A disused plaza at 375 N. Robert St. had a taxable value of $326,400. It was privately offered to developer Madison Equities for just $2,500.
On June 5, 2018, John Mannillo, commercial real estate developer and chair of Saint Paul STRONG, received an Early Notification System (ENS) email from the City notifying recipients of a proposed real estate sale by the Housing and Redevelopment Authority (HRA) to Madison Equities, Inc.
The parcel of real estate being sold was 375 North Robert Street in downtown Saint Paul. The sale included over 6000 sq. ft. of paved plaza space with a fountain. At the time of this proposed sale, Ramsey County Property Tax Records valued the land at $326,400. Madison Equities first offered $1000 and the City then settled on $2,500.
As a commercial real estate broker and developer, Mannillo was aware that this proposal was vastly underpriced. Based on his knowledge, he advised some members of the City Council (via email) that downtown land prices were selling for around $50 per ft. and that smaller parcels tended to increase in value per ft. In this email, Mannillo strongly disagreed with the City appraiser’s perspective that “this is an unbuildable parcel”.
Mannillo went on to state:
“If the land were valued at $50 per ft., it would be worth $300,000. An enclosure could be built and occupied. It could also be used for parking, which is conservatively valued at $15,000 per space.”
Upon Mannillo’s challenge to the City about why the City owned parcel of land was being sold for hundreds of thousands of dollars under market rate, he received a response that because of the location and current physical building restrictions, there was only one possible buyer. The City noted that that buyer, Madison Equities, Inc., owned the rest of the block including the US Bank Property and the old Buttery Restaurant and intended to use the new parcel to expand the Buttery space to include patio dining—though it first had to find a restaurateur to lease the property.
Mannillo later discovered that just prior the proposed sale, the City had solicited an appraisal for the property. Despite that appraisal valuing the property at $30,000, the City still proceeded with Madison Equities, Inc.’s proposal of $2,500, which would essentially be a $27,500 subsidy and would not even cover closing costs to the City. (This was testified to at the public hearing)This subsidy was acknowledged in an email to city council member Rebecca Noecker (June 8, 2018) from Andy Hestness.
STRONG Score
The closed-door sale of a downtown plaza was completed privately for a price well below its market value. The future use of the plaza is now uncertain, and Downtown Saint Paul has lost a community amenity.
Process
- While the proposed sale was notified through the City’s ENS system, the details of the sale were obscure. Key decisions were made without public knowledge or participation.
- The City failed to disclose the complete public record of the transaction, withholding key emails and documents and refusing to explain its reasoning.
Outcomes
- While the proposed sale was notified through the City’s ENS system, the details of the sale were obscure. Key decisions were made without public knowledge or participation.
- The City failed to disclose the complete public record of the transaction, witholding key emails and documents and refusing to explain its reasoning.
Ethics statement: John Mannillo is the Chair of the Saint Paul STRONG steering committee. He is a real estate developer and submitted an alternative bid to purchase the parcel at 375 N. Robert St. at its present, undeveloped appraised value of $30,000 which was rejected.
While John provided documentation and background for this article, editorial decisions and control rested with the author and other members of the St. Paul STRONG steering committee.