Friday, Nov. 21, 2008

Northwest District Asks Realty Company to Return $621K

Nancy Matocha

Staff Writer

The Northwest school district has requested a realty company return $621,500, alleging it improperly profited from the sale of 135 acres.

In a letter dated Oct. 30, the district’s attorney, Robert H. Roeder, accused Patterson & Associates Commercial Real Estate of acting "in an unprofessional and unethical manner" regarding the purchase of 135 acres of land by the district.

The undeveloped site on Highway 287 and Willow Springs Road, just south of Blue Mound Road, is the site of the district’s planned third high school and sixth middle school.

The letter further states, "you intentionally misled the District as to the status of your agency in this matter and participated in assisting a related entity, Crockett Capital, LLC, in achieving an unwarranted profit in excess of $621,500 at the expense of the District."

Crockett Capital is owned by Steve Patterson of Patterson & Associates. Patterson denies misleading the district and said he had been looking to buy the property for ten years, and put it under contract to extend the Willow Ridge development. "I didn’t set out to sell this to Northwest ISD," said Patterson. "For anybody to try to insinuate that I did it to try and flip to Northwest ISD, that’s unfair," Patterson said.

Northwest closed on the property March of 2008 at a purchase price of $4,673,600, or $34, 619 per acre. Crockett had a contract on the property from March 2007. "We disclosed that to them upfront before they ever put it under contract," said Patterson realtor Bruce Baucum, who brokered the deal.

What district officials later learned through an FBI investigation into both the district and realty company, is that Crockett had closed on the property that same week at $30,000 an acre. The investigation found no illegalities. Northwest had a seven-year relationship with Patterson & Associates through Baucum, a district resident and member of the district’s Long-Range Planning Committee. Reports from that committee are made public on the district Web site. District officials concede they were aware of the relationship between Crockett Capital and Patterson & Associates but say they are disappointed.

"In my opinion ... they might have thought it was just business as usual, but to us it felt like a betrayal and violation of trust to the district," Superintendent Karen G. Rue said.

There was no violation, according to the realty company. "They didn’t express interest in purchasing it until he [Patterson] had it under contract," Baucum said.

But district officials said the site was one of many they had looked at since voters passed a bond package in Oct. 2005.

Northwest ISD is the second fastest-growing district in Texas and the third largest, according to 2007-2008 figures. Currently operating 19 campuses, the district projects 114 campuses by 2027.

Dennis McCreary, assistant superintendent for planning, facilities and construction, said that this was the second land purchase from an entity related to Patterson & Associates. The other property was 10 acres in the adjacent Willow Ridge development, purchased in June, 2007 from BD Development which Baucum brokered, for $650,000. "We felt that we got a fair price there," McCreary said.

In the second purchase, the 135-acre property for the third high school, district officials relied on comparable land sales analyses provided by Baucum, but results from an independent appraiser hired by the district after the sale estimated surrounding comparable land at lower values, including the site for the high school, which the independent appraiser valued at $27,000 per acre.

"We feel from our past association we developed some trust, and betrayal is just a good summarization of how we feel, how I feel personally," McCreary said.

Rue concurred. "This particular sale in our opinion was not handled with the district’s best interest in mind and that led to the letter," she said.

Both officials say they remain pleased with the site of the third high school.

"One-hundred-acre-plus sites are difficult to find, and we want to make sure that we’ve got a situation that will serve a community that will be there in the future," McCreary said.

The district has severed ties with Patterson & Associates and plans to hire a broker dedicated solely to Northwest. All future land purchases will have an independent appraisal. "It’s worth it to give ourselves and our community peace of mind," McCreary said.

Patterson and Baucum hope to mend the broken ties. "We’re going to respond to the letter," Baucum said. "We’d like to meet with them. I think once they have all the information, that we’ll resolve it."