SEMINOLE — The burst bubble of the real estate market has spelled doom for some speculators and banks, but it is saving Seminole taxpayers almost hundreds of thousands of dollars.
Council members have agreed to buy 1.46 acres for $380,000, which is about $450,000 less than the property was listed for last year and $170,000 less than the city was willing to pay at the time.
The sharp price decrease is a prime example of the effect of the economy on the price of land, Seminole City Manager Frank Edmunds said.
In this case, the taxpayers benefited, but owners Claude Ogorek and Lois Delaney-Ogorek were the clear losers. They not only sold the land for less than the $550,000 they paid in December 2006, they were out the $100,000 cash they used for the down payment.
"The economy has been brutal," Ogorek said Tuesday. Or maybe, he said, the decision to buy the property and try to flip it to the city was "just stupid. I don't know."
Ogorek said he bought the four parcels on the northeast corner of 113th Street and 70th Avenue because the acreage is surrounded by city-owned land — a fire station, tennis courts and across from the site of the new public works building.
"I always thought I could flip it to the city and make a buck," Ogorek said.
If the city didn't want it, Ogorek said he figured he could sell to someone else.
The $550,000 purchase price was based on the fact that Ogorek had just been offered $1.35-million for his home and the 2 acres it was on. The $550,000 seemed reasonable for 1.46 total acres.
The house deal was contingent on the buyer's being able to get a permit to move the driveway. When that could not be done, the house sale fell through.
But Ogorek had the land on 113th. He listed it for $800,000 and approached city officials with an asking price of a bit more than $600,000.
The city ordered an appraisal, and on Oct. 2, 2007, the appraisal came back at $550,000. Seminole offered to buy it for that price, but Ogorek turned down the offer.
Ogorek and city officials talked some in the ensuing months, but they never could come to a deal. Then Ogorek fell behind in his mortgage payments, and the bank called the city to see whether it was interested. The city ordered another appraisal, which valued the land at $380,000. Seminole offered to buy it for that price.
The bank and Ogorek agreed. Under the deal, the bank will get the entire purchase price. Ogorek will be released from his mortgage obligations, but he'll lose his $100,000 down payment.
Ogorek is not happy, but he's taking the deal. He doesn't have much choice.
"I don't really believe the appraisal that they did now," Ogorek said. "I think that's really low-ball, but the bank wants out."
As for Seminole, the money will come from a $2-mllion surplus in the current Penny for Pinellas money. Edmunds said officials deliberately held some of the Penny money just in case something unexpected happened. Getting the land for this price, he said, is worth the expenditure.
It's unclear what the city will use the land for, Edmunds said.
"Its location lends itself to a variety of uses," he said.
In the past, officials considered building more tennis courts there. But others in city government have suggested such projects as a fire training facility or a senior center.
Edmunds said it's too early to make any decisions.
In the short run, he said, Seminole will likely knock down most of the buildings on the property, spruce it up and use it as green space.