Monday, February 28, 2005

North Canton Administrator Violates City Charter in Land Deal

Prepared Comments Made to
February 28, 2005

I would like to address my comments to this council regarding City Administrator Michael Miller’s efforts to acquire 24 acres of wetlands in the Nimishillen Creek Floodplain without consulting and communicating with North Canton City Council.

I would like to begin by saying that the preservation of these wetlands and floodplain is important to me. It is important to Plain Township, to the Stark County Park District, and to
the entire community of Stark County.

And in that vein, I think that we need to realize that everyone can benefit no matter who becomes the environmental steward of this property.

North Canton does not have to acquire this property to protect and preserve the wetlands.
Any number of government entities who have attempted to acquire these wetlands could preserve this property for the benefit of all without any financial burden on the taxpayers
of North Canton.

Administrator Michael Miller and Mayor Tom Rice have totally ignored this option and would have this council believe that acquisition of these wetlands by North Canton is the only option available and that is far from the truth.

The truth is that the seller has been shopping this property for many years, and the reason the property has not sold is that the owner is asking a king’s ransom for the property.

The Stark County Park District discussed acquisition of this property as far back as 1999.
Also, Plain Township, where the property is located, has expressed interest in acquiring and preserving these wetlands over the years.

North Canton seriously negotiated for these wetlands in 2001, and went so far as to have an appraisal done on the property. The appraisal, dated April 5, 2001, valued the property at $5,000 per acre.

North Canton declined two offers from the seller four years ago. The first offer from the seller was for $18,000 per acre on March 13, 2001. A second offer from the seller a few months later was for $15,000 per acre made on June 10, 2001.

If government leaders in Plain Township, the Stark County Park District, and North Canton passed on this property at an asking price of $15,000 four years ago, why would you now consider paying $22,500 per acre? And that price does not include the expense of $50,000
in improvements the seller wants the city to make to the property for his benefit and the fifty
year lease of the property back to the seller for one dollar per year?

We have all heard the saying that “there is a fool born every minute.” Well, I believe that the seller of this property has found two of these individuals right here in North Canton City government.

Mr. Miller and Mayor Rice, why are you resurrecting the seller’s pipe dream that the taxpayers of North Canton would want to pay far in excess of the fair market value for this property?

Mr. Miller, you stated to council in a memo, dated February 9, 2005, that the Water Rate Utility Study was the basis for moving ahead with the purchase of these wetlands. One of the goals of that Water Utility Rate study is “Environmental Stewardship.”

Environmental stewardship is what governments are expected to foster and promote and that
is a worthy goal. But environmental stewardship should not come at the expense of fiscal stewardship.

Mr. Miller’s arguments at last Tuesday’s council meeting for acquisition of these wetlands are unsound and rely on scare tactics. The first scare tactic was that the property must be purchased to stop development.

The August 6, 2004, appraisal of the property provides the following site description: “The subject site is generally level and low with a significant portion of the subject being in a flood zone….A significant portion of the subject property lies in a 100-year flood zone. During times
of heavy rains, a significant portion of the subject lies under 2 to 3 feet of water as the creek floods….[and] a soil survey from the Stark County Soil & Water Conservation Study indicates the presence of hydric soils, which would indicate the possible existence of wetlands on the property. Most of the soils are either Muck or Sloan, therefore a Delineation Study would be necessary if someone wanted to develop the site.”

Mr. Miller, it is laughable that you would attempt to tell this council that North Canton must purchase this property to prevent development. Your own appraisal indicates that the likelihood of development on this property is very unlikely.

The revelation in last Tuesday evening’s council meeting that Administrator Miller had given the seller a $6,000 payment as part of a six-month option agreement is beyond comprehension. This expenditure and the agreement, which Administrator Miller signed, were without the knowledge or approval of city council.

Mr. Miller, what was the purpose of making a payment on an option to purchase when there is no one competing for the property at the price you have offered?

It appears to me you were trying to keep council from walking away from this deal rather than the seller!

Why would you think this seller needed an incentive to bind him to this deal? This seller had finally hooked North Canton into paying more than $22,500 an acre for property that only a
few years earlier the city had declined to buy for $15,000 per acre.

Is it possible that maybe you were really just trying to make council feel more obligated to approve this deal? What part of this deal do you think council will focus on? The wholly unacceptable terms and price you have negotiated or the loss of $6,000 of taxpayer dollars if council turns down this convoluted deal. This is a scare tactic on your part to force council into
a deal that is against the best interest of North Canton taxpayers.

Another scare tactic last week was your comment that North Canton would lose the grant funds if it does not proceed with this deal.

Quite honestly, Mr. Miller and you, Mayor Rice, it appears as if you are working on behalf of
the seller. You have argued vigorously for this deal that is stacked overwhelmingly in favor
of the seller and against the taxpayers of this city.

You have fashioned a deal that is in your own words, convoluted, and it makes North Canton
a party to a blatant attempt to evade tax implications of the sale for the seller.

What is the actual sale price of this property? In total dollars, the seller’s sale price in 2001 began at $364,140. Later that same year, the seller’s price for the property dropped to $303,450.

In 2005, the sale price rises to $540,000 with the owner contributing $120,000 of the sale price back to the city. The net to the seller in this transaction is $420,000. This is far higher than the $303,450 that North Canton turned down in 2001 and it allows the seller to claim a fictitious donation in this deal.

This same “fuzzy math” has been used to mislead the members of the NRAC who authorized
a grant of $180,000 for the City of North Canton to purchase these wetlands.

It is my understanding that the grant to purchase this property is a 75/25 match with 75%
of the purchase price coming from local sources. If you remove the fictitious donation from
the seller, this criteria is not met.

Mr. Miller, since you are Chairman of the Natural Resource Assistance Council for District 19, can one conclude that your position as chairman has what might be termed “special privileges when dispensing these public funds?

The numbers are being manipulated in a scheme to deceive everyone and you know it!

This deal by Administrator Miller and Mayor Tom Rice has more holes than a hundred slices
of Swiss cheese.

There is an additional cost to North Canton taxpayers in the terms of this proposed purchase that has not been quantified.

Everyone here on this council as well as in certain flood-prone areas of the city is aware of the problems of the Zimber Ditch. What costs are the taxpayers of North Canton assuming when North Canton takes ownership of the West Branch of the Nimishillen Creek?

I would like to conclude with what I believe are flagrant violations of North Canton City Charter that have grown out of the secrecy that has surrounded this deal:

The North Canton City Administrator, Mr. Michael Miller, signed an option agreement for the purchase of this property nearly three months ago on November 22, 2004, without any consultation or knowledge of the North Canton City Council.

This is a direct violation of Section 3.01 (4) of the North Canton City Charter. “The mayor shall sign, on behalf of the municipality, all contracts, conveyances of indebtedness and all other instruments to which the municipality is a party.”

Mayor Rice, is there any reason why you did not sign this agreement? And please do not tell
me that you were unavailable! You know as well as everybody else in this room that this is a deal that nobody would want.

The option agreement sets forth a purchase price of $540,000 for the property. The negotiations and subsequent agreement to purchase this property has taken place without
any consultation or knowledge of the North Canton City Council.

Furthermore, Mr. Miller expended $6,000 to secure a six-months option and dispensed the funds nearly three months ago on November 30, 2004, without the knowledge of the North Canton City Council. The $6,000 is to be deducted from the purchase price of $540,000. This agreement is much more than a $6,000 agreement but the purchase of property for a price in excess of the amount allowed by Section 4.05 of the North Canton City Charter and Section 735.05 of the OHIO REVISED CODE.

These are serious violations of the North Canton City Charter and show a total disregard for
the system of checks and balances that is built into the process of city government.

The secrecy in which the negotiations for this property have been held should unnerve every member of this council.

I would urge this council to end any further discussions under the present terms for the purchase of this property and demand a return of the $6,000 given to the seller without
proper authority by Mr. Miller.

I would urge this council to direct Mr. Miller to partner with the Stark County Commissioners and allow the county to pursue acquisition of these wetlands for the benefit of the entire community. In this way, the goal of Environmental Stewardship is achieved and North Canton taxpayers are spared any further expense.

Thank you

Chuck Osborne
City of North Canton