Settlement over VK land could cost Cape more than $8M; Councilmembers have final vote
The final price tag for the land that a new public safety building may sit on could be a stiff one, as city staff has recommended a settling with the VK Corporation for $8.2 million, according to a summary document released Wednesday.
On Monday, the City Council gave its approval to Balfour Beatty to design and solicit bids on a $23 million facility — Monday it will decide how to complete the other half of the deal.
Four separate appraisals judged the VK property as being worth anywhere from $5.65 million to more than $12 million.
After the city acquired the land via quick-take in late 2006, the previous owner, VK Corporation, and the city entered into a litigation process that has dragged out for more than a year. Following a mediation session, the city agreed to an $8.4 million price tag for the land; attorney fees and expert costs will bump that number up though those total costs have yet to be determined.
The city is entitled to a credit of about $5.22 million, which it had already deposited with the court, so the council’s decision is over the outstanding $2.98 million.
According to the summary document, VK slashed its settlement demand by $200,000 after the mediation session to $8.2 million in response to concerns over the high price tag.
Mayor Eric Feichthaler said Wednesday that he could not comment on the matter at length, but said the VK land cost was a major reason that he so strongly supported McGarvey Development’s proposal for a new police facility.
“I thought it was imperative that we rid ourselves of that burden by getting McGarvey to buy that as part of a building transaction,” he said.
McGarvey, which withdrew its proposal last week, was willing to take the VK site off the city’s hands.
In his summary statement, Assistant City Attorney Mark Lupe pointed out that the midpoint for the four appraisals is more than $8.85 million, noting the $8.2 million VK is asking for is far less.
He also said any portion of a jury award above the $5.22 million deposit will bear interest of 11 percent per year from December 2006 until it is completely paid, which would only add to the total cost.
“When considering the opinions of the expert appraisers, prejudgment interest, the cost of a jury trial and corresponding expenses, this settlement is considered to be within the range of a reasonable settlement,” he wrote.
Councilmember Bill Deile spoke with Lupe Wednesday afternoon and expressed “cautious optimism” that the two sides could come to an agreement not quite as painful to the city’s pocketbook.
“(Lupe) thinks we can get it for something less than $8.2 million,” said Deile. “We’re going to have to come up with a settlement number, but I don’t think it is going to be quite that high.”
While the city attorney did give Deile a specific figure, the councilmember did not divulge the number because of the sensitive legal nature of the process.