Hosed in Housing

Look what happens when the city attempts to get into residential real estate

It's been five years, and Dr. William Deeming is still waiting to hear from the city of Tucson about purchasing his home on Dodge Boulevard. The 83-year old dentist also can't believe the money the municipality lost on the house next door.

Deeming's plight began when nearby El Con Mall decided to expand by adding big-box stores such as The Home Depot. To reduce the traffic impacts of this new development, the City Council voted to close two of the three Fifth Street mall entrances, leaving Dodge Boulevard open. That meant Deeming and his two neighbors would be facing significantly increased traffic.

Deeming heard the mall owners were going to pay $400,000 for his 3,500-square-foot home and office, where he still practices three days a week. Deeming says $400,000 was also to be paid by the mall for the 6,000 square foot home to his south, an amount he remembers the owners quickly accepting, since they had been asking $350,000 for the property.

But before the transactions were finalized, as part of a comprehensive El Con mitigation plan, the council decided the city, not the mall, would offer to acquire the three homes. It had appraisals done by different contract professionals, and while Deeming's home was valued at $250,000, the one next door came in at $515,000.

Deeming was dumbfounded by the difference. The two lots, he points out, are mirror images, but his was valued at $50,000 while his neighbor's was priced at twice that. Plus, Deeming indicates, numerous other mistakes were made by his appraiser, who he labels "incompetent."

While the city's proposal of $500,000--$100,000 more than the mall reportedly was going to pay--for the house next door was quickly accepted, Deeming believes he was never even given an offer. He was shown the appraisal for his home, an effort city employees thought was sufficient, but Deeming didn't (See "Can't Get Out of Dodge," May 30, 2002).

Instead of selling outright, Deeming was interested in talking about a sale which would allow him and his invalid wife to remain in the home, but no negotiations to purchase his property ever occurred.

Meanwhile, after acquiring the large, rambling home next to Deeming's, the city offered it for sale--but no one was interested until La Frontera Behavioral Health Center looked at it for use as a group home. Once that $460,000 transaction fell through because of zoning problems, the city had the property reappraised. The second valuation was for $305,000. That's close to the price the house finally sold for in early 2003, after a public bidding process.

But that didn't end the city's financial obligations. There were structural and other problems with the house, and the city ended by paying $51,000 to fix those.

Thus, in the end, taxpayers lost a quarter of a million dollars on that house.

At the same time, upset by his dealings with city employees, Deeming turned to the City Council for assistance. But he got no satisfaction from them, and he was told the case was closed.

Despite that, he persisted, and complained to the Arizona Board of Appraisal about how his house had been valued. As a result, a letter of remedial action was issued against the appraiser of Deeming's home.

Deeming also researched city real estate regulations, and found the written policy requires two appraisals, "when the estimated value of the property exceeds $250,000 ... ." For the house next to his, Deeming stresses, that was not done when the house was bought or sold.

"The decision on two reports can be waived if it makes good sense," replies John Updike, director of the city's Real Estate Division. Updike, who was not with the division when the earlier events occurred, also points out a second appraisal for $475,000 had been done for a lending company shortly before the city got involved with the home.

Explaining the drop in price for the house, Tim Murphy, special projects coordinator in the Real Estate Division, says: "The second appraisal (done before the house was sold by the city) reflected the lack of market for it." Plus, he adds, "Clearly, we paid too much to begin with."

Instead of selling the house at a sizable loss, should the city have held on to it and let Tucson's zooming real estate prices catch up? After all, in the past several months, the few homes which have sold in the small subdivision just to the west have gone for between $119 and $149 per square foot.

Updike doesn't believe waiting would have been worthwhile. There were expensive maintenance issues with the property, he says, adding: "Given the size of the home, I don't see us making much more."

For his part, Dr. Deeming is still waiting to hear from the city of Tucson about purchasing his home. While he waits, he believes the situation on Dodge has become much worse.

"The traffic is getting obnoxious," he says. "I can't believe the cups, used diapers and cigarette butts that have to be cleaned up every day.

"I honestly don't know where to go from here," Deeming continues. "I'm so mad at the city. I want equitable treatment from them, but I've talked to five or six attorneys and, without exception, they've told me I have a good case, but can't win."

In conclusion, he says: "The lesson I learned is you can't trust city officials to do as they should."

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