Two unanswered questions loom over the city’s April 14 purchase of 2 State St., a bank building at the corner of Market and State streets, for municipal office space.
One: Why did city Chief Financial Officer (CFO) Michael Bertino confidently declare during a Jan. 25 City Council hearing that the building’s value was $1.5 million — $1.2 million less than the final purchase price?
Two, why were Bertino and city lawyer James Lamanna spearheading the purchase, when city Planner Aaron Clausen and the newly-formed Lynn Development Team would appear to have been the logical point persons in a search for the best location for the city to invest in real estate?
In approving the 2 State St. purchase, the city removed a prime downtown property from the real estate market that was under agreement for purchase by PNC Bank for $2.65 million.
With Bertino and Lamanna driving the discussion, councilors decided that acquiring a property with half the space available for municipal offices and the other half generating rent to the city from a long-term tenant made more sense than allowing a commercial buyer to bring employees into the bank space and enhance the private-sector presence on thriving Market Street.
We can’t help but wonder if Clausen and the development team could have searched the city looking for an underutilized building or vacant property that could be revitalized with the city renovating a building for municipal offices or constructing one.
A targeted, multi-million investment in a less-than-prosperous part of Lynn might just be the sort of economic pump-priming needed to attract other development. The City of Malden saw the benefits of this type of targeted public investment when state education offices located in the city’s downtown.
It is not Bertino’s job to spearhead city real estate acquisition decisions. It is his job to accurately assess city financial affairs.
The appraisal prepared by Daly Appraisal Services of Braintree in November valued 2 State St. at $1.5 million. But, as he proposed this purchase price to the council, Bertino knew the offer price for 2 State St. was $1 million higher.
He could not have helped but notice that the appraisal used the common real estate term, “highest and best use,” to reference 2 State St.’s history as a bank outfitted with two drive-up teller windows.
One might be tempted to dismiss Bertino’s low-ball bid for the property as an attempt to save the city money. But before he put the matter before the council, all parties involved were told by Eastern Bank they intended to dispute Bertino’s proposed price.
Knowing that, how could Bertino during the Jan. 25 meeting characterize the city’s move to acquire 2 State St. as a “friendly taking”?
We think that question is worth asking, especially since councilors received a Jan. 12 letter from Eastern Bank that waved a red flag over the appraisal and assessment values Bertino was quoting to councilors.
“Eastern Bank understands that the city can confiscate private property for a public purpose by eminent domain if it pays the fair market value for that property. However, it is a common occurrence, as in this case, that there is a significant disparity between the city’s appraisal on which it acts and the actual fair market value that the city must eventually pay,” stated the letter.
“Significant disparity” is a perfect description of the difference between $1.5 million and $2.7 million.
Exactly what did the city get for its money? Answer: basement and first floor space totaling 8,077 square feet with no opportunity to expand to 2 State St.’s second floor occupied by a tenant with a nine-year lease.
Bertino told councilors last month that the extra $1.2 million would come out of city free cash accounts. We understand the city is flush with cash from a number of sources, including pandemic-related aid.
But free cash traditionally forms a reserve or “rainy day” fund to cover city expenses during lean times. It would seem that this may not be the “highest and best use” of the city’s cash.
Planning for financially-lean times is part of Bertino’s job description — which brings us to a third question: Is Bertino doing the job he was hired by the council to do?
