GSA negotiations

Sunday, April 29, 2012

The General Services Administration's handling of the sale of the old Cape Girardeau courthouse on Broadway was a fiasco.

There's no other way to put it.

The fate of the building began to unfold upon the completion of the new federal courthouse. The process required several steps, including whether to donate the property as a homeless shelter. When the Rev. Larry Rice petitioned for a homeless shelter, that idea was widely opposed and the courts eventually ruled that the building was not appropriate for that purpose. The next step was for the GSA to negotiate with local public entities if there was interest. The county commission, under different leadership back then, had originally agreed to buy the building for $1.2 million, but the Rice case stalled the offer. In the meantime, the county did more research into the building and found that renovating the building was more expensive than originally thought.

So when the negotiations opened up again, the county offered $750,000. The GSA, knowing the original price the county had quoted, believed the building was worth more, and did not believe that was the county's best offer. If the GSA truly thought the building was worth $1.2 million, it can be argued that it didn't want to leave $500,000 on the table. It could also be argued that two government bodies ought not to be engaging in hardball negotiations.

What can't be argued is that the president of the United States had ordered the GSA just six months earlier to dump surplus properties in order to eliminate wasteful spending. President Obama, in a memorandum, said, "I hereby direct executive departments and agencies (agencies) to accelerate efforts to identify and eliminate excess properties."

But the GSA, not satisfied with the $750,000 offer, decided to take the building to auction.

At the first auction, the two highest bidders backed out, leaving the county's bid of $450,000 the highest of the remaining bidders. The GSA refused to sell the building at that price, and asked the county for $750,000. The county commission believed the market had been set lower and refused to go higher. So the GSA decelerated efforts and kept an excess property in hopes of getting a higher bid in a second auction.

During the second auction, Presiding Commissioner Clint Tracy took his own gamble and dropped out of the bidding when the county was one of the last two bidders, hoping the county could buy the building at a lower price from the individual who ended up buying it for $325,000. Several weeks went by with the county unable to get a response back from the owner; more recently, it appears that the two parties will talk. Whether the county will end up with the building or whether the new owner from Texas will renovate is still undetermined.

But from the federal government's perspective, clearly this is not what the president had in mind.

The GSA has admitted it made mistakes in the negotiations over this building.

Robert A. Peck -- the GSA's public buildings commissioner who was later fired as part of an investigation of lavish GSA parties that squandered hundreds of thousands of dollars -- testified in a hearing that the Cape Girardeau federal building "is a case study which we are spreading around the GSA to talk about how not to make certain decisions about our property disposals."

The GSA is an easy target for criticism here because it ended up selling the building for $425,000 less than what the county offered.

Clearly mistakes were made. But how much of it was flawed perceptions about property values, how much of it was human stubbornness, and how much of it was the process itself?

The GSA appeared to be disingenuous to its own bidding process by asking the county to raise the price after the first auction. In the end, the GSA kept trying to dig its way out of a hole.

As for the county, there's no doubt our local officials were trying to save as much taxpayer money as possible. Presiding Commissioner Clint Tracy took a risk, and so far it has not worked out in terms of claiming the building. But not everyone believes the county needs the federal building, depending on what the county wants to do with a courthouse upgrade in the future. But it does appear certain the county won't overpay for the federal building. At this point, it's a positive step just to have the GSA removed from the equation.

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