Read the full
text of Mike
Burton's letter to WW and two other online
responses to the article.
"He says he's going to sue you. He says you've got a bad
reputation. He says your facts are just wrong. So tell me,
what's your response?"
That was Ervin Flick, an outraged taxpayer calling our
offices last week to relate his conversation with Mike
Burton, Metro's elected executive. Flick had read WW's
cover story raising questions about purchases made by
Metro's greenspace program ("Green
Acres," WW, Feb. 2, 2000) and called Burton
to urge him to resign.
Interestingly, Burton began discounting the cover story
even before it hit the streets. On Jan. 31, he sent an
e-mail alerting Metro employees to the imminent publication
of the article. "Inaccurate story on open spaces in this
week's Willamette Week," it said. "From the questions
the reporter and editor asked our staff and others, it's
clear the basis for the story is way off the mark."
The day the article appeared, Metro posted a rebuttal
on its Web site presenting "14 facts" about the greenspace
program and its explanation for three of the transactions
detailed by WW.
The next day, Metro officials sharpened their attack.
Internally, buttons and posters were distributed at Metro's
offices on 600 NE Grand Ave., proclaiming, "Willamette
Week is Yesterday's News. Open Spaces are Forever." Burton,
for his part, posted a letter to WW on Metro's
Web site, saying the examples of transactions used in
the article were "oversimplified and distorted."
Council member David Bragdon, Metro's presiding officer,
shared some of Burton's criticism, saying the article
was "probably about four years too late and pretty exaggerated."
"I understand there may have been some problems when
they were first starting out," Bragdon said, "but I think
it's a program that's very well run. All the examples
that you gave have been explained very justifiably to
me by the staff."
Others were not so harsh. Former Gresham Mayor Gussie
McRoberts, while noting that her experience with Metro's
greenspace program was positive, left WW a voicemail
calling it an "excellent article" and saying, "I thought
it was terrific."
Of all the critics, Burton was the most specific. "You
'cherry picked' the highlighted transactions and then
misrepresented and omitted facts that we provided to your
reporter," he wrote in his letter. Of the six specific
purchases WW mentioned in its article, Burton responded
to two:
"The article reports that the Canemah Bluff property
was acquired for $713,000 and sold to Metro for $2.85
million 18 months later," he wrote. "Omitted is the critical
fact that, during the interim, the owner was able to secure
approval for a 136-lot subdivision. Obviously, this land-use
decision increases the value of the land considerably."
Burton is correct that the subdivision approval boosted
the value of the land. However, it did so by only $4,500
per lot, or $612,000 total, according to the Metro appraisal.
In other words, the subdivision approval explains less
than one-third of the $2.13 million difference between
Metro's price and what the seller, Don Oakley, paid 18
months earlier.
Burton also says that WW ignored "the independent
appraisal that concluded the property's value to be $3
million...." That appraisal, however, considered 41 acres
of land, not the 39 Metro ended up buying.
Burton didn't address the fact, cited in the article,
that Oakley submitted detailed calculations to Metro to
justify what he asserted the property would be worth after
it was approved and fully developed. That figure was $2.284
million--$716,000 less than Metro's appraisal figure.
The second purchase that Burton defended was 148 acres
along Multnomah Channel. Charles and Connie Hegele bought
it for $300,000 in 1993 and sold it to Metro for $750,000
four years later.
"Conveniently missing from your so-called thorough five-week
review," wrote Burton, "is any mention of the seller's
appraisal that came in at $1.16 million and the two documented
competing offers for $800,000 each."
Indeed, the sellers had their own appraisal done, but
two other appraisers looking at the same land, one for
Metro and one for the Nature Conservancy, valued the land
for much less. To justify their asking price, the Hegeles
also cited two identical offers that were tendered in
the midst of negotiations with Metro. Appraisers, however,
are typically suspicious of such offers and discount their
import. In fact, the Metro appraiser's final value of
$650,000 specifically took the offers into account and
used them to raise the appraisal only $50,000 from his
original conclusion.
Metro's Web posting took issue with a third transaction
reported by WW. In that case Metro hired an appraiser
to look at 3.3 acres owned by Nicky Miller and Rob Norvich
in a city environmental-protection zone that banned development.
After consulting with city planner Duncan Brown, the appraiser
concluded that the zone could be lifted and valued the
property at $37,000, assuming a potential for one homesite.
The seller, however, wanted more, and Metro's appraiser
was directed to redo the appraisal on the basis of a letter
Brown wrote after meeting with Metro staff and a deputy
city attorney. The Metro Web posting characterized Brown's
letter as saying "the city would be likely to approve
the development of anywhere from 3-12 new housing units
on the site."
The planner's letter, however, does not say this. It
says the city "may consider changing all or a portion
of the EP Overlay," which would open the door to three
home sites. But that change would not necessarily pave
the way for 12 homesites, as Metro implies. As Metro's
own memos and appraisals show, getting any more than three
homes built would require city approval of a subdivision
application, a dicey proposition because of opposition
of neighbors and environmentalists.
In addition to defending some of the purchases WW
questioned, Burton, in his Feb. 3 letter, wrote that the
article omitted "information about the appraisal process,
how it works and how different appraisers can reach different
conclusions even when both are ethical professionals."
It's true that appraisers can legitimately disagree on
value. Such disagreements often occur when appraisers
approach situations of uncertainty with different assumptions
that either boost or lower value (for example, whether
a local government will allow or deny development). Under
professional standards, these are supposed to be highlighted
in the appraisal, so any buyer or seller reading the report
can adjust the price based on their belief as to whether
the assumption is valid.
In documents reviewed by WW, however, Metro does
not adjust its price for uncertainty. Instead, officials
frequently employed assumptions that favored the seller,
in some cases at the specific direction of Metro, ignoring
the buyer's risk that such assumptions might not be borne
out. By contrast, many appraisers take risk and uncertainty
into account, since in the real world that's what most
buyers do.
"Risk factors are a big factor in doing the analysis
of a property," said Roger Hanna, a Portland appraiser
who has worked for Metro and other public agencies, when
asked about an appraisal he did of land near Beaverton
that may be acquired using Metro funds. "I think it would
be a mistake for appraisers to ignore what I describe
as market risk--and the reason I say that is because I
think most developers don't ignore market risks."
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Willamette Week | originally
published February 9,
2000
