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Wednesday, August 28, 2013

Post-Whalerock document dump

Town unloads lots of records about the Whalerock deal AFTER the deal was done
These documents raise questions that should have been addressed
By Will Collette

FYI: the closing on the Whalerock deal DID NOT happen on August 27 as proposed. 

In Charlestown’s Bizarro World, the key to intelligent and informed debate is for the public to have access to information about important issues after the decisions have already been made by the CCA-Party controlled Town Council. No reason why the Whalerock wind turbine controversy should be any different.

On Friday, August 23, the day after the Town Council majority’s decision to spend every nickel of available open space/recreation bond money to buy the Whalerock property, the town sent me key documents containing crucial detail which I assume they expected me to cover in Progressive Charlestown. 

In Washington where I worked for 25 years, a Friday release of mounds of important documents on controversial subjects is called taking out the trash.” Lawyers use the term document dump.”

As readers know, I have advocated the town’s purchase of that property since 2011 and have been pushing it hard since we reached the final stages of the battle. Also, since the Town Council has made the deal and decided not to give voters the final say, the issue is pretty academic at this point.

However, unless Charlestown totally embraces Niccolò Machiavelli’s principle that “the ends justify the means,” it makes sense to review the process Charlestown used to get to an end point that more or less lines up with what most residents wanted to happen. That meant wading through over 300 pages of documents.

To be clear, I am glad the town will become owners of the Whalerock site. I hope we remain the owners. I am happy to see the end of the hysterical campaign against wind energy that Whalerock spawned and hope Charlestown will come to embrace a more reasonable green energy policy.

Now can we drop the barriers that block
homeowners from installing small wind
generators to power their homes?
But the process was bad. 

I'm not just talking about the refusal to honor past promises and precedents by giving voters the final say. In addition to sending me over 300 pages, the town has also posted a 235-page collection of documents on Clerkbase.

Charlestown citizens should have been able to see, read, understand and discuss those records before the Town Council decided to make this major deal.

For some odd reason, the town did not include in that 235-page blob, the important Judge Kristin Rodgers’ August 22nd court decision where she ruled in favor of Charlestown and against Whalerock on the issue of legal standing. The town sent it to me, but withheld it from you. Click here for the details and here for the decision.

This court decision should have been explained to the audience at the Town Council meeting. Rodgers' decision substantially changed the odds that Whalerock would have won in court if the Zoning Board of Review had turned down their application for a special use permit.

That court decision made the “ultimatum” from the Whalerock developers – the ultimatum that Town Council Boss Tom Gentz used to justify scrapping his prior pledges for a town vote – a lot less potent. That ultimatum memo (click here) was also part of the town’s August 23rd document dump.

And the town can’t use the excuse that there wasn't time to include Judge Rodger’s August 22nd decision because somehow, they had time to include an August 22nd e-mail from Joanne D’Alcomo of Y-Gate fame in that 235-page collection on Clerkbase. I think Judge Rodger’s opinion is substantially more important and relevant than Joanne D'Alcomo's.

Among the other documents the town sent me was Boss Gentz’s lengthy resolution (click here) which ended up being approved by his CCA Party colleagues Deputy Dan Slattery and George Tremblay and their ally Lisa DiBello. Only Councilor Paula Andersen (D) voted “no,” not because she was against the buy-out, but because she wanted the voters to make that decision.

Draft Closing Agenda documents raise lots of red flags

There is a 79-page document that contains all the documents pertinent to the proposed  but now postponed August 27 closing for this deal on the property. It includes duplicates of several other documents plus the final sales papers and the legal papers to terminate all litigation and claims, cleaning up much, but not all, of this very complicated mess. Click here for that document. 

I think this was something the public should have seen before the August 22 hearing.

Among the things that caused my eyebrows to arch:
  • Does James Barrows actually hold title to the land? Who does? On Page 22 of this Draft Closing Agenda, the Barrows-LeBlanc sale/leaseback deal filed with the town last December 31 is mentioned. That deal called for Barrows to pay LeBlanc $2 million for the land by the end of this year, but these new documents make no mention, nor offer any proof that Barrows actually completed the purchase and now owns the property. I'm not a lawyer, but it seems to me that until Barrows actually pays, he doesn't take possession. And did Charlestown do a title search to make sure we come out of the deal with clean title?
  • If you look back at the sales-leaseback agreement, you will find this statement: "Title in property shall be reserved to the Seller (LeBlanc) until the purchase price [$2 million] is fully paid and this contract is fully performed by the Purchaser (Barrows)." I found no evidence in the Draft Closing Agenda that this has been done and that title has been transferred to Barrows.
  • Just to be clear - Charlestown is doing the deal with James Barrows, but Barrows doesn't seem to actually own the land.
  • It might be hard for Barrows to fulfill his end. The sales agreement binds him to pay Larry LeBlanc $2 million which he probably doesn't have until he gets the town's $2.1 million check. 
  • Add another half a million. Further, the leaseback agreement obligates Barrows to pay LeBlanc $500,000 if the Whalerock wind project is terminated. Add that to the $2 million land price and it comes to $2.5 million, which is more than what the town is paying Barrows for the land. Barrows does not get title "until the purchase price [$2 million] is fully paid and this contract is fully performed." 
  • And maybe another $700,000. Plus there's the question of who pays for LeBlanc's $700,000 mortgage. It is unclear in the Barrows-LeBlanc sales agreement whether that mortgage obligation goes to Barrows along with title. If Barrows is also on the hook for the $700,000 mortgage, then this deal makes no sense. Even though all that is really Barrows' problem, it could become Charlestown's problem if the title is clouded.
  • What if Planning delays or doesn't approve the two house lot carve-out. The whole deal is contingent on Planning and the Building Official giving the carve-out its complete OK. Planning Commissar Ruth Platner has been uncharacteristically pleasant and accommodating to Barrows. However, she has expressed misgivings about the site of the lots facing out onto Route One. She repeatedly suggested taking two parcels at the back end of the land facing onto King's Factory Road. Her Planning Commission doesn't continue its deliberations on the Barrows' proposal until August 28 (tonight). 
  • What about future precedents? If Planning and the rest of the town does indeed grant Barrows lightning-fast approval for his carve-out and the construction of the new homes, how will this precedent apply to all the many past and future applicants who might wonder what they have to do to get special treatment like that.
It's certainly possible that there is a logical answer to all these questions. I'm not a lawyer and I'm not perfect, so maybe I missed something or misunderstood something. But these questions ought to be answered for the public BEFORE, not after, the Town Council forks over $2.1 million. Taking shortcuts and failing to provide the public with the records and time to review and question these documents could bite Charlestown in the ass very badly.
Click here to see the full-sized version of the new map

Now we can see what we get for the money

Also due to the document dump, we can now all see what the property we’re buying looks like. Click here for the full map showing the land, minus the two house lots carved out for development. 
Here's a close-up of the new version of the two
house lots being carved out of the property

The size of these lots was enlarged to make up for parts of the land deemed unbuildable under current Charlestown zoning. The new state “slopes” law takes effect on January 1. Under that new law – which was bitterly opposed by Charlestown – those sloped areas would not have been excluded and we would have gotten three more acres for our money. Hoisted on our own petard, you might say.

Again, I’m fine with that. In my estimation, if LeBlanc’s partner James Barrows builds a couple of nice homes on those lots, their addition to the tax base will offset the $1 million in tax value we are taking off the tax base by converting the Whalerock property into open space. Except CCA Party leader and Planning Commissar Ruth Platner still insisted on testifying at the August 22 hearing that the tax impact all depends on whether those homes are occupied by families with children.

Included in the document dump were August 8 advisory opinions from the Conservation Commission (click here) and the Planning Commission (click here). Both opinions were unanimous, positive recommendations, although the Conservation Commission expressed concerns about the ability of the town to actually use the land. Planning made the land sound more like an east coast version of Yosemite.

Interesting reading in the appraisal

I was most interested in the appraisal of the property. As readers may recall, one of the turning points in last year’s Y-Gate Scandal was the disclosure that the appraisal of the abandoned YMCA camp on Watchaug Pond was based on conditions and factors the appraiser knew were false and unrealistic.

The Whalerock appraisal (click here) and appraisal addendum (click here) include some serious flaws, though none as outrageous as last year's Y-Gate appraisal. The appraiser used conditions and factors given to him by Town Tax Assessor Ken Swain.

The key assumption was to value the land under its current zoning classification (R2A) that permits home building. The size and nature of the land led the appraiser to assume that up to 30 house lots could be carved out of the land. It is not clear whether the appraiser based his house lot calculations using today’s standards for building on sloped land, or the loosened standards that take effect on January 1. As we’ve already seen, that could make a huge difference.

He could have – but didn’t – assume an NK Green scenario where roughly 30 houses as well as two large wind turbines were built on the property since that was the plan developers Larry LeBlanc and James Barrows were pursuing prior to this deal. NK Green in North Kingstown is an upscale residential development with one 413-foot wind turbine smack drab in the middle of the neighborhood.

Assumptions like that would have dramatically raised the assessment and would not have worked with a $2 million agreed upon sale price. Using only the house lots as the basis, the initial appraisal was $1,875,000. 

However, the appraiser was not given accurate information by the town. According to new maps (above) drawn up on August 1-2, the lots needed an additional 3 acres to meet Charlestown’s current zoning ordinance. The appraiser didn't get that information until after finishing the appraisal. So he did an addendum on August 21 that reduced the assumed number of buildable lots from 30 to 29 and cut the appraised value by $75,000.

I found the appraiser's valuation of $75,000 for three acres of ocean view property on the moraine personally interesting, since Cathy and I own a 2.54 acre vacant lot on the moraine with an ocean view just a little over a mile southwest. Our current appraisal is $149,000. Hey, Ken, I think we need to talk.

It's not unusual for appraisals to be shaped by the client to achieve a given outcome. Clearly that was the case with the town appraisal of the Whalerock land. But this is purely an academic point since the parties were agreed on a price that comes close enough to the appraisal value.

This is bad

I was, however, thrown by a major gaffe in the appraisal narrative. Since the appraiser used information provided to him by town, I can’t imagine why this passage appears on page 9:

This section is loaded with errors. Let’s start with the claim that the Tribe has “shown a great interest in purchasing the site.” Five years ago in 2008, the last time the Tribe was mentioned as a buyer, Chief Sachem Matthew Thomas went to great lengths to assert that this was not true.The Tribe has not been a player in the Whalerock controversy, never mind a potential buyer.

It’s also a false statement that the Tribe’s adjacent 31-acre site has been taken into trust by the US Secretary of Interior. 

Charlestown and later the state of Rhode Island fought all the way to the Supreme Court against the Tribe’s efforts to build affordable, senior citizens housing on that site. The key thing the Tribe wanted to do was put the land into federal trust. However, the Supreme Court's decision, Carcieri v. Salazar, blocked the Interior Department from taking that land into trust.

It is also not only totally false, but bordenline libel, to write that this land “had been marked for the future site of a gaming facility.” Marked by whom? And where did the appraiser get this? Was it a secret communique from the secret CCA Party Headquarters in the Great Swamp? Why interject this calumny into this document?

The appraiser admits his information might be a little out-dated, noting the last he heard, the state had initiated federal litigation against the Tribe’s plan to put the land into federal trust. OK, the state filed the federal case in District Court in 2003, so he’s only ten years behind the times.

He also says the state sued to “halt plans for the gaming facility.” Again, what gaming facility? And where did this misinformation come from? He seems to be using the CCA’s long-held belief that the Tribe coveted LeBlanc’s 81 acres and that it would give the Tribe critical mass to build a casino, despite all the reasons why that makes no sense.

He admits that “we do not know the status” of the state’s federal lawsuit at the time of this appraisal. If he doesn’t know that, he doesn’t know much about this area. The Supreme Court ruled on Carcieri v. Salazar four years ago in 2009. It is settled law. It has not been reversed. Congress has not even come close to “fixing” it.

All of these mistakes make me wonder about the accuracy of the rest of the appraisal. It certainly casts doubt on the appraiser’s calculations of what the “most likely buyer” would pay for it since it’s clearly not the Narragansetts and clearly not for a casino, despite the CCA Party’s fevered imagination. It raises questions about political bias. It raises lots of questions about what information he was fed and by whom.

Appraiser doesn't know about Carcieri v. Salazar but does know
about Camp Davis
And it’s not like this appraiser was unaware of other current events involving the Tribe and the town. He includes the Camp Davis property (pages 41-42) as one of the comparison properties used in his appraisal.

OK, I suppose I’m going to take a hit for going off on what is, put in the context of the big picture, still an academic point. 

But was it necessary to arrive at what most would consider a worthy end by violating past promises and precedent, holding back key information until after the fact, ignoring the people’s right to vote and now falsely accusing our neighbors, the Narragansett Indian Tribe?

Process does matter, not just outcomes. The people’s right to know matters, even if they choose not to pay attention. The truth matters, whether or not it is convenient.