Board member: Aviation authority undervalued Boeing land

By Matt Tomsic
mtomsic@scbiznews.com
Published March 28, 2013

The Charleston County Aviation Authority sold property to Boeing for millions less than initial appraisals, and one authority board member wanted more time to discuss the land sale before holding a final vote.

The aviation authority board approved the sale price of $12.5 million during its March 21 board meeting with an 8-3 vote. Board Chairman Andy Savage and board members Larry Richter and Mallory Factor voted against the approval.

“They agreed to take it, and it was a big rush,” said Tommy Hartnett on Thursday.

Hartnett is a board member who also is chairman of the Land Sale Special Committee, which was studying the land deal. Hartnett called into the March 21 meeting and was advised by legal counsel not to vote since he phoned in.

“We sold our only asset at a bargain-basement price. I thought that was a mistake,” Hartnett said.

Boeing has said it wants to purchase the property at fair-market value, said Candy Eslinger, a spokeswoman for Boeing, and the second set of appraisals came in closer in value than the first set.

“The first (aviation authority) appraisal did not take into account a number of known and existing encumbrances, such as easements, wetlands, height restrictions, poor soil (and) radar,” Eslinger said. “When you take into consideration that much of the total acreage is not suitable for commercial development without substantial investment, we feel this price is a fair market value. This price is a more accurate reflection of the property’s current development condition.”

The vote wrapped months of negotiations between Boeing and the aviation authority over the purchase of roughly 320 acres of airport property. Boeing has also expressed interest in obtaining rights of first refusal for another 488 acres of airport property plus a purchase option in 2025 for Boeing South Carolina’s main campus, which is 264 acres. The negotiations and appraisals that led to the $12.5 million land sale only included the 320 acres after Boeing approached the board during a December meeting with its proposal.

The two sides ordered a first round of appraisals for the 320 acres, and on Jan. 29, the land sale committee recommended the authority sell the land based on its appraisal of $27.6 million. Boeing’s appraisal was nearly $14.7 million, triggering a second round of appraisals because the difference between the two was greater than 10%, Hartnett said.

The aviation authority’s second appraisal came in at $12 million, while Boeing’s second appraisal was $13 million, which the authority averaged to $12.5 million.

“I am dumbfounded that four appraisers could be so far apart,” said Hartnett, who is also an appraiser. “It’s amazing to me that they did that.”

During the meeting, Hartnett urged the board to send the decision back to the land sale committee to look at the second round of appraisals and study the deal. Hartnett said he isn’t against Boeing’s expansion, and the company has been a good neighbor and employer.

“I feel like we could have gotten another $7 million,” Hartnett said. “That’s the last real asset that the airport authority had, and we let it go for $12.5 million.”

 

Editor’s note: A previous version of this story incorrectly indicated the amount of the first  appraisal from the Boeing Co. on 320 acres of land. The story above has been corrected, and the Business Journal regrets the error.

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