North side of 48th & O awaits resolution

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BY DEENA WINTER / Lincoln Journal Star

Seven months after the city chose a developer to revitalize the northeast corner of the busy 48th and O intersection, dirt has yet to be turned — because the city and the developer haven’t reached a deal.

It’s an odd situation in which the developer, Realty Trust Group, would buy back a parcel of land it sold the city in 2004 in connection with the O Street widening.

That sale, along with another next door, raised eyebrows because some people — including City Councilman Jon Camp — thought the city paid too much for the property.

O Street has been widened and the south side of the street has been redeveloped with the city’s help, but the north side remains an eyesore.

Negotiations between the city and Realty Trust got hung up over the price the city wanted to charge for two parcels of land at the corner of 48th and O.

The city paid Realty Trust Group $923,000 for the northeast corner property, home to an abandoned Amoco station. At the time, the county assessed the property’s value at $456,000.

In 2005, the city paid $1.85 million for the old Blockbuster Music property at 4850 O St. At the time, it was assessed by the county at $900,000. The city bought that parcel from SHM Investments, whose registered agent is Lincoln attorney Robert Nefsky.

Camp has maintained the city paid too much for the parcels — as well as the whole revitalization around 48th and O, which was a priority for former Mayor Coleen Seng.

“It’s been an extravagant expense there,” Camp said. “We had some well-intentioned individuals who were under the direction of the former mayor and she wanted that area improved.”

At the time, former public works director Allan Abbott explained the city could have bought just a sliver of the corner properties and paid damages for cutting off access to the remaining property, but the damages would have totaled more than the value of the remainder.

Instead, the city bought all of the property, with hopes of recouping its money when it was sold back to the private sector.

“It was an enormous investment and everyone was just fantasizing over this big development there and I think, unfortunately, the good intentions lost touch with reality … of what the marketplace could bear,” Camp said.

North-side revitalization plans include a Hy-Vee to be built to the east at 50th and O. Originally the grocery was supposed to be accompanied by a Pinnacle Bank and retail development in a joint venture between Pinnacle and McCombs Commercial Realty. But negotiations stalled when the city and developer couldn’t get the numbers to work. Only the grocery store remains of the original plan.

Camp said the Hy-Vee-Pinnalce plan was a great project but would have required a bigger city subsidy than what was proposed.

After that deal fell through, the city sent out a second request for proposals from developers interested in buying the parcels and redeveloping the corner where the bank and the retail were to have gone.

Realty Trust was the only developer to respond to the second request for proposals by November 2006.

At the time, the company had just bought property east of the city’s two parcels — where it has a sign advertising a development called “Gateway Gardens.” Realty Trust’s redevelopment proposal to the city envisioned a restaurant, a somewhat big box store and retail space with a fountain centerpiece.

Once Realty Trust was selected to develop the corner, negotiations with the city began to determine who would do what to make the development fly.

But Realty Trust and the city were unable to seal a deal because, said Wynn Hjermstad of the Urban Development Department, Realty Trust questioned the price the city was asking for the corner properties.

“We were trying to recover the cost of what we paid to purchase those two properties,” Hjermstad said. “We wanted to recover those tax dollars.”

In its November 2006 request for proposals, the city stipulated it would sell the property for a minimum of $25 per square foot.

But after Realty Trust questioned the price, Hjermstad said an appraisal was done.

The appraised value was different from what the city had been asking, so Hjermstad said the city issued another request for proposals in mid-April to be fair to all bidders, because it’s possible other developers would have put in proposals if the cost of the property was different.

Hjermstad said she wasn’t at liberty to say whether the appraisal was higher or lower than what the city paid for the property.

The new request for proposals says the city property will be sold to the developer for “fair value.”

City Attorney Dana Roper said the city will not release the appraised value of the property, nor the appraisal, because appraisals can be withheld under the state’s open records law.

The latest request for proposals doesn’t have a deadline.

So far, only Realty Trust has put in a proposal, although Hjermstad said the department expects additional proposals.

“We want to get the best deal that we can for the taxpayers,” she said.

However, Camp said the city should either sell the property for less than it paid or just “sit on it” for a while.

Mike Marsh of Realty Trust Group could not be reached for comment.

Reach Deena Winter at 473-2642 or dwinter@journalstar.com.