Our Edgewater Point Report - Revised PDF Print E-mail
Written by Concerned LSL Community Members   
Monday, 31 October 2011 00:00

Since the 2009 Capital Improvements campaign, the Concerned Members has always been very interested in the details behind the $750,000 Edgewater Point purchase by the LSLCA Board of Directors under the leadership of former President Greg Jones. 

(Since the initial publication of this article on August 31st, 2011, some public mischaracterizations have been made about the “Enormous Disparity in Price” portion of this article by anonymous sources in a vain attempt to discredit it.  To make these and other facts clearer, update it as a result of the recent election, and reduce the possibility of further mischaracterization of the findings of our report, we have added or modified the underlined text in order to provide more clarification and reduce ambiguity. 
These changes are not meant to provide any new information, just reduce ambiguity and thwart attempts to put words in our mouth.)

While countering the Board’s campaign for a massive increase and building projects, this issue resonated throughout the community as a highly unpopular and unwise decision.  What was known of the facts didn’t make sense to us either and we suspected some of the facts presented weren’t entirely accurate. 
Therefore, in the years since the defeat of the Board’s campaign, the Concerned Members have been quietly attempting to gather more information about this transaction, mostly from public records but from some other sources.  Some of our suspicions were verified by our investigation, other facts we learned just led to more questions.  Some of those questions we don’t think we’ll ever be able to answer.  But we do feel this report will shed some light where it needs to be shed.

In 2009 the LSLCA BOD purchased a 5.11-acre vacant parcel of land situated along the shoreline of the Big Lake adjacent to the 1000 Edgewater Point office building.  The facts concerning this acquisition and its enormous cost, which was funded by CA reserves, has not been explored in great detail up until now.  In this analysis, we attempt to take a critical, but balanced look at many of the essential facts surrounding this very controversial expenditure of CA funds. We think it’s also important to emphasize that during this time the CA BOD was lead by Greg Jones, as President. 

The entire original Edgewater Point parcel (which included the 5.11 acre land in question the CA purchased as well as two other partitions of land) was purchased by a development company in the 1990s for $1.8 million.  In 2002, the 1000 Edgewater Point office building was sold off for 1.4 million and the St. Charles Ambulance District property which appraised for $54,000 was transferred leaving the remaining 5.11 acres.  This 5.11 acres is what the LSLCA Board under Greg Jones later purchased in 2009 for $750,000.   

You will find the source documents for most of the following explanations in the Edgewater documentation file.

Purchase Now! (get authorization later)

The Edgewater purchase closed on May 15, 2009 (see “Purchase announcement”).  The LSLCA paid a total of $758,375.73 after legal fees, appraisal, and 2009 real estate taxes.  A BOD resolution, dated April 28, 2009 authorized Greg Jones to execute "a Contract of Sale and all pertinent papers to consummate said transaction".  However, the purchase contract for Edgewater, executed by Mr. Jones, was dated April 17, 2009 which precedes the date of that resolution by the Board by 11 days.  Furthermore, there’s no evidence that the Engineering & Facilities committee or the Finance committee as a whole was even consulted about the transaction.  It is not mentioned in any minutes leading up to the sale. 

Here’s the first group of questions we can’t answer:

  1. Since the purchase occurred before the LSLCA Board of Directors authorized Mr. Jones to purchase the property, was the vote of the Board just a formality to spend $750,000 of the CA’s money on a piece of property?
  2. Why is there no evidence that our LSLCA committees were ever consulted on the purchase?  Wouldn’t it have been wise to involve them to make sure this was a good investment?

The Mysterious (and Missing) $950,000 Edgewater Point Appraisal

LSLCA Board president Greg Jones said in a Newstime article entitled Edgewater condos become non-issue with property sale, published in 2009, "Five years ago the property [Edgewater] appraised at approximately $950,000".   (See “Purchase announcement”)  The trouble is we have been unable to identify the existence of any appraisal of the 5.11 acres comprising the CA's Edgewater parcel that produced a Market Value finding of $950,000 or any number close to that.   The CA Operations Manager stated he has never seen this appraisal.  While the CA did have an appraisal done on the property after purchase (which raised more questions and is discussed in our next topic), there’s no evidence that an appraisal for $950,000 ever existed.

  1. Why is there no evidence, in CA records or otherwise, that there was ever an appraisal for $950,000 for Edgewater Point? 

Finally Getting an Appraisal… After the Purchase?

The CA paid for an appraisal report that was commissioned to determine the "as is" market value of the 5.11 acres of vacant land comprising the remainder of the original Edgewater parcel.  However, the appraisal was actually commissioned by the law firm that still represents the CA BOD.  That would be Tony Soukenik, Esq. of Sandberg, Phoenix, Von Gontard PC.  As far as we can determine, the BOD never engaged in any process to select the appraiser among a list of those commonly known to be qualified and used by local banks, developers, investors and other users of commercial appraisal services in the St. Charles County.  We know that the CA's attorney selected the appraiser.  That’s all we know.  Consulting the State of Missouri's Appraisal Commission website, we identified no less than 24 Certified General Appraisers (excluding the County Assessor) identified to reside or have offices in St. Charles County (a "Certified General Appraiser" connotes the essential qualification to do commercial real estate appraisals in the State of Missouri).  We think it is very curious, if not all together troubling,  that despite the apparent number of individual commercial real estate appraisal practitioners in St. Charles County, the CA's law firm choose to hire an appraiser who office is far from St. Charles County and one who does not frequently (if at all) appraise real estate in St. Charles County.   

As far as we can determine the appraisal was engaged sometime in the month of April, 2009.  The effective date of the appraisal is identified to be April 25, 2009 as reported in the appraisal's Transmittal Letter.  The date of the Transmittal Letter is May 1, 2009.   This is significant in that the date of the contract to purchase, executed by, then, BOD President, Greg Jones, is April 17, 2009.  Comparing these dates, this means that the appraisal field work and other investigations, in addition to the official vote by the Board of Directors was completed after the date that the purchase contract was executed by the Board President.  Further, the Transmittal Letter date indicates that the appraisal was not even available for review and consideration until at least 18 days after the deal to buy the property had been struck.  You may or may not already be aware that Greg Jones has conceded publicly in oral statements and email that the appraisal was obtained after the BOD had already committed the CA to the purchase.  Why the Board's leadership would not have arranged to have that real estate appraisal prior to signing the purchase contract?  A limited scope appraisal (commonly known as a Restricted Report) could have been readily completed within a matter of days to accommodate the needs of the BOD decision making.   Having the appraisal document available prior to the transaction (rather than after) allows the buying party to make a more informed decision and strengthens the buyers bargain position - all of which we would hope would lead to making a more well informed and more savvy buy decision.  

By now, your head is probably spinning with questions.  Here’s ours:

  1. Why was it apparently a foregone conclusion that the Edgewater Point property would be purchased for a certain price before the appraisal was completed and its value was determined? 
  2. Was it, again, a foregone conclusion that the property would be purchased regardless of the outcome of the appraisal? 
  3. What was the reason for the appraisal at all if the purchase was a foregone conclusion?  Was it only to make the sale look good?
  4. How could this order of events possibly have been thought to be in the best interests of the LSL CA residents?

More Appraisal Details Raise More Questions

We have significant concerns about how this appraisal was conducted and the conclusions it draws as to the value of the comparable properties.  In short, we feel the appraisal included in the attachment is flawed and you may agree.

But, as we’ve previously covered, it wouldn’t have affected the sale price because the contract had already been executed by CA President Greg Jones.  If it had come out low, the transaction would have happened anyway because the deal was already done before this appraisal.

Enormous Disparity in Price

In conjunction with our forthcoming analysis of the appraisal itself, we thought it was important to review the historical market values set by the St. Charles County Assessor and compare the BOD appraisal with the Assessor's market value estimate.  Doing this we find that the disparity in these two numbers is enormous!  Whereas the BOD appraisal commissioned by the CA's attorney put the Market Value at $850,000, in the same year, 2009, the County Assessor valued the property at a mere $350,000.  The Assessor's Office reflected that same value in 2005 thru 2009.  It was valued at $350,000 in 2009 as a taxable property until Jan 1, 2010 when the Board’s petition to convert it to a non-taxable property was granted.  From the time it was bought in May 2009 until the end of that year, we, as CA members, paid taxes on that property.  You can see proof of this in our attachment.  The LSL CA definitely did pay taxes on the property in 2009. 

Greg Jones posted an online post in September of 2010 (attached) in which he stated that "... since there are no [real estate] taxes collected there is no incentive for the assessor office to expend the manpower necessary in order for their appraisal to accurately reflect the true value of the land".  Ah, but Mr. Jones leaves out (or maybe just forgot somehow) that the land was taxable at the time of the assessor’s valuation of the land at $350,000 and for 4 years prior to that time.  Therefore, Mr. Jones’s statement means nothing in the context of explaining the disparity in price between the Board’s appraisal and the assessor’s valuation of the property in 2009.  The non-taxable argument is a smokescreen.

The County Assessor does not get paid for doing a poor job of estimating values - or shall we say for estimating real estate values low.  Remember that when the value estimated is low, the County generates less tax revenue.  We think that is key to our argument here. How do you think the Assessor would be motivated to approach the case in question?  Remember that prior to the economic down turn, which began in last quarter of 2008, the two years prior essentially marked the apex of commercial property values in the County and the larger area.  The Edgewater parcel was at that time and in prior years owned by a taxable entity and as noted above the property was valued at $350,000 by the Assessor in years 2005, 2006, 2007, and 2008. In the 2004 the Assessor's value was $389,540 and in 2003 the value was $436,040.  We suppose the case could be made that the Assessor's value could have understated the value of the property to some degree.  But the case could also be made that it may have overstated the value as well.  For those trying to make this argument, we remind them that the St. Charles County Assessor defines Market Value as follows, “Simply stated, market value is the most probable price in terms of money that a property will bring in an open and competitive market.”  Put bluntly, to embrace the notion that the Assessor's estimate of the market value was $500,000 below the actual market value, or 143% off in favor of the owner, is in our opinion so implausible as to be an absurd conclusion.   But we understand why some might be motivated to try to make it anyway.

Related statistics taken from the attached documents about Edgewater Point.  It should be noted that all information regarding the market value assessment, tax and transaction history regarding the Edgewater Point property was obtained from the St. Charles County public records.

Edgewater Point ownership history:

  • 1996 Collier Bldg. Corp.
  • 1999 The Collier Org. Inc.
  • 2009 Edgewater Point LLC.  Hassan Jadali, Partner
  • 2009 Edgewater Point Associates.  Hassan Jadali, Partner
  • 2009 LSL Community Association.

Edgewater Point parcel appraisal history by St. Charles County Assessor.

  • 2003 - $436,040
  • 2004 - $389,540
  • 2005* thru 2009 - $350,000

(*) After an interview with the St. Charles County Assessor this year, it was discovered that the reduction in 2005 was due to an appeal by Edgewater Point Associates at a hearing held in the Assessor’s office April 1, 2005. The assessor recalls the owner provided documentation that the parcel was “un-buildable” and the owner provided a listing to support his claim.  The assessor’s notes read, “Owner provided current listing of property.” The assessor didn’t recall the exact amount of the listing but when asked if the value on that listing provided by the owner could possibly have been higher than $350,000, the assessor responded “no”.  [Note that this statement was reaffirmed for accuracy by the assessor in a follow-up interview conducted on 10/20/2011.]

It stands to reason that the assessor’s valuation wouldn’t be lower than the listing doesn’t it?  Why would the assessor have allowed the property to be valued for tax purposes even lower than the listing that brought it down?  It doesn’t make sense.  That’s our point.  Edgewater Point was worth $350,000 when the LSL CA bought it and the controlling interest of the Board at the time should have known that.

  1. When all public documents at the time (all of which are available at the St. Charles County Government offices 201 N. Second St., St. Charles, Mo. 63301) support the Assessor’s Market Value appraisal of $350,000, why would any one spend $750,000 for it?  We leave that question for the reader to consider.


We believe that the issues discussed above should in total prompt very serious questions as to the motivations and/or the competency of the, then, BOD leadership in terms of representing the best interests of the CA community in this acquisition.