New developments have emerged involving the the purchase of a small piece of land in Maggie Valley by the town for a park.
Alderman Phil Aldridge made $6,500 in commission for acting as the town’s real estate agent in the deal. In general, it is considered a conflict of interest for a public official to profit off a contract with the body they serve. A little-known exception applies to towns with a population under 15,000, which Aldridge was able to utilize.
But Aldridge may have crossed the line when he spoke in favor of buying the land during the town board’s deliberations.
According to state law, a public official using the 15,000 loophole to do business with the body they serve cannot “deliberate or vote on the contract or attempt to influence any other person” involved in the vote or “participate in any way.”
The town board held a special meeting to talk about whether to buy the land last October. According to the minutes from that meeting, Aldridge left the room when the rest of the board discussed whether the town could and should hire him to act as their real estate agent. When Aldridge came back in to the room, he shared his opinion about buying the property.
“Alderman Aldridge stated that he was reluctant to purchase the property at first because he had concerns about the effect it would have on the taxpayers and the improvements to the festival grounds. After further consideration, Alderman Aldridge realized that this could be the last time the Town has the opportunity to purchase land adjacent to Jonathan Creek for a public park,” according to the minutes.
The board had not yet voted, and it is unclear whether those statements qualify Aldridge as participating in the deliberations, which is barred by law.
Making use of the loophole
Some have questioned whether it was appropriate for Aldridge to take advantage of the 15,000 loophole in the first place. The small-town provision is intended for a scenario when an elected official owns the only business in town that provides a needed service, and it would pose a major inconvience for the town to seek that service from outside the area.
Every town west of Asheville could technically utilize the loophole, but most elected or appointed officials don’t. Just recently, Sam McCrary, who serves on the Maggie ABC board, acted as the town’s real estate agent in the purchase of land for a new ABC store. In that scenario, McCrary did not accept commission from the deal.
“No, absolutely not,” McCrary said. McCrary said he did not take commission “because of a conflict of interest from serving on the ABC board.”
In the town board’s eyes, however, Aldridge was a logical choice. The town needed someone who could act quickly since another offer for the property was pending.
“Alderman (Mark) DeMeola felt that Alderman Aldridge could represent the Town if he is removed from all aspects of any action decided. Alderman (Saralyn) Price agreed, adding that it would be difficult to select a realtor from all the realtors within the Maggie Valley area,” the minutes from the meeting read.
The board made a point of noting that Aldridge’s commission would come out of the selling price, and wouldn’t really cost the town anything extra. Wording to that effect was included in the town’s resolution to buy the property.
But it’s not exactly accurate, according to Joann Lyons, a Realtor with Maggie Valley Properties. If Aldridge had left his portion of the commission on the table, it would have reduced the selling price and saved the town money. Lyons said there are several Realtors in Maggie Valley who would have done the transaction for the town pro bono.
“Upon my brokers approval I would have been more than happy to have helped them and not charged the town anything,” Lyons said. “Several of us would have been happy to do that for the town. We pay town taxes so we would have been happy to save the town the money.”
How did the town find out?
Another recent development in the story comes from a would-be buyer of the same property who was preempted by the town with a slightly higher offer. Mike Gaddis, a developer from Maryville, said the sellers had verbally accepted his offer of $125,000. The paperwork had been faxed to the sellers and was expected to be returned within a couple of days, Gaddis said.
In the meantime, the Maggie town board found out the sellers were considering an offer of $125,000. They called a special meeting, hired Aldridge as their real estate agent and told him to make the sellers an offer of $130,000. The town had the property under contract the next day.
“I was very upset,” Gaddis said. “It is kind of bizarre how they knew what I was offering for it. That is supposed to be confidential.”
Tim Barth, the Maggie Valley town manager, said the town’s timing was just a lucky coincidence on their part. Barth said the town learned through casual conversation that the sellers were considering an offer of $125,000 — much less than the initial asking price — and called a special meeting to discuss it.
“We decided if somebody had made an offer of $125,000 and it was seriously being considered that we might be interested,” Barth said. “We didn’t know if there was a sale pending or how close the sale was.” Barth said he can’t remember who told the town about the $125,000 offer on the table.
On another front, Gaddis said his intentions for the property were misunderstood. In a memo to the town board, Barth wrote: “If the town does not buy the property there is no guarantee what might get built on the property. There has been mention of a 27-foot-tall ice cream cone shaped structure being built on the property and that they would sell ice-cream out of it.”
Gaddis said they had the wrong guy.
“I’ve never been in the ice-cream business and don’t want to be in the ice-cream business,” Gaddis said.
Gaddis said he planned to build a professional office on the property and had already had engineers look at it.
Apparently another potential buyer interested in the property several months earlier had broached the idea of an ice-cream stand, but never made a real offer and was unconnected with Gaddis.