Would You Make This Trade? The City Might
During the January 21 City Council meeting two seemingly unrelated items were brought up, the La Volla Creek drainage project and a City surplus land sale. The engineering contract for the drainage project was passed with much applause from the Council as an answer to the flooding of the Los Colonias, Los Encinos subdivisions and the La Molina neighborhood. The City also passed a surplus land sale without comment or scrutiny.
The declaration read “Item 13. Ordinance declaring City owned land on Oso Creek at Starry Circle as surplus property; authorizing its sale or exchange to the public by sealed bid; and authorizing execution of the deed and any related documents necessary to complete the sale and convey the property.” (Emphasis added)
This month at February 9 meeting it was learned that the two were connected in a possible land swap. Councilman Greg Smith (D4) and Mike Pusley (at-Large) questioned an appraisal that was presented for the second reading on the sale of the surplus land. Both of them questioned the low appraisals for the City land. Which led us to investigate further, what we learned is quite a story.
La Volla Creek Drainage Project
Los Colonias subdivision has had periodic flooding with the most severe being in 2010 (see history of La Volla Creek flooding below). In addition, proposed FEMA floodplain maps put Los Colonias, Los Encinos and La Molina’s squarely in the newly identified floodplain. This would mean that homeowners would be subject to high flood insurance rates and depreciation of their home values.
The City began working on a plan to solve the problem in 2017 and began to apply for grants to help in 2018 after the first preliminary FEMA maps were released. This resulted in the award of half of the funds from FEMA needed for the culvert expansion to solve flooding in La Molina and a $7.2 million grant from CBGD Disaster Recovery Funds for building a retention pond on La Volla Creek to help Los Colonias and Los Encinos. That would allow the City to ask FEMA to redraw the flood plain map.
Enter Lands Greenwood 2018 LLC
In an unusual coincidence in 2018, a company called Lands Greenwood 2018 LLC purchased the 130 acres north of La Volla Creek that would be needed for the detention pond. The land is totally landlocked and most of it in the floodplain. Tax records indicate it was bought for approximately twice the tax value.
In 2017 the Tax Appraisal District set a value of $1620 per acre on the land. In 2018 the value had risen to $3402 an acre, presumably based on the sale price to Lands Greenwood. Since that time is value has declined on the tax rolls to $2817 per acre.
Realtor Chris Montalvo and Nader Karimi are listed as the owners of Lands Greenwood and have listed it for sale at $3,838,320 or an astonishing $29,078/acre.
They describe it as an, “Excellent development opportunity! 132.08 acres just down the road from the new freeway and Greenwood/ Saratoga. Current subdivision preliminary plat will be on file soon for up to 450 residential lots. Great piece of property in hot area of Corpus Christi that is continuing to grow. Brand new Los Encinos has just been constructed as this area continues to excel.” (https://www.landsearch.com/properties/calle-cuernavaca-corpus-christi-tx-78417/1042520)
A most interesting assessment of land locked floodplain.
Enter Moses Mostaghasi
Six months ago Moses Mostaghasi approached the City with an offer to swap the 130 Lands Greenwood acres on La Volla Creek for the land off Starry Road on Oso Bay. It’s unclear whether Mostaghasi is an unlisted partner in the land or holds an option on the property, but he clearly presents himself as in the position to negotiate to swap.
Mostaghasi is associated with MPM Holmes, MPM Enterprises and MPM development. Mostaghasi is part of the Mostaghasi family who are developers, homebuilders and funding companies. A search of Corpus Christi business records reveals at least ten different people named Mostaghasi who own over forty companies in the Corpus Christi Area many with interlocking boards.
Nader Karimi, listed as an owner of Lands Greenwood, is listed in businesses with the Mostaghasi family and Azali family of developers.
Enter the Appraiser
Greg Smith (D4) asked “do we need to get an appraisal to sell this land?” The answer was no, only if you’re using in the alternative method such as a land swap. Otherwise it goes to the highest bidder.
When the City sells land they sell it to the highest bidder, unless they use one of the so-called alternative methods. One alternative method is to swap land that the city doesn’t need for land that the city needs, a not uncommon practice. In that case decision about market value is based upon an appraisal.
The Council received an appraisal of the City property on Oso Bay from Mitchell Kirkpatrick. Kirkpatrick took an unusual approach to say the least. His appraisal of the Oso property was based on comps that were not waterfront and many of them odd shaped. Even more interesting, all the comps were owned by Mostaghasi or Azali.
Kirkpatrick likely had the appraisals at hand because he is listed as confirming four of the five, likely for the previous purchase. That would indicate a possible prior business relationship with Mostaghasi.
Then Kirkpatrick did two curious things with the comps that weren’t really comparable. He took the value of the five comps and calculated their average price per acre. He then deducted what he considered deficits to those properties from their value until he brought the average value down from $39,000/acre to $20,800/acre. He then used that figure to set the value of the Oso property. Further distorting the appraisal, Smith pointed out Kirkpatrick deducted the 69 acres of floodplain from the Oso Bay land but didn’t deduct floodplains on the comps, further depressing their per acre appraisal compared to the Oso land.
Reportedly one developer in town was so appalled when he saw the appraisal, he sent an employee to City Hall with a check for the full appraisal amount offering to buy the property on spot to make his point. Another successful developer related to the author the property was easily worth $60,000 an acre.
Enter the Councilman
The biggest Council advocate for the land swap is reported to be Gil Hernandez (D5). Hernandez received over $20,000 from Southside developers during this recent campaign cycle, two thirds of his total contributions.
Hernandez many times appears to be a lobbyist for developers as opposed to a Councilman representing citizens. Hernandez came under fire last summer for pushing the extension of Rod Field Road that only benefitted a handful of developers instead of improving heavily burdened and dangerous Yorktown south of Roddfield Road.
Right before that he had received $8500 in contributions from developers. He told others he was soliciting contributions to put on July campaign report to scare off any possible opponents.
The simplest is usually the best
If the appraisal is distorted to come in low on the Oso property and the value inflated on the Lands Greenwood property, will our Council be accomplices in this hornswoggling of the taxpayer? Certainly not if Mike Pusley and Greg Smith have their way.
They suggested the City proceed with the standard way of handling the situation. Sell the surplus waterfront property on Oso Bay to the highest bidder.
Offer Lands Greenwood the fair market value for their land on the La Volla Creek (Get an independent appraisal.). Fair market value for floodplain that is landlocked is probably $2000 an acre. If that is refused the City should take condemnation action to acquire the property for the public good.
Citizens interested in the integrity of the Council should follow this item closely. Developers contributed over $150,000 to the winning candidates who now sit on the Council. Their actions will tell us whether they’ll represent us or developers for the next two years.
The shameful history of La Volla Creek
In 2010 La Volla Creek flooded worse than it ever had flooding most of the homes in the Los Colonias subdivision. The residents complained that this had never happened before. At the time I was editor and publisher of “We the People Newspaper” and covered the story.
Investigation revealed that the airport had constructed a 10’ x 50’ ditch that flowed into the Margaret Kelley ditch and then into La Volla Creek. The new ditch, funded by the FAA, had been built by the City owned airport without communication to the city that it was being done.
This was significant in that the airport have been constructed as a retention basin meant to drain slowly because it contained large areas of impermeable surface. The new ditch changed that to a model that drained all the water as quickly as possible from the airport.
Further complicating the situation was the City had contracted to clear La Volla Creek of brush and trees that have been blocking the flow. After the 2008 financial crisis many contractors went broke including the one that was clearing the Creek. The project was abandoned with many trees cut but not removed from the riverbed. When 10’ of rain fell on the airport, the combination of the extra flow and the blocked channel flooded the neighborhood. i.e. the City caused the flooding problem.