BATH, Maine — Residents at Wednesday’s City Council meeting spoke out against the way a city-owned building was sold this spring, questioning the openness of the process and the amount of the sale.

The council also unanimously approved a $14.6 million municipal budget for fiscal 2014, which reflects a nearly 5 percent increase over the current year.

Larry Scott of Washington Street told the council he has questioned why the city sold the Mid Coast Center for Higher Education for nearly $800,000, while its assessed value is $6.5 million, according to the city’s online database.

“I don’t understand why you feel I’m not entitled to any answers,” he said, noting that he had reached out to the city manager’s office, councilors and the property realtor. “We are a society where our elected officials and employees are not above the citizenry. … Deals done in closed executive session, with no public knowledge, sounds so un-American to me.”

The council in April had unanimously approved the sale of the Park Street building to Robert Smith of Phippsburg. Smith has purchased and improved several properties around Bath, according to City Manager Bill Giroux.

Tenants at the Mid Coast Center on Park Street, owned by the city for about a decade and formerly a hospital, include University College.

“The city has a duty to get the best price it can when it sells property for commercial purposes,” said Michael Wischkaemper of York Street. “This sale violates that principle. You can’t get the best price for a large commercial property like this with a secret, private sale.”

He noted that the property had never been put on the real estate Multiple Listing Service, and said there was no reason that information such as the asking price had to be secret until the sale was completed.

“One reason city decisions like this must be in public is that it gives the public the opportunity to comment,” Wischkaemper said. “It gives the opportunity for City Council people to maybe hear other opinions.”

Scott said, “I am not saying that the building shouldn’t have been sold, and I’m not saying that the price is wrong. I’m only saying that you will never know if the price is wrong.”

The property had been listed with a Realtor, and the city got a full-value offer from Smith six days later, according to Giroux. Part of the offer was that the property would not be advertised until the City Council had a chance, soon afterward, to consider the matter, the manager explained.

“We bought it [from Mid Coast Hospital] for $1; we sold it for $799,000,” Giroux said Wednesday morning. He also noted that “the tenant situation at the Mid Coast Center is not stable right now. Providence [Service] Corp. is leaving, and the other major tenants have gone to short-term leases.”

Paul Mateosian, Bath’s assessor and assistant city manager, said Wednesday that the value on tax-exempt properties is an irrelevant number. He noted that the value listed in the database for that 1910 property is a “cost-approach number,” based on what it would cost to build a hospital that size, minus depreciation, and is not intended to reflect what the sale value would be.

That former hospital has been reutilized as a rental property, and its expenses have exceeded income during much of the time the city has owned it, Mateosian explained. He pointed out that a property like the Mid Coast Center, with an unstable tenant situation, would be capitalized at a higher rate than a parcel with a stronger income stream, causing the value to be lower.

Councilor Mari Eosco said the city does not want to be a landlord, noting that it tried to sell the property several years ago, “and it was over a million then, and nobody touched it.”

“I certainly acknowledge that this could have been done differently,” Councilor Meadow Rue Merrill said, adding that she wished “we had taken more time to address this.”

But she said that “just because the information wasn’t as available as someone would like” does not make that information secret.

Merrill suggested the council enact a policy that all commercial city property be appraised by an independent appraiser prior to any sale. She said after the meeting that the council’s Economic Development Committee later this month will discuss the process through which city buildings are appraised, how the public is given notice of a possible sale, and the timing from when a property is listed to when it is sold.

Councilor David Sinclair said the panel needs “to move from our present posture of defensiveness and adversity in response to any requests for information, and instead embrace them; embrace those requests as an opportunity to engage more with our constituents. … I hope that my colleagues on the council will join me in helping to direct a better response to further requests for information … pertaining to the things that we’re doing for [constituents].”

Budget approval

The council also unanimously approved a $14.6 million municipal budget for fiscal 2014, which reflects a nearly 5 percent increase over the current year.

The city spending plan reflects an approximately $300,000 increase over the current year. Of that amount, $7.4 million could come from taxes, a 1.4 percent hike.

The bulk of the increase is due to rising operating costs, according to the city’s fiscal 2014 budget message.

Included in those expenses are West Bath’s lawsuit against Regional School Unit 1. West Bath is suing the district to recover $1.9 million the town says it overpaid in the first four years of the school district’s existence, and Bath has joined RSU 1 in its defense of the lawsuit.

Other expenses include health insurance and increased costs of fuel and salt at the Public Works Department. Those expenses are offset by reductions in general liability, workers’ compensation and debt service, according to the city.

Meanwhile, Sagadahoc County taxes could increase nearly half a percent, to $1.65 million, while Bath’s payment to RSU 1 is to increase 3.1 percent, to $9.1 million. Those hikes could result in an overall Bath tax increase of nearly 5 percent, to reach $18.16 million.