Guest Editorial
By Lisa Smith

Council members please consider your statutory obligations before voting to spend $2,000,000 of federal funding, awarded to the city of Aiken for Northside and Downtown redevelopment, as a buyer’s incentive to purchase the remaining publicly owned Project Pascalis properties.

Before any sales agreements were made, small business owners who are/were renting space in the city-owned Pascalis Property buildings expressed interest in buying their rented premises. They did this privately and publicly. They were reassured publicly but then denied the opportunity to purchase. The tenants were given 5-year lease agreements which were all signed and returned to the city. The city arbitrarily reneged on their offer of a lease to one of the tenants, while giving 5-year leases to other tenants. The city also paid substantial relocation expenses to yet another tenant. This is a commitment made by the city to assist with the relocation of displaced tenants, made with the caveat that tenants are/were not to discuss any part of the agreement publicly. An unusual city policy of threatening our small business owners in order to control their ability to speak honestly about city business practices.

Why were the Pascalis Properties only marketed as a group?   The notable exception to this was Newberry Hall, which was sold as an individual property by the city to its original owners at a substantial loss to the city.  The city acquired Newberry Hall, without an appraisal, for $2M and then sold it back, one year later for $1.15M.  Although that is a $850,000 loss for the taxpayers, there is a precedence set by selling a business property to its current tenant for the appraised value. Less city incentives.   

Would a company interested in restoring the Hotel Aiken want to be forced to also buy Vampire Penguin (with a five-year lease in place) and Warneke Cleaner, amongst the others?   Why would a buyer who might be interested in restoring and reopening a business in the McGhee Block want to buy a hotel? 

• Why weren’t the publicly owned Pascalis Properties offered for sale to local business owners/tenants who wanted to purchase them?
• Why are the properties only marketed as a group?
• How much money could the city have made by selling these properties to local small business owners at the appraised values less incentives? 
• Why were some tenants given lease agreements while others promised lease agreements that were not honored? 
• Why did (at least) one tenant qualify for substantial relocation compensation between $50-75K in addition to the agreed amount?
• If Newberry Hall could repurchase their property, at a  loss to the city, then why not the others?
• Why are/were small business owners bound to secrecy agreements?

 The city decided to hire Colliers to market the remaining Pascalis Properties. We have not seen the criteria used to make this decision. 

After the sale of Newberry Hall for $1.15M, the remaining $9.5M of city owned properties from the failed Pascalis Project had the approximate cost to taxpayers of $8.35M.  Arguably, there were many other costs that should be considered, bond origination and payments, real estate commissions, closing costs, etc., but the $8.35M is the lowest amount due to repay taxpayers their investment made by city government in commercial real estate.

Although we have requested the closing statement for the original purchases by the city of the Pascalis Properties, our FOIA requests have been denied. 

Colliers used one of its related companies to conduct an appraisal of the properties and established the value and consequently, the sales price of $2.5M.  $8.35M worth of our property was appraised for $2.5M and no questions were asked?  No second appraisal was ordered; no additional comps were offered.  Colliers is the agent for the seller’s (us) and the buyers…and they set the price by using a Colliers company to appraise the property.

 A small group was assembled by city government, including the Colliers agent, to review the offers made by prospective buyers on the Pascalis Properties and recommend which would be accepted.  We do not know how the group members were chosen.  The group held closed meetings without any minutes being taken.  They did not meet publicly or comply with FOIA laws.  Information was not available to the public on the choices available, or the decision-making process used to choose the winning offer on Pascalis Properties. 

• What was the criteria for inclusion in a group assembled to disburse more than $8.35M of publicly owned property? Why was this group exempt for FOIA Laws, public meetings, or any reports?
• Why was an appraisal of $2.5M accepted on property the city paid $8.35M in 2021 That’s more than a 70% devaluation in a market that was very bullish. 
• What were the exact criteria used for choosing the preferred buyer from the alleged six other offers made? 
• Why was only one offer made available to the public?
• Why was Colliers hired as our agent, and also the buyer’s agent and the appraiser, and on the city’s team of decision makers? They remain our agent and on the city’s team after the expiration of the listing agreement.

When asked, on the record, if a parking garage was a contingency of the sales agreement of the Pascalis Properties to the selected bidder, the City Manager stated it was not.  At that time the appraised value of $2.5M was the agreed upon sales price with a $200k allowance to be paid by the city to the selected bidder for “design services”.  Careful readers would have also discovered that the contract required the city to “repurchase” property from the selected bidder that would include Warneke, and other property not fully described, at a price that is not disclosed to build a parking garage at the city’s further expense (estimated at $7M).  We can assume the city would then also pay Colliers a commission to “re-purchase”.  This was presented at a public hearing and was accepted by the council’s vote. 

• The City Manager informed the public that a parking garage was not a contingency of the sale of the Pascalis Project properties, however the city contract with the successful bidder required the city to first sell, then “repurchase” land including Warneke Cleaners, but not fully described, for anundisclosed amount, for the construction of a parking garage at the city’s expense, which we now know is estimated at $7M. 
• The sales price of $2.5M was established by an appraisal from a company linked to the buyer’s agent, who is also our agent with the city reimbursing $200,000 for “design services”.. 
• We do not know any specifics about any other offers made because no information has been made available.  One offer made was rumored to be a purchase for $5M without contingencies.  Another offer was rumored to be for a slightly lower amount made by a renowned historical restoration expert representing an established hotel restoration business without contingencies.

Now we are told that the selected bidder will also require the city to pay $2M for improvements to the Pascalis Properties prior to the sale.  This was approved by council on first reading.  This is in addition to the $200K, and the repurchase of part of the property, not fully described, for an undisclosed amount, and the city funding a $7M five story parking garage.  

• An additional $2M is now being required by the preferred bidder from the city to close the sale on the remaining Pascalis Properties.  That brings the sales proceeds to only $300k, less the repurchase of Warneke and more undescribed property for an undisclosed price, which will likely cause the bottom line of the sales contract to show a cost to the city rather than any proceeds, and the city will be required to build a $7M parking garage.

Before committing to sell (give away) millions of dollars of publicly owned property at a complete loss, AND committing to build a huge multi-million-dollar parking structure with ingress and egress on Newberry Street, Council MUST do it’s due diligence.

Council must fully consider these “irregularities”.   

All bids made to purchase the Pascalis Properties, including the interest of the current tenants, should be studied and considered, and the option of re-listing the properties should not be excluded. 

ALL six current bids must be fully reviewed and the full decision-making process must be made public in order to have any kind of transparency or public trust in this process.

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