The Northeast property that the El Paso City Council voted to buy for $2.7 million last week was on the tax rolls last year at a value of $780,313.

And a real estate broker who was involved in trying to sell the 7.3-acre site next to the largely-vacant Northpark Mall several years ago thinks the city paid far too much for it, despite two private appraisals that bracketed the $2.7 million price.

Plans to build a new Northeast Transit Terminal on the site of the former Furrs grocery store at 9400 Dyer have been approved by the Federal Transportation Administration, which will cover 80 percent of the cost.

The property’s owner commissioned an private appraisal last June by Zacour & Associates of El Paso, which arrived at a $3 million value. In May 2008, the city hired Hoover Appraisal Co. to assess the property, and it arrived at a $2.4 million value. (View Hoover's comparable sales listings below)

The city and the owner, George Meshkanian, who heads a number of real estate and development companies in Santa Monica, Calif., split the difference, settling on $2.7 million.

But Dan Foster, a Grubb and Ellis Co. broker, questions both appraisals, and said it is his opinion that the property is worth no more than $1.3 million.

“In 2004, we had the property listed, and on the open market with a lot of investors speculating in the Northeast submarket, the highest offer we had was in the $750,000 range,” Foster said. “That was prior to the vandalism and fires and the equipment being auctioned off.

“I don’t think there’s any way you can come up with a $3 million value on that property.”

Foster said he called the offices of Mayor John Cook and Northeast city Rep. Melina Castro about the issue before last week’s meeting.

Castro did not return his call, Foster said, though he left her a detailed voice mail message about why he needed to speak with her. Nor did Castro return calls from NewspaperTree.com about the issue this week.

Cook, who called Foster back after the council had made its decision last week, told NewspaperTree.com he was surprised by the appraisals and the price the city had to pay for the property.

“I thought it would be $1.5 million,” the mayor said. “We had to go to the Federal Transportation Administration and get permission to buy it for more than our appraisal value was.

“What’s unique is when it couldn’t be sold for $750,000, there was still a functional supermarket there. Since then there’s been a fire in the building. We just needed it to tear it down. The value for us is the real estate.”

Cook, who has supported the project and the prospect of the revitalization of Northpark Mall, said the issue is now decided.

District 2 city Rep. Susie Byrd, who does some appraisal work for Zacour & Associates, said commercial values are on the rise in the Northeast because of troops arriving at Fort Bliss in the next two or three years will need an estimated 8,000 apartment units and will create a new shopping market.

"The demand for land in the Fort Bliss asrea has increased significantly and the sales prices have increased significantly," she said. "The only thing that hasn't changes is the availability of financing.

"In the Northpark Mall area, there were some very pricey deals about to close that didn't close because of financing."

But four years ago, while residential and commercial property values in El Paso were heading steeply up, she said, Northeast was dying.

"Now, all of a sudden, you have 8,000 multi-family housing units needed close to Fort Bliss so of course things are changing," Byrd said.

CAD tried to raise valuation

Last year, the El Paso Central Appraisal District, which is responsible for setting taxable values on real and personal property, tried to raise the assessed value of the Furrs site to $1.29 million.

But Meshkanian hired Cumming Property Tax Service to challenge that valuation, and CAD’s Appraisal Review Board lowered it back to 2007’s $780,313.

When NewspaperTree.com contacted Meshkanian, he declined to answer questions.

“Hire an appraiser yourself and get them to do a report,” he said.

CAD and county property records show Meshkanian, through his Northgate Plaza LLC, bought the property an undisclosed amount in 2003 from the LaSalle Bank in Chicago in 2003.

Last November, a month before City Council voted to go forward with a $73 million package of projects that included the Northeast terminal, Meshkanian and three associates himself bought the property from Northgate Plaza LLC., property records show.

Then, in January, Meshkanian sold the property back to Northgate Plaza.

RJL Real Estate also listed the old Furr’s site for a time and had no luck selling it.

Asked for his take on the price the city has agreed to pay, RJL broker Rick Amstater said, “That’s probably what the seller wanted, and it’s probably close to replacement cost. But otherwise I have no comment.”

He had a little more to say, however.

If there are two appraisals that put the property’s value in the same neighborhood, Amstater said, it would be hard to dispute them. But he added that any sales used to establish the value must involve comparable properties.

Concluding his remarks, Amstater said, “I would think the owners are very pleased.”

Bob Ayoub, president of one of the city’s biggest real estate management companies, didn’t want to discuss the Northgate site specifically but agreed that two independent appraisals are hard to argue with.

“Northeast El Paso has been very good to us,” he said, ticking off his company’s plans for new projects there.

So, if the old Furr’s property is really worth $2.4 million to $3 million, why wasn’t the Central Appraisal District able to successfully make the case for at least a $1.3 million value?

CAD’s chief appraiser, Dinah Kilgore, said her agency is not privy to residential or commercial sales information, and the current session of the Texas Legislature has again defeated a bill to give appraisal districts in Texas access to that data.

But if the private appraisers, who have access to the real estate industry’s multiple listings services and tend to share information, did have actual sales information on commercial properties, it would be good to look at them closely, she said.

And if the Zacour and Hoover appraisers compared thriving commercial business properties to Northgate, which has been a failed property for a decade then, she said, the differences should be noted and the Furrs site should have been adjusted downward.

“With commercial property, you always have to adjust up or down, and those adjustments should be explained and vacancy factors should be noted along with any stigma on the property,” Kilgore said.

Foster agreed and noted that while the Furrs building has a Dyer Street address, it sits well off Dyer, behind a dilapidated, vacant mall with a terrible history.

“It should have a Wren address because it fronts on Wren,” Foster said. “If you’re doing an appraisal and bumping it up on the assumption that down the road, the center next to it may be revitalized, that’s foul play.

“As it sits today, it is not a viable commercial center. There’s no retailer that’s going to go in there and its last use was an indoor-outdoor flea market on Saturday and Sunday.”

The Zacour appraisal contained no explanations for any downward adjustments in the value of the Furrs site and made no overtly negative remarks about the site.

In the Hoover appraisal, there is a “history of the property” heading, but it refers only to the ownership and to appraiser’s belief that the site is “not currently listed for sale or under contract to sell.”

The appraisals, both a year old, make no reference to a national recession and describe the banking industry as strong and expanding.

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To reach David Crowder, write to dcrowder@epmediagroup.com or call (915) 351-0605, ext. 30

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