Why did previous Salisbury city councils and former mayors sell off prime, taxpayer-owned downtown properties for a tiny fraction of their value? On the Wednesday, August 12 edition of OPEN AGENDA (S3 E42) we expose the details of these costly violations of the public trust that are benefiting their real estate developer friends (and campaign donors) at YOUR expense. To make matters even worse, millions of dollars in tax breaks were given away to developers as well. It seems likely that these real estate transactions were NOT conducted lawfully, whereas, the Charter requires surplus properties to be sold at fair market value. Astonishingly, not only were they sold for less than market value but for far less than the City paid for them years ago! We will also reveal the identities of two current city councilwomen who voted for these give-aways several years ago, and of a former city councilwoman who is now running for County Council. Since all of these properties were city parking lots, where will downtown visitors parkâparticularly with the increased density? Who will pay for the public infrastructure improvements necessary to support all of these new, high occupancy buildings? Betcha it won't be the developers. Tune in and be informed.
Open Agenda TV S3 E42 Developers and City Still at Odds Over Properties
Show Transcript
Disclaimer: The following transcript was auto-generated and may contain spelling or contextual errors.
You're watching Open Agenda. Here's your
host, Mike Goldberg.
Welcome to Open Agenda. I'm your host,
Mike Goldberg. Our panelists today are
Joe Scafino from Salsbury and Joe
Venosa, also from Salsbury.
>> Clearly by the accent. [laughter]
>> Yes, that's the Staten Island end of of
Salsbury.
>> You know, development in downtown
Salsbury, Central Business District is
in the headlines once again. Salsbury
Market Center LLC, the owner and
developer of downtown Lot 30, has
initiated a legal action to compel the
city to quickly schedule a hearing
before the Board of Appeals. It's the
developers hope that they can obtain the
permits necessary to begin construction
on lot 30, which the city administration
never processed because the plans for
development do not satisfy on-site
parking requirements. This is just the
latest of several legal actions related
to the inadequate parking and the city's
sale of prime downtown properties to
real estate developers at prices far
below fair market value. So today we're
going to discuss the specifics of some
of the downtown properties formerly
owned by the city that were formerly
used as much needed parking lots so that
people can come to downtown to dine to
go [clears throat] to council meetings
or you know whatever else. Uh that
people are going to be denied in the
future that parking. It seems that there
may be a bit of a shortage.
Um,
>> oh, I was waiting for
>> Okay. Yeah, I just I'm sorry. Um,
regarding that these lots that the the
code says that parking for these
developments will be evaluated on a
project by project basis by the planning
and zoning commission and then making
their parking recommendation to the
mayor and council.
>> That was never done.
>> Well, we'll get into I'm sorry, you had
something.
>> Well, no. So again, based on the
research that you've brought us through,
it seems that the process wasn't
correctly followed and of course the
actual financial transactions also defy
logic
>> logic which we'll get into.
>> So I'm curious to sort of chew on that a
bit.
>> Yep.
>> Well, I'm looking forward to getting
into some of the ugly details on this.
So stick with us and we'll talk about uh
the details on the various lot sales.
We'll be right back.
Welcome back to Open Agenda. I'm your
host, Mike Goldberg. We're going to
continue our discussion about the
downtown lots uh in Salsbury that were
formerly owned by the city of Ssbury
that were ultimately sold to developers
in recent years. Uh why don't we start
with lot 30? It's one of the more
prominent lots downtown. Uh what was the
original use or the most recent use of
of that particular lot? Lot 30 was most
re recently a parking lot uh right on
the uh north prong of the Wcomo River
>> and roughly where is it located so folks
not understand
>> West Main Street
>> pretty much right across from where the
Madhatter restaurant is
>> exactly and the draw you cross the
drawer bridge and it's that it's
[snorts] that lot right now it has a
chainlink fence and and black screening
around it um that was originally
purchased by the city in 1984 forund
$166,000.
So, here we are 42 years later and uh
the city sold it to Green Street Housing
for $10,01.
>> $10,01
when it was purchased years ago for
$166,000.
One would think that the value would
have appreciated significantly. That
would be worth considering it's prime
downtown property well over a half
million dollars. Exactly.
>> So why did they sell it for pennies on
the dollar?
>> Your guess is as good as mine.
>> Yeah. But uh you know, one thing that
that effect affects all the um all the
sales of the lots that we're going to
touch on is that the director of
procurement has a competitive bidding
requirement that all city salailable
property must be sold through
competitive bidding ensuring fair market
value. Mhm.
>> I mean, that's in the code.
>> And not only did the director of
procurement not get fair market value,
>> but the council and the mayor at the
time approved those sales. So, the
taxpayers
>> unknowingly
>> subsidized these giveaways.
>> Yeah. And giveaway is the only word you
can use. I mean, I only I almost can't
comprehend a piece of property that was
valued at $166,000
when I was basically born and then
selling it 40 plus well almost 40 years
later for a tiny fraction. I mean, other
than the land around Chernobyl, I don't
know what kind of real estate
depreciates to that extent.
[clears throat] So, we don't really know
what the present fair market value is
because there's no indication that the
city obtained an appraisal before
disposing of the property.
>> Yeah, that's the other thing that that
wasn't done. I mean, I'm just
>> I mean, there's no other way to
establish fair market value.
>> No, I'm I'm flabbergasted. Like I said,
that's why I got involved.
>> And I'm sorry. Go ahead.
>> I was just going to ask so is is this a
trend that we also see with the other
lots?
>> Oh, absolutely. [laughter]
>> Which one you want to talk about next?
>> Yeah. Well, we'll we'll talk about all
of them, believe me. Do you know uh what
kind of improvements the developer is
contemplating to put on that lot?
>> Yeah.
>> He he he wants to put a approximately
11,000 foot of retail space and then 51
apartment units above it.
>> So, there'll be ground floor retail
makes one or more tenants and then
>> and I believe it's it's low income
which, you know, we need. No, no
question there. Um the the issue is the
parking requirement
>> and that's the issue with all these
downtown lots.
>> Um the developers believe they don't
have a parking requirement
and
the code clearly states they have one.
>> So um
>> and we'll talk a lot more about that.
>> Yeah, we can talk about that in a few
minutes because it'll be clear.
>> But I think there's also another issue
there. Um, there's an adjacent property
on Willow Street, I believe. Yes. That
will be leased to the Salsbury Market
Center, who who is the developer, a
subsidiary, Green Street Housing.
>> And do you know how much they're
leasing?
>> It's a 99-year lease for a dollar a
year. A
>> dollar a year.
>> And the city purchased that lot in 1985
for $94,000.
>> So they purchased it for 94,000
and they are leasing it for $1 a year.
Brilliant.
>> How can we have an affordability crisis
on the Eastern Shore when [laughter]
we're we're managing to sell city assets
for literally pennies on the dollar?
>> Well, it gets worse. Let's uh talk about
lot 10. And that's uh that's the public
parking lot, I believe, where the flea
market used to be.
>> Exactly.
>> Okay. And uh who uh who was that sold
to?
>> That was sold to Menus LLC. And I
believe they were the developer of the
Ross also. Yeah.
>> Ment Capital Partners. Yeah.
>> And got millions of dollars in tax
breaks from the city on that project. Um
that that that uh lot 10 was sold for
$75,000,
but that one had an estat assessment at
the time of $1.7 million.
>> And it should be understood that the
estat assessment is not actually fair
market value. the fair market value is
going to be less than that because the
tax assessments I'm sorry will be
greater than that because tax
assessments run several years behind
fair market value. Correct. And so the
assessed value was.7 1.7 million chasing
a $75,000
acquisition price
>> again.
>> And what do they what do they intend to
build there?
>> Um supposedly a convention center and
hotel. Mhm.
>> Um my understanding at the is that
they're still working on financing. I
don't know if that's still the case, but
>> yeah.
>> And that leads us to another property
that's known as Marina Landing. Um that
was uh purchased that was also purchased
by the city of Ssbury back in 1988. You
know how large that lot is and what the
city's acquisition price was? That lot
was a little over three acres and the
city paid 1.2 million for that in 1988.
Now they sold it to Salisbury
Development Group. Uh they sold 2.4 of
those acres for a dollar.
[laughter]
I don't know.
>> I'm flabbergasted. I believe it.
and [clears throat] that the council and
mayor at the time approved this
>> is is shocking. I I don't know
>> why there weren't people in the streets
with pitchforks and and torches. I I
really
>> So, just to reiterate, it was purchased
in 88 for $1.2 million and sold for $1.
>> Yeah. Majority of it.
>> So, two 2.4 acres out of the three. Yep.
So obviously another huge loser for the
uh for city of Ssbury taxpayers.
>> And that leads us to three lots that
kind of go together. Lots
[clears throat] 1, 11, and 15. All of
which were also formerly uh public
parking lots that we will no longer uh
have the use of. Uh can you give us some
of the background about the sale of
that? Okay, that one was sold uh
approximately 2016 for $275,000.
[clears throat] Now, doing my research,
uh the deeds only show that they were
purchased for $10,000 each and
consideration. So, I can't tell you if
if the developers who sold it uh took a
tax write off. I don't know if there was
some other I I can't tell you that. Uh
but we can tell you you know that the
the um the value of those properties is
significantly more than 270. In fact I I
will I will tell you that that the three
of them combined are are worth over a
million dollars.
>> Now just clarify they were sold in 2023.
>> Well the original was 2016.
>> Okay. [clears throat]
>> And the original land development
agreement. Okay. And then the revised
amended land development agreement was
2023.
>> So they were declared a surplus in 2016
when they were sold. Is that okay? I
see. Okay.
>> Now what's interesting though of the
three lots, lot 15 was never even
declared surplus.
>> So what authorized the city to sell that
property if since
>> I have declaring it surplus is requisite
to the sale. it. From the minutes that I
read, it appears that the mayor threw it
in because lot one included Unity
Square. So when the city took part of
lot one for Unity Square, the developer
said, "Well, I lost that. I need
something to make up for it."
>> And
apparently uh Mayor Day at the time,
>> sorry. I'm sorry.
>> Apparently Mayor Day at the time said,
"All right, well, we can put lot 15 in
there to make up for and the developer
said fine, but lot 15 was never declared
surplus. So there's no way that should
have been included.
>> That's that's pretty amazing. Now, is
there not a lawsuit uh involving lot 15
at this time?
>> Yes. There there is a a building owner
across the street owns the um what was
called the synagogue building and she
has a business on the ground floor. She
has apartments above and when she
purchased that building [clears throat]
uh you know the city assured her no
that's that's public parking no problem
because she needs parking for her
tenants and and and
uh clients and there are other
surrounding businesses that would use
that lot. And recently the city actually
had four electric charging stations for
electric vehicles installed on that. So
it would indicate yeah that's a that's a
parking lot. Um, so when
>> so the owner of [clears throat] that
that other property had asurances from
the city of
>> Ssbury that parking would be available
and then they pulled the rug out from
>> that's why she purchased the building.
She spent a lot of money purchasing and
renovating that building knowing that
she was going to have parking otherwise
it would have been pointless. And so
once this happened she actually offered
to buy that property and offered more
than they sold it for. And uh she
>> but the city didn't want more money.
>> No, the apparently they said uh my
understanding is they told her, "Oh,
you're too late." And it so it's in
litigation now. There is going to be a
hearing in December that I will
absolutely be attending.
>> Um there's a good chance. I've read the
I've read the lawsuit. It's 40 pages
>> and it's damning of what the city the
city director of procurement did,
>> what the mayor did and what the council
did.
>> Now, this is the prior mayor, not
>> right. No, no, no. The current mayor
inherited a mess and he's doing a hell
of a job
>> cleaning it up.
>> So, that would have been Mayor Jake Day.
Former mayor Jake Day.
>> Yes. And then acting mayor Jack Heath.
>> And then the council.
>> And the council.
>> And of course the council. Yes. So
now the city's in a position where it's
selling off all of these parking lots
and uh that's seems to me that's going
to result in a shortage of adequate
parking downtown. So what do y'all think
the impacts to the central business
district are going to be with all of
this this parking uh being taken away?
>> Well, I don't think they're going to
help. I mean, you know, again, I
understand that there's a a constant
sort of battle between those who think
parking is not important and, you know,
sort of hoping for a more walkable urban
core versus those that want to drive.
The the reality is this though, right?
As much as I'm and listen, I bike and
walk downtown all the time. I'm a big
proponent so I walkable. You got more
credibility as as a bicycle enthusiast
than anybody here. But we don't have the
transportation infrastructure that most
cities of our size would require for
that.
>> And that's the argument that the uh the
Salsbury Market Center says, there are
plenty of cities that have apartments
with no required parking. But like you
said, New York, Chicago, Baltimore, they
have public transportation. So we don't
have that.
>> And we we we do not have that. And we
also don't have major employers
downtown.
I
>> I was at one point very involved in a
lot of the redevelopment in downtown
Richmond, Virginia, the Shako Slip,
Shako Bottoms area, formerly tobacco
warehouses. So they took these old
tobacco warehouses, converted them into
multif family units with ground floor
retail or food and beverage space. and
having interviewed many of the tenants,
they would be able to get on a bus, go
[clears throat] north on Broad Street to
get to major employment centers that
were just outside of the CBD. Uh many of
them were able to actually walk to work
because there are many downtown
employers and there's certainly an
abundance of uh of retail and uh dining
amenities downtown that downtown
Salsbury, you know, simply doesn't have.
Well, I just want to throw in that um
the developer of lot 111 and 15 actually
came up with a proposal for for the
parking that the the mayor and council
actually accepted.
They proposed that the city spend $10
million to build a parking garage for
their tenants. [laughter]
>> Well, look, if if you're robbing the
city already, why not go the full nine?
I mean, and and again,
>> but with all of the money they made on
the sale of these properties for $1,
that should most certainly pay for the
parking structure.
>> It's it's and and doing the math, it
would it wouldn't even the permit fees
wouldn't even pay for the bond. I mean,
it's
>> again, how how the mayor and council
[clears throat] approved that
and that excuse me, that that
parking proposal was never discussed in
a work session. It was just brought up.
>> Yeah.
>> At at Yeah. at that one session where
they voted on it.
>> Why don't we take a little break at this
time? We'll come back and we'll we'll
talk about some of the processes for
disposing of surplus properties. So, uh
stick with us and we'll be uh back on
the flip side here in just a minute.
You're watching Open Agenda.
>> Welcome back to Open Agenda. Thanks for
sticking with us. I'm still here with
the two above average Joe's. Uh in the
last uh block we talked about the
differential between the acquisition
price of the downtown properties
formerly parking lots and the amounts
for which they were sold to private
developers. Um could one of y'all
explain to us you what is the process
for selling surplus properties in the
city of Salsbury? Um the director of
procurement has to identify uh
properties that either um surplus
or obsolete
>> and and present it to council. They're
also supposed to give council a fair
market value for those properties
>> which would require an appraisal.
>> I would think so. That's how else you're
going to get it. And then uh has to be
put out for competitive bidding. And and
again, you put something out for bid, if
you don't like the bids you get, you
don't have to sell it.
>> Yeah.
>> So,
>> now I personally, I can see where there
might be situations where you don't want
to sell it uh by competitive bidding
where there's a specific use, an enduser
who, you know,
>> would do something different that you
wouldn't want.
>> Exactly. But uh but still I I think the
bottom line here is that you want to
receive fair market value in in most
cases.
>> So when it comes to parking and which it
appears we're now going to have a uh uh
a shortage of, do you think that the
city officials followed the laws and
ordinances pertaining to approving site
plans that don't meet the parking
requirements?
Based on what I've heard today and and
even prior to this, I I don't think they
followed those laws or ordinances at
all.
>> No, absolutely not.
>> In fact, I would say that, you know,
they they went out of their way to, in
my opinion,
damage the public trust and a
dereliction of their duty. You know,
fiduciary duty.
>> Mayors and council people and obviously
the head of procurement, they have the
fiduciary responsibility to the public
to protect their assets. Yep. If you're
giving them away to your friends or to
just people that you think care about
the community via development projects
without actually doing the math, I I
have a problem with that.
>> And and I'm going to throw this in. If
you look at the campaign finance reports
for the then mayor and the council
people, the developers were contributors
to their campaigns.
Well, that certainly is interesting that
[clears throat] So, do you believe that
there's at least a possibility that
something unoured was was actually
>> Well, I mean, you know, it's just like
Congress, you know, the best Congress
money can buy and at the [clears throat]
local level, they got the best council
and mayor that they could buy,
>> you know.
>> So, most of this happened during the
last administration. Uh,
>> yeah. 2016 to 2023 is when this all went
down
>> and that's when uh Jake Day was mayor.
But there's also a few council people I
understand that had voted for these
conveyances of the real estate that are
still on the council. Uh in one case a
candidate. Can can we name some names
here?
>> Well um um Councilwoman Blake and
Councilwoman Gregory uh voted for all
these uh property sales. They voted to
approve the $10 million bond for that
parking garage. And there was a council
person who was appointed for 11 months,
Megan Outton. She also voted for this.
Now, the lots one 11 and 15
[clears throat] that was voted on in
2023.
So again, council president at the time,
Ba Boda,
Michelle Gregory, Angela Blake, and M uh
Megan Outton, who was just appointed,
served 11 months. Those four voted for
the sale of 111 and 15 and they voted
for the $10 million garage and acting
mayor Jack Heath at the time also
support. The only one who voted against
it was April Jackson.
>> Okay. Do uh do you believe that the city
officials complied with the competitive
bidding uh requirements pertaining to
the sale of city owned property?
>> Clearly they didn't.
>> How about the director of procurement at
the time who was responsible for
determining fair market value? Did they
even bother to make a determination of
fair market value or were they just
going to do the [clears throat] deal?
>> It it blows my mind how you can just not
do your due diligence and follow the
law. But
>> the short answer is no. They didn't.
they didn't do it. It's clear and that
and that's that's outlined in the
lawsuit that's going to be heard in
December. And that's why I believe
there's a a good chance that all those
sales could be declared void.
>> Mhm. Well, and and again, even if that
does happen, right, there is still, I
think, a structural concern here, which
is a major city in Maryland, Salsbury,
has been operating this way for years in
which you have developers, often the
friends and campaign contributors of
some of these officials who are able to
have massive influence that goes against
every financial reality, every ethical
standard,
>> fiduciary, and frankly, just basic
mathematics to effectively develop a
part of the city that then would
compromise residents ability to actually
live and work and travel there. So, it's
it seems to me to be at its core
corporate welfare and crooked deals that
are not helping the community. And and I
just as a as a regular person, right,
who lives in Salsbury, who cares about
this city, who raises my child here,
>> I find this to be so disgusting that
people would not even follow just the
basic process and then to turn around
and act as if this is all on the up and
up.
>> Yeah. And part of the what I think part
of the problem is you know we say why
weren't the citizens there with torches
and pitchforks. Well only 29% of the
city residents are homeowners. 71% of
the city residents are renters and
renters generally
>> aren't paying attention. You know
there's some transient. You know um so I
think that's part of the problem. And I
think part of the problem is also that
the people who actually run for office
for city council uh don't have a
background in business. They don't have
a background in real estate. They don't
necessarily understand what the heck
they're doing.
>> Fair enough. Neither do I and other
people. But but 2 plus two is four. And
it seems like on some of these deals,
even that level of expertise is lacking
because I don't think you need to be
someone with a real estate background or
in finance to understand that if you
bought a property in the 1980s for
$160,000
and you're selling it for literally
$10,000,
that's just incompetence at best.
>> It wouldn't make sense for anybody to
invest in real estate under those under
those circumstances, I don't think. Now,
weren't there also some tax abatements
involved here as well?
>> Well, there's the Horizon program which
um interestingly the the Ross uh got. In
fact, they got it belatedly uh they were
saying, well, our project wouldn't be
profitable without without this benefit.
Well, in in supposed capitalist system,
if your project can't be profitable
standing on its own without government
subsidies, you don't build it.
>> We're just socializing failure.
>> Yeah. Exactly.
>> Yeah. Well, this has certainly been most
enlightening. I appreciate y'all uh
coming today to talk about this and we
will be back very soon with another
episode. Thanks for tuning in to Open
Agenda. We'll see you next time.
