Knerr said to agree on deal but then moved to scuttle it
By Cindy Hoffman, Staff Writer
(Sept. 14, 2023) There was a glimmer of hope that the Heron Park development proposal by Palmer Gillis of Coastal Ventures Properties (CVP) might still be possible, but that hope died Monday night when Councilman Jay Knerr demanded Gillis keep only five EDUs and give the remaining 31 EDUs that came with parcel 57 to the town.
EDUs (equivalent dwelling units) are used for water/wastewater flow capacity planning. One EDU is equivalent to 183 gallons per day of water and 253 gallons per day of sanitary sewer. Properties are sold with EDUs and parcel 57 at Heron Park has 36 EDUs. A typical home has one EDU.
Gillis, who has been spent nearly two years negotiating with the town, said Knerr’s demand was unreasonable and unacceptable.
According to a letter sent to council members Dean Burrell, Jay Knerr and Shaneka Nichols on Sept. 6 from Mayor Zack Tyndall and councilmembers Steve Green and Jack Orris, “Following the meeting, at least one of you reached out to the mayor’s office to express the items you would like to see in a future contract and stated that you would be interested in re-exploring the potential sale of Parcel 57 to CVP.”
That council member was identified Monday night as Jay Knerr. A new round of negotiations ensued last week and a new contract was drafted with agreed-upon parameters. That included a sale price of $1.2 million, the amount the recent appraisal estimated, based on the property being already cleared and rezoned for B2 business development. It also included a rear setback to protect the feeling of the walking path around the lagoons, a small residential component and 34 sewer EDUs that will be conveyed with the sale. Two sewer EDUs would be transferred to parcel 410 and 191.
But Knerr changed his mind again sometime between last week and Monday night and demanded that Gillis keep only five EDUs with the property.
“The offer does not meet the needs we have for the property,” Gillis said.
Gillis said that EDUs are part of the value of the property and were included with the property when it was sold by Tyson’s to the Town of Berlin. Orris also said that was reflected in the deed he had in his hands that night.
Knerr disagreed and demanded that Gillis pay the town more money for the EDUs.
Knerr said this was affirmed in the appraisal when the EDU value was not considered when formulating the parcels’ worth.
“The option that I saw moving forward since no contract had been signed was to ask Palmer to purchase the EDU’s that have a substantial value,” Knerr said.
“EDUs do not provide additional value to the property. The EDUs are in the deed for the property,” Gillis said.
Gillis said that by continuing to restrict the number of uses on the parcel, the town is reducing the value of the property.
Gillis reminded Knerr that the deal he is offering will slash the town’s $2.3 million debt on the property in half with just the sale of parcel 57 which is 9.35 acres. The town will currently keep parcels 410, 191 and 52, the green space that makes up Heron Park, which totals about 29 acres.
But that was not good enough for Knerr.
“After carefully weighing all of the pros and cons of selling versus not selling, I came to the conclusion that parcel 57 is worth more than the $1.2 million that was offered,” Knerr said.
“I thought we had an agreement last week. I am sick and tired of this deal being changed,” Gillis said.
Tyndall noted that every time the town moved the needle, Palmer conceded. But the demands by Knerr were too much for even Gillis and he walked away.
“We came here in good faith. I don’t misrepresent my word. I live by the spirit of the law,” Gillis said.
He said he was still willing to advise the town on the demolition of the property’s structures, stating that he knew the building better than anyone since he was involved in the construction of it.
With the Gillis deal dead again, the town still has to deal with the demolition of the building.
In their letter, Tyndall, Green and Orris asked Knerr, along with council member Nichols and Burrell to re-evaluate the risk that the town is taking by moving forward with demolition without a partner.
According to the Sept. 6 letter, DBF (the firm hired to develop the RFP) believes that it is “unlikely” that the town will be able to demolish the entire building.
“DBF also believes that the Town ‘will have to spend money to secure and stabilize’ the remaining portion of the building if the entire demolition cannot be accomplished with the available funding.”
“Additionally, it is difficult to pinpoint precisely where the demolition will end if the cost to demo exceeds the available grant funding. DBF will work with the awarded demolition contractor to try and maintain the ‘more robust buildings’ so ‘collateral damage is minimized,’ however, there could be an additional cost to the Town if something does not go as planned.”
The letter continued, “We believe that the Town of Berlin is not in a financial position to take on these potential additional costs and caution the Council that there may be unknown issues that arise during the demolition that the Town would have to resolve immediately, potentially further eroding our available reserve funds.”
“All this speculation that the town will have to spend hundreds of dollars more in demolition costs is nonsense. That building has substantial intrinsic value,” Knerr said.
“We do not have to demo that entire building and going forward it can easily be rehabbed into any number of uses. So, clearing up the outer areas and gutting the interior will not exceed the 500K demo grant. What it will do is allow us to remarket the property at a higher value after we determine exactly what is the best use for that parcel.”
Once the RFP for the demolition goes out, the experts will assess the cost and challenges of demolition. Then the market will determine what parcel 57 is actually worth.