privy to the purchase prices of the property, but I feel comfortable that the $1.8 million is what it took to have all the pieces fall in place," Downard said. "Based on the conversations I was involved in, that's where we were heading, and I don't know that it got off track."
King and Bryant Hamilton were not able to be reached last week.
On the same day the Walmart deal was announced, the city also agreed to pay a different company owned by the Bridgewaters – the Mardrian Group, or TMG -- $961,135 to settle a 2008 lawsuit against the city and the nonprofit organizations behind the Kentucky Center for African American Heritage, according to a settlement agreement obtained by WDRB.
That amount represents the unpaid invoices on construction work TMG performed as the main contractor on the heritage center at 1701 West Muhammad Ali Blvd., according to court records.
Teresa Bridgewaters told The Courier-Journal for a March 27 article that, as part of the settlement, TMG agreed to waive interest on the unpaid work that could have pushed the payment to $1.2 million.
Poynter said negotiations over the precise amount of city subsidy to the Walmart project were "completely separate" from the settlement of the heritage center lawsuit.
"It's related in the fact…that it happened simultaneously, but the $1.8 million is completely different," he said.
Money spent so far
On Dec. 19, Newbridge paid $150,000 for the century-old, boarded-up house and small lot at 1824 W. Broadway, which sits right in the middle of the Walmart's planned frontage on Broadway.
The property had an assessed value of $5,280 and $1,790.60 in liens from the city for lack of upkeep. In 2009, it was placed in the city's list of Abandoned Urban Property, a designation that comes with big tax penalties.
Later that month, Newbridge paid $62,000 for the home at 715 Kendall Ct. (tax value: $19,670) and $85,000 for 712 S. 20th St. (tax value: $27,420).
While tax assessments can often understate the market value of property, Jefferson County Property Valuation Administrator Tony Lindauer said his office's values accurately reflect market conditions in the area.
Lindauer suspects the premium prices Newbridge has paid so far simply reflect the parcels' role in completing the Walmart site.
"They are assembling all these properties, and people can hold out and get a hell of a lot more for them," he said.
None of the individuals who own or used to own the adjacent parcels could be reached for comment.
Metro Councilman Jerry Miller, a Republican who represents the Middletown area, said he wants to see more documents, like the purchase contract between the developers and Walmart, before voting to allocate the rest of the money to the project.
But Miller said it can be difficult to determine accurate real estate values and he sees "nothing inappropriate" with the deal.
"There is a huge push to make sure we have investment in the West End, and I support that, but we still have to be prudent stewards of the taxpayers' money," he said.
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