An offer to purchase 30 of the single family detached lots in Huxley’s Prairie Ridge Development failed to receive council approval.
Brother’s Construction LLC, owned by Jay DeVries and Chad Ireland, offered to buy the lots at $27,000 per lot for a total of $810,000. The council held a public hearing regarding the proposal during their meeting Tuesday, Oct. 22.
Dennis Parmenter, community member and local attorney, was one of the individuals to speak during the hearing. He questioned whether the city was selling the lots at a fair market value or giving them away as gifts. According to Iowa Code 364.7, “a city may not dispose of real property by gift except to a governmental body for a public purpose.” He said nearby lots owned by Steve and Ann Quick are selling for $38,000.
“I don’t see any way you can get around saying you’re not giving $11,000 per lot away,” Parmenter said.
He worried the $11,000 difference in selling prices would negatively impact the ability of the Quicks to sell their lots.
Huxley City Administrator John Haldeman said Brother’s Construction came to a council meeting in July to express their interest in purchasing the lots. They came back Sept. 5 and submitted their offer, which was $4,000/lot higher than what the single family detached lots are selling for currrently.
Dave Nelson of Whitfield and Eddy P.L.C., attorney representing Brothers Construction, said he does not believe the proposed purchase violates the state gift code. He said when both the buyer and seller agree on a purchase price, fair market value is established.
Kevin Brooks of Slater and president of South Story Bank & Trust, questioned if there were other “willing buyers” out there who would offer a higher price for the lots.
Council member Marge Nerness said they need to get an appraisal for the lots.
“I don’t think it’s fair for other people in the community,” Nerness said.
The price of the lots in the development was set at $23,000 during a public hearing Nov. 9, 2011, based on a market analysis done by Century 21 Real Estate. At the time, the realty company estimated the lots to be worth $23,000-$25,000. It was decided by the council to sell them for $23,000, Haldeman said. The council wanted to keep the price of the lots low since the development was established to offer affordable housing for low-to-moderate (LMI) income families.
Councilman Mark Baker said if the price of the lots was higher, it would be hard for LMI families to qualify for and pay for the lots.
Community members were also concerned about one of the items in the addendum to the offer that gives Brothers Construction “an exclusive option to purchase all of the single family bi-attached lots in Prairie Ridge Estates at a purchase price to be mutually determined by the parties.”
Nelson said if covenants had already been put in place for the bi-attached lots on the east side of the development, Brothers Construction would likely have proposed to purchase them, as well.
After the Oct. 22 meeting, council directed city staff to get an appraisal for all the lots in the Prairie Ridge development that have not been sold.