The former owners of a downtown building made a $245,000 profit after a controversial no-bid purchase of a warehouse and almost a block’s worth of land from the city of Mobile earlier this year, according to City Council attorney Wanda Cochran.
A series of notes from Cochran to Councilwoman Bess Rich obtained by Lagniappe confirm the owners of 650 St. Anthony St. sold the building in August for $500,000, after finalizing a sale between themselves and the city for the sale of the same property for $255,000 in June.
Matt Zarzour, a former co-owner of the building and current co-owner of the Gulf Coast Ducks, along with his brother Grant Zarzour, said they were looking for opportunities to lease space in the building and were approached by the owners of Port City Pups. Zarzour said Port City Pups ownership had interest in buying the building outright and so they sold it to them and agreed to lease back a portion of the building for the Ducks.
Lagniappe raised questions when it was discovered in March that the city used a 2015 Courtney & Morris appraisal to value the property for the 2019 sale. At the time, city spokesman George Talbot said the appraisal was completed because the city got an offer on the property four years ago. There has since been considerable development along St. Louis Street, just a block away.
The Zarzour’s company Activation Maintenance had a lease on the city warehouse they were using to house duck boats, and that contract contained a “right of first refusal,” meaning they could purchase the property without it being advertised or going out for public bid, which is standard for the sale of city property. The only public notification of the sale came at a late December 2018 City Council meeting held in Old City Hall, when the council approved the deal.
Prices for comparable downtown property seemed to indicate the city’s asking price for 650 St. Anthony was low. However, a professional appraiser and a broker who both spoke to Lagniappe earlier this year confirmed the price was about right. But just two months later the property sold for twice the appraisal value.
The city is now interested in subleasing a portion of the building from the Gulf Coast Ducks ownership for more than $300 per month to store two of the city’s Mardi Gras floats, which is what brought the issue to the attention of Cochran and Rich.
At a pre-conference meeting Tuesday, Rich questioned the deal and asked who the city would be paying, the Zarzours or the new owners of the building listed as an entity called Doux Maison Enterprises LLC.
“Who has the sublease, is it the new owners?” she asked.
She also questioned why the city couldn’t store the floats in another municipal building.
“I had the same question,” said Executive Director of Public Works Jim DeLapp. “At one facility, the doors were not tall enough … and at one the doors were not quite wide enough.”
Michelle Melton, deputy director of real estate asset management, told Rich the sublease was on a portion of the property the Gulf Coast Ducks currently leases from the new owners.
Given that there is not another city-owned facility big enough to house the floats, Rich questioned why the city would sell the property in the first place.
“I’m concerned from the standpoint that we gave it up as no longer needed,” she said of the building. “We could’ve reserved a portion of it if we needed it, but we decided it was totally not needed. That’s the only way we can sell property.”
By council rules the sublease issue will be delayed until the council’s next regular meeting scheduled for Wednesday, Oct. 30, at 12:30 p.m. At the same meeting, councilors are expected to vote on a new non-exclusive lease agreement that would allow the Ducks to use a city-owned boat ramp near the Arthur R. Outlaw Convention Center for $500 per month.
In comments made during the council’s regular meeting, Rich said she had asked colleagues to hold off on voting on the budget until she got back from a vacation she had scheduled months ago. Council President Levon Manzie, instead, called a meeting for Thursday, Oct. 17.
Rich said she had received an opinion from Cochran telling councilors they couldn’t vote on the issues in a special meeting that had been delayed from a regular meeting. Manzie said he had received a conflicting opinion from Cochran, and with only hours to spare before the special meeting did Cochran change her opinion. The council also received guidance from City Attorney Ricardo Woods saying they could legally vote on the issues due to state law.
Rich said she has issues with Woods giving opinions to the council, given that he’s represented Mayor Sandy Stimpson in the legal issues against the council.
The council is expected to vote next week on a $14,000 contract that would begin a city investment in improving the rigging at the Mobile Civic Center. The contract with Barter & Associates is for a rigging analysis of the building.
SMG, the company in charge of managing the Civic Center, along with other Mobile venues, has stated the current rigging at the arena is not large enough to accommodate modern lights and sound systems. An upgrade to the rigging’s weight threshold could help the company attract bigger, more modern acts to the arena.
As for a Civic Center redevelopment update, Talbot said the city has been in contact with The Cordish Companies in reference to a smaller “Live!” that would accommodate a refurbished arena.
“The ball is in their hands,” he said. “They are taking a lot of the information we gave them and are putting together a concept.”
Stimpson reported to the council and the public on his recent trip to Havana, Cuba, one of Mobile’s sister cities. He said he went with a delegation from Mobile to help celebrate the Cuban city’s 500th birthday. City officials placed a plaque on a statue of Pierre Le Moyne d’Iberville in Havana that faces Mobile. It corresponds with a statue of d’Iberville near Cooper Riverside Park, which faces Cuba.
City officials also placed a historic marker in Havana, which highlights Mobile’s connection to bringing baseball to Cuba. In 1864 three Cuban men, two of whom were brothers, left Spring Hill College with the island’s first baseball and bat, Stimpson said.
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