A little-known third appraisal gives high value to the property.
Two years ago, the city bought the Meigs Farm property for $1.5 million.
The 20-acre parcel that parallels SR-305 south of Koura Road, was hailed for its pristine land and its watershed.
But the purchase became contentious after a second, more detailed appraisal came in, evaluating the property at nearly half the amount ($700,000) the city paid.
Public IRS documents acquired through the city indicate there was a third appraisal on the property paid for by the previous owner of Meigs Farm, Gale Cool.
The third appraisal valued the property at $1.925 million. On an IRS tax form, Cool claimed that amount as the appraised fair market value and claimed a $425,000 deduction on his 2007 taxes.
Mayor Darlene Kordonowy signed the IRS tax form acknowledging the city had, in essence, been donated $425,000.
“What someone does on their private taxes is not something the city has an ability to influence,” Kordonowy said.
A city legal memorandum on the IRS form, written by City Attorney Paul McMurray, stated that by signing the form, the mayor and city “are in no way representing agreement with the ‘claimed fair market value’ of the property.”
Cool said the third evaluation was made at the time of the sale, however, it is not possible to independently verify the time and the methodology used for the appraisal since it is a private document.
“I don’t want to belabor it more,” Cool said this week. “This was the final appraisal and it settled the issue.”
The Meigs property has had a tumultuous history. It was once mined for peat moss before Cool acquired the property after a bank foreclosed on it.
Cool originally felt the property would be an ideal place for a spa, but he ended up offering the property to the city’s Open Space Committee (OSC) for $1.5 million, after he abandoned those plans.
The city’s OSC consulted island appraiser Anthony Gibbons to see if the asking price was fair. In a limited three-page appraisal, Gibbons valued the property based on its two, 10-acre, buildable lots and concluded the asking price was fair.
Despite reservations by some city council members, the council approved the $1.5 million purchase based on OSC recommendations.
Afterward, the city sought a second appraisal which was published in early fall 2007.
The second, 76-page appraisal by Seattle’s Columbia Valuation Group gave the property a value of roughly $700,000.
Cool said the first appraisal was woefully inadequate, and that the second appraisal failed to take into account the water rights and a service road that goes through the property as factors that increased the value of the property.
The third assessment, done by David R. Brewer of DRB Appraisal Services based out of Everett, included both the water rights and the access road, Cool said.
“I don’t really want to release the thing. I think it is a tempest in a teapot,” Cool said of the third appraisal. “Values change all the time. Who knows what the value is now.”
Tim Bailey, an island real estate agent who served on the Open Space Committee during the purchase, believes the property is worth what the city paid for it, despite the conflicting valuations.
“I do know that Gale felt like he was selling it at a loss to the city,” Bailey said. “I really felt (the property) was something the island would need in the future, it’s biggest asset being the watershed on the property.”
According to Kordonowy, there were some problems in the way the deal was handled and how quickly it was approved, but the city merely acted on a council motion.
“There was always a concern that this might happen,” she said. “The way it went forward, it was not a good transaction.”
According to the the Kitsap County Assessor’s office, the 20-acre parcel was valued at $745,760 as of Jan. 1, 2008.
The IRS form and related legal memorandum attained from the city by the Review can be viewed below.
