Broker, state defend Maine property sale to warden

By GLENN ADAMS, The Associated Press
Posted Aug. 16, 2011, at 5:25 a.m.

AUGUSTA, Maine — Maine State Prison Warden Patricia Barnhart told a legislative investigating panel Tuesday she knew the potential for public scrutiny when she agreed to buy state-owned property near the coast for well below its assessed value, but saw no red flags suggesting the transaction would be called into question as a possible conflict of interest.

“I was intimately aware of the scrutiny” the sale of the 5-acre property could draw, Barnhart told the Government Oversight Committee. She defended her actions as aboveboard and said she hopes to get out of the deal, which has been invalidated by the attorney general, without a loss.

Barnhart and others addressed the committee as it wound up its inquiry into the sale of property near the former state prison in Thomaston to Barnhart for $175,000, a figure that’s below its $458,000 town-assessed value. The discrepancy has drawn widespread attention.

Attorney General William Schneider cited a statute prohibiting state officials from engaging in contracts with the state in which they stand to gain financially. Lawmakers also were concerned that the property was not advertised publicly.

While no one on the oversight committee alleged wrongdoing by state officials, the broker or Barnhart in the sale, several members chided those involved for failing to take the statute into consideration as the deal played out and for not being more sensitive to appearances of a conflict.

“It’s disappointing they missed red flag after red flag,” said the committee co-chair, Sen. Roger Katz. The Augusta Republican said several lessons can be learned from the episode: Advertise all state property sales publicly, get the highest price possible, and take greater care to avoid even an appearance of a conflict.

During a 4½-hour session, the committee was told that the sale, which spanned a couple of years and was due to wrap up in June, was unconventional in several respects. The property includes a home that had long been occupied by prison wardens, a building used for temporary housing for prison trainees, and a third building which has fallen into disrepair.

The sale came about after the Legislature ordered the sale of $1.5 million in state-owned properties to balance the state budget. The Bureau of General Services hired CBRE-The Boulos Co. of Portland to sell that and other properties to raise the money.

Addressing the discrepancy between the assessed value and sale price, Boulos broker Chris Paszyc said his company does not rely on assessed values because they lean more toward replacement value than market value. Replacement value may bear little relationship to the true market price, he said.

Paszyc added that the value was further clouded by “encumbrances” on the property, such as the lack of maintenance on the buildings and the state’s intention to lease back from Barnhart the transient structure or “bunkhouse” on the lot. Paszyc said that given those considerations, $175,000 “was the best we could do.”

Those encumbrances also would have complicated a traditional publicly advertised sale of the lot, so the state proceeded with a sale to the warden, who had been living there, the broker said. Those involved in the sale also noted that sale prices for other comparable properties in the Thomaston area were consistent with that of the prison warden’s property.

“I think this was as good a deal as if the state had advertised,” Betty Lamoreau, director of the Bureau of General Services, told the committee.

Lamoreau also acknowledged that, if given the chance, things would be handled differently.

“This is an unfortunate turn of events,” she said. “I don’t think it’s the tip of the iceberg.”

 

http://bangordailynews.com/2011/08/16/news/midcoast/sale-of-house-to-maine-state-prison-warden-draws-more-questions/ printed on July 10, 2014