Flip this property back and forth: D’Iberville does another real estate deal (get ready to grab yer ankles)

But first some lovely dance music:

D’Iberville agrees to sell Ocean Expo land in whale of a deal ~ Mary Perez

And Mary invokes Rube Goldberg which in turn got my radar up – well that and the fact the buyer of the old Ocean Expo land is the company that sold it to the City to begin with:

An additional research source is the D’Iberville Comprehensive Financial Report Fiscal Year Ended September 30, 2011. A 123 page pdf; but those interested in the Ocean Expo/Ramco Developments, LLC mentions can go directly to pages 57 and 65.

The linked report states
” In June 2011, the City entered into an agreement with Ramco Development(sic), LLC to purchase approximately 6.5 acres to subsequently lease to the Institute for Marine Mammals, Inc. for the construction of the Ocean Expo Learning Center. The land was purchased in the amount of $6,969,600. The City issued special obligation bonds in the amount of $4,500,000 as described in note 6. The City also issued a promissory note in the amount of $2,469,600 to Ramco Development(sic),LLC which is secured by an assignment of lease. The City has agreed to assign and to set over to Ramco Development(sic), LLC, 75% of the City’s $1 per patron lease payment as provided in the lease agreement with the Institute for Marine Mammals, Inc. Any outstanding balance on the promissory note will be due and payable in full on or before June 2031.

Let’s do some basic math and see where the raw numbers take us:

6,969,600/6.5 = $1,072,246 (Price per acre paid to RAMCO for the Ocean Expo Site)

7,600,000/8 = $950,000 (Price per acre D’Iberville will receive from RAMCO if RAMCO exercises option to purchase)

Sweet deal. The City uses the fact that RAMCO will open a new auto dealership as justification for the $2MM in tax increment financing the City will incur but I disagree. If the market is there for a new auto dealership then I trust in the marketplace to meet the need. Instead we have the City seeding a private business in one heck of a real estate deal for that private business from outward appearances. How about some more math:

6.5 Acres sold by RAMCO to City in 2011 * (1,072,246-950,000) = $794,599 gain on the property flip by RAMCO.

If I were a citizen there in D’Iberville I’d do my level best to get the City out of the real estate business since that is the taxpayers that are getting stuck with the tab for all of these money losing real estate transactions.

14 thoughts on “Flip this property back and forth: D’Iberville does another real estate deal (get ready to grab yer ankles)”

  1. Hang on a sec. Based on what the story reports, I don’t see anything blatantly wrong on the face of this (there may be something very wrong, however). First, is it 7.6 acres or 8 acres – the story uses both. And whether it is 7.6 or 8, what is the extra land worth? What is the original 6.5 or whatever acres worth TODAY? If the extra acreage above and beyond the original 6.5 is only worth 600,000.00, and the 6.5 is worth what it was sold to the city for, then $7.6 mil is a commercially-reasonable sale (and gets the city out of a land deal they probably should not have ever been in AND with no loss). With interstate-frontage commercial property, you cannot (necessarily) divide the number of acres by the dollar amount as you (usually) can with, for example, a 160 acre farm with all acres more or less equal to one another or in a subdivision with all lots being more or less equal.

    For example, imagine a parcel 1 acre wide and 8 acres deep, with the “front acre” fronting the interstate and the “back acre” being all but useless commercially, with the middle acres decreasing in value as they recede from the interstate. In such a scenario, the “value” of the front acre might be 2-3 mil and the back acre worth nearly nothing (or even a practical-standpoint financial detriment – it has no commercial value, but there are taxes, upkeep, maybe even fencing/lighting/security, liability issues, etc.). Granted, that is pretty unusual example, but the fact remains that there are many factors in commercial land value besides “number of acres” that may make this a totally fair, legit deal for buyer and seller.

    1. I agree that there are many drivers of commercial land value – new interstate exchanges and the access it grants are major enhancers of value none of which existed when the City overpaid RAMCO for the original parcel.

      That said we are essentially comparing the same piece of property, buyers and sellers and yes, RAMCO has gotten a steal courtesy of the taxpayers.

      1. How so? The original parcel was 6.5 acres for a little under 7 mil (not all cash) and the current sale is for 8 acres for 7.6 mil cash. It is not essentially the same parcel, the same amount or remotely the same terms. What is the value of the additional acreage? And assuming that the city did overpay when they paid the 7 mil for the 6.5 acres, they are getting all or most of it back – in cash – from the guy they allegedly overpaid on paper, but who took a 2.5 mil assignment against the admission revenue for an attraction that never opened (which will probably get dealt with in the sale closing). I’m not defending the transaction because I don’t know all the specifics and the article doesn’t give any relevant information, but for the same reason, I’m not going to agree, on the limited information, that it is improper, either. Also, I don’t see how the taxpayers are on the hook for anything unless the TIF goes unpaid, but since the land deal is cash and the TIF covers construction financing on two car dealerships, it seems unlikely that Mandal will bail before the TIF pays out – but I don’t anything about the guy, his business or his balance sheet. Does anyone know if all that other shopping, esp. Walmart and Target, or whatever else in that area, got any TIF districting, and if so, how it has played out so far?

        As to the access, comparing the two usages – a marine center/aquarium/Sea World wannabe and two car dealerships, both destination-type entities – as well as what appears to be the overall drastic increase in congestion in the area (in my admittedly limited personal experience with it, combined with hearing from friends in the area), I would bet that an extra interstate on/off ramp won’t mean much one way or the other as to the value of the frontage portion for such usage.

        1. 6.5 of the 7.6 acres are identical Nunn and that 1.1 acre must adjoin the original parcel, all conveniently located by a brand new interstate exchange. My experience has been that major roads and improvements greatly enhance commercial and industrial property values. I never said the deal was improper but I am saying Mandal got himself one heckuva good deal. He is a businessman and that is what good businessmen do after all.

          To the extent that Mississippi local politics is a few smart folks leading the others around by their noses is the exact reason these type of money losing deals for the taxpayers get cut time and again, with D’Iberville seemingly the worst offender when it comes to real estate speculation. Mr. Mandal is clearly one of the smart ones and he is to be commended for that. If he doesn’t like the exposure he should stick to doing real estate deals with private citizens.

          1. I guess I still don’t see the “taxpayer” aspect to this, at least not directly. First, all I know about this deal is what has been reported above and in the story you linked. I’d never heard of Mandal or his car dealership(s) before and know nothing at all about him or his dealings. But here is what the story seems to indicate: he sold 6.5 acres of land to the city for 4.5 mil in cash and held a note, secured by the 1.00 per admission “levy” the city was to get, with only that paying the note until it was paid or until 2031, when any remaining balance came due. Now, he’s buying back the 6.5 acres plus an additional amount (somewhere around 1.5 acres) for 7.6 mil. I’d guess, but don’t know because it was not stated, that the note will get addressed in the closing, so the city will get roughly 5.1 mil in cash and it will have to address the 4.5 mil bond it used to buy the 6.5 acres, leaving the city with at least 600K in cash. I think all would agree on that part.

            My questions remain. What is the current market value of the not only the original 6.5 acres sold, but also the additional 1.5 or so acres? From what the story said, the city’s only other offers were for 6.5 mil and an offer to auction the land. An auction was not only risky, it was unlikely to produce a new buyer who would offer more than the two cash offers (Mandal’s and the 6.5 mil), and likely as not, an auction would result in less than either – it would have to result in a sale of 7.6 mil plus the costs of the auction. That seems unlikely. Even if Mandal had bid up to the 7.6 mil and won with that, the auction costs would have reduced the city’s net – it would have taken 8 mil plus for the city to net the 7.6 mil.

            From what I can tell from the limited information, the only place there might be some mischief is in the buying of the old dealership, moving the city department (public works or whatever) over to it, etc., etc. But without more info, that seems legit IF – IF – the city does need the space. I have no idea. On the other hand, if this had been a completely private deal where Mandal bought the land from a private owner, presumably the old dealership location would have been vacant and for sale anyway. There’s nothing wrong with someone getting a benefit from a public deal; if there was no (honest) profit to be made from a “public” contract, no (honest) bidders would bid. It is when something is “rigged” in some way that causes the problem. If this was a mutually beneficial deal for the taxpayers of the city and Mandal, more power to them all.

            On a personal note, I believe the area in question is where the Target and Walmart shopping centers are and yet another one is going in. If so, that is on the route from Jackson to Biloxi. We made the mistake of stopping in that mess for a “quick” burger. It would have been quicker and less stressful to stop a couple of miles north of there, buy a cow and a piece of land (where it would have been much cheaper, I’m sure), built my own restaurant, slaughtered the cow, cooked some burgers, torn down the restaurant and relisted the land. And if I were a resident in the middle of all of that, I’d say that it was fine by me if Mandal stole a little something for himself as long as he didn’t build yet another traffic snarl-slash-shopping center clusterflock (purely humor – I’m not condoning theft).

            Seriously, though, that does bring up what might be a relevant point. Will that area support all of that shopping/dining without cannibalizing its own? At some point, there is only so much “shopping/dining dollars” to be spent in and from the immediate area, so all that might happen is that the sales tax revenue will remain the same, just spread ever more thinly among the increasing multitude of stores. I can’t imagine folks in other areas of the coast driving past 3 or 4 other Walmarts to get to that one (or 42 other restaurants, etc.). However, a couple of car dealerships will bring in regional money. In other words, it’ll take sales dollars from Biloxi, Gulfport, etc., about which I’m sure d’Iberville is gleefully unconcerned.

            1. My questions remain. What is the current market value of the not only the original 6.5 acres sold, but also the additional 1.5 or so acres? From what the story said, the city’s only other offers were for 6.5 mil and an offer to auction the land. An auction was not only risky, it was unlikely to produce a new buyer who would offer more than the two cash offers (Mandal’s and the 6.5 mil), and likely as not, an auction would result in less than either

              I think that is the root of my heartburn. Either the city overpaid up front (likely) or its underselling on the back end (far less likely). Either way the cast of characters is largely the same.

              And yes, that new shopping corridor is cannibalizing the existing retail. As I recall the SUn Herald did a story that touched upon that in the last year or so.

              I do not think RAMCO had any role in the IMMS disaster except for being the lucky property owner that won the Walker family lobbying lottery. I think it is likely he is simply taking advantage of the City’s current predicament to get the land back given the lack of offers. All that said I do not trust Fred Hornsby because unlike Mr. Mandal he was in neck deep with Scott Walker.



  2. Some areas in which both the buyer and the seller are saving money are sales commissions,finder fees and consulting fees not being paid to the Walkers this time around. If all remember Ocean Expo was in the final stages of locating in the City of Biloxi on Back Bay. The property was being contributed at no cost to the city and salt water did not have to be piped 3 miles. Then the Walkers became involved. Scott Walker was first employed as a consultant by Moby Solami. Ocean Expo then changed locations, the City of D’Iberville spent millions, Sharon “GOT GRANTS” Walker was hired by IMMS, Bill Walker signed off on everything needed and collectively the Walkers were paid $$$$? Maybe the City of D’Iberville got what they deserved. But as always the taxpayers get the to pay for the mistakes made by the pollute-ticians. Always the same show in a different location.

  3. To this day I am still amazed on how Rusty Quave has not been dragged into some mess in some shape or fashion. I could be offbeat but he is the Mayor of D’Iberville who worked on contract for the DMR during WalkerGate, he was the mayor when the Janus/Walker Jr. ordeal broke loose, and he was the mayor during the Expo fiasco which have all occurred quite recently.

    Land Scam brought up an interesting point by stating the site was changed from Biloxi to D’Iberville. I am not familiar with this situation but if true, it should make people wonder due to the DMR/IMMS/Marine connection and the fact that D’Iberville is doing their level best to provide avenues for the generation of sales tax. This can be seen by way of an overpopulation of retail services that the coast cannot realistically support and sustain IMHO

    Land Scam–You also mentioned GRANTS–do you care to elaborate as I have heard of many shifty rumors pertaining to the way grants were wrote and handed out at the DMR–dirty little secrets perhaps. 😉

    Maybe a new auto dealership wouldn’t be so bad. I am thinking Audi, BMW or Volvo would be a good touch…………..

    1. Those luxury brands require larger consumer markets than the one here on the coast. The line we do not have and could support is Subaru.

      1. Yes that is true but we to have a Benz dealer that moved in. Perhaps they did that to provide support for the Princess Trinity Walker. 😉

        Doug, you would look good rooling around in a BMW 7 series equipped “wit 22’s”. Hehe. 😉

  4. The entire time I was reading Doug’s post, the comments, and writing my previous comment I could not get the name Bob Mandel out of my head. Then, I read the story on the SH and sure enough, the name was listed. Coincidence, I think not.

    An auto dealership not operating in South MS? I wonder what it could be. I wish Mandal Auto luck after their attempt to operate as a VW dealer. I have a warm history with these cats.

    In turn, I noticed that the public works department will be operating out of the current dealership site which will be bought by the city.

    Insider deal? Hmmmmmm…..Sorry Rusty, but I just don’t buy story that your not involved with this shit. That’s my personal opinion anyway.

    1. OK, the replies so far seem to hint at some inside knowledge that this Mandal guy is hinkey. Does anyone care to share their thoughts on why? I’d never heard of him and don’t recall hearing anything about him, good bad or otherwise. I can’t recall even hearing his name mentioned in any context. And while I will not go to far into things, I hear a lot stuff about a lot of folks down on the coast.

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