holiday blogging lovely home
Two prominent Gainesville real estate agents were at the center of a controversial school board land deal – the first major purchase funded by a new half-cent sales tax – that resulted in the district buying a property last year for twice as much money as the land sold in late 2018, according to interviews and a review of hundreds of pages of emails and documents.
The interviews, emails and documents show that the agents worked to increase the sale price of the property despite some school board officials believing the agents represented Alachua County Public Schools. One message between the two agents described efforts to “sway the # up as much as possible” increasing the cost to county taxpayers by millions of dollars – and raising the total commission payments they collected on the deal.
Those efforts occurred one day before the agents formally signed an agreement to work on behalf of the school board.
Fresh Take Florida’s two-month investigation into the deal also revealed that it largely circumvented oversight from a committee specifically tasked with monitoring the use of funds stemming from a half-cent education sales tax, which county officials pitched to voters as a way to fund improvements at existing schools and pay for new properties and construction.
More:Sworn complaints filed in case involving Bosshardt, Colliers International
More:Gainesville residents question police about need for SWAT raid at real estate office
As the school board realized what had happened, exasperation spilled over this week at an Alachua County Public Schools board meeting. Superintendent Carlee Simon said in an interview she hopes to find a way out of a three-year, exclusive real estate services contract between the board and the agents, Daniel Drotos and Michael Ryals, who operate a Gainesville branch of the multi-billion dollar firm Colliers International.
Simon said she does not trust the agents to act on behalf of the school board, and current and former school board officials have raised concerns about the agents and their dealings with the school system.
“That transaction, like it or not, it went straight off the rails,” school board member Tina Certain said at Tuesday’s school board meeting. She added that the agents hired by the school board “were really working both sides of the fence.”
At the heart of the issue is a property in the unincorporated area of Jonesville, west of Gainesville, that the school system purchased last year for $3.68 million.
Drotos and Ryals acted as brokers in the deal. The agents maintain that they were transaction brokers, meaning they did not owe a fiduciary duty to either the buyer or the seller.
In a statement provided by their attorney, Ron Kozlowski, Drotos and Ryals said they acted responsibly and with transparency.
“Ms. Certain’s assertions about our role in the land purchase are misguided,” the statement said. “As a disclosed transaction broker, we acted appropriately and legally in facilitating the purchase by the school district.”
Drotos and Ryals are separately ensnared in a dispute with their former employer over allegations they left that company with confidential customer information. Police accused them of defrauding their former employer, Bosshardt Realty Services, and filed sworn felony complaints in late August. Those criminal cases are currently pending.
The controversial deal traces back to 2018, when Drotos and Ryals worked as agents at Bosshardt Realty Services. They helped a longtime client and developer, Peter Trematerra, purchase a west Gainesville property from a retired couple for $1.85 million. The land was primarily an investment instrument for Trematerra, records showed.
Trematerra did not respond to phone calls and emails over weeks asking to discuss the land sale.
Shortly before Trematerra purchased the property, national home builder D.R. Horton expressed interest in purchasing the land, which would have been developed into a residential neighborhood, for about $4 million. Residential construction would have required Trematerra to seek approvals from county planning boards, a process that can be costly and time consuming.
Around this same time, Drotos and Ryals’ group at Bosshardt Realty had been awarded a three-year exclusive real estate services contract by Alachua County Public Schools.
Shortly after winning the contract, the agents informed the school board that Trematerra’s property was for sale, telling officials the land could be purchased for a lower price than D.R. Horton’s $4 million offer, as construction of a school would not require Trematerra to navigate the costly entitlement process associated with residential construction.
“The fact you can move quicker and without the need to entitle the property brings value,” Drotos wrote in an email to then-Assistant Superintendent Paul White on Jan. 30, 2019.
White replied that the school board would pursue the deal if the property’s price did not include the value of the residential construction entitlements.
Hours after White sent his reply, Drotos contacted a local property appraiser, Don Emerson, to order an appraisal of the land. Ryals encouraged Drotos to provide “non-public information” to Emerson in order to “sway” the appraisal price up, the emails showed. Ryals also said they should “quickly” suggest to Trematerra they publicly list the property for $4 million.
That same day, Drotos sent a commission agreement to Trematerra that said Bosshardt Realty would represent Alachua County Public Schools in the transaction and Trematerra would pay the agents a 3% commission on the sale.
Drotos gave D.R. Horton’s $4 million purchase proposal to Emerson Appraisal Services, which included the value of property developments required for the construction of a neighborhood, not a school.
“Those sales people submitted information that was not public to an appraiser to raise the price upon the property,” Certain said. “That’s documented. It’s in an appraisal report. It’s in emails.”
Meanwhile, Drotos and Ryals instructed now-former Bosshardt Realty associate Lauren Edwards to publicly list the property online for $4.2 million, according to emails. The listing occurred shortly after the email exchange about swaying the price up.
One day after the agents worked to increase the cost for the school board, Trematerra signed the commission agreement with Bosshardt Realty. The agents maintain they had no fiduciary responsibility to the school board prior to this date, since the contract had not yet been signed by the owner.
At least some school board officials said in interviews they believed the agents solely represented the school system in the transaction, and complained – after questions began emerging about the wisdom of the deal – that it was difficult to get a clear answer regarding Drotos and Ryals’ role.
Certain said she was not aware that the agents were working as transaction brokers. “When I asked our staff, I asked our attorneys, I asked the superintendent and I asked Paul White… I got four different answers,” Certain said.
It is common in Florida’s commercial real estate industry for an agent to act as an unbiased facilitator of a transaction rather than solely representing one party. Florida’s real estate laws allow brokers to represent both parties in a land deal but only when the buyer, seller or both give consent and when the brokers properly disclose their roles.
Emerson completed the appraisal in late February 2019, and valued the property at $3.5 million, nearly double the price Trematerra paid for the land a year earlier. D.R. Horton’s proposal to turn the land into a subdivision was the key factor behind the increased property value, according to documents.
Drotos asked White in March 2019 whether the school board was willing to share the appraisal with Trematerra. White denied the request, citing the $3.5 million evaluation and the inclusion of D.R. Horton’s plans in the appraisal.
“The district would be buying the property without the entitlements,” White wrote in an email to Drotos. “I am hopeful with the entitlements back out the number will be something I can take to the superintendent. I believe the current number would be a bridge to far.”
White said later in an interview that he believed the appraisals accurately reflected the value of the property, maintaining that the purchase was a smart move for a school system that faces overcrowding in west Gainesville schools.
“We really went above and beyond what we needed to do to be transparent,” White said. “The reality is, the full board moved ahead with the process based on the direction with the superintendent.”
In March 2019, Drotos, Ryals, Edwards and another agent, Rory Causseaux, informed owner Aaron Bosshardt they were leaving his company. Ryals told Bosshardt he planned to retire, while Drotos said he was leaving to start a Gainesville-based branch of Colliers International.
Edwards is accused by police of copying 160 proprietary company files on behalf of Drotos, and police later accused Drotos, Ryals, Causseaux and Edwards of stealing trade secrets from Bosshardt Realty and potentially defrauding the firm out of $2 million in real estate deals.
As they were leaving his firm, Drotos told Bosshardt the school board property deal was “dead,” according to interviews and documents.
Prior to their departure, the agents exchanged emails saying they should “kick the can down the road” over signing Bosshardt’s three-year real estate services contract with the school board. After hearing from Drotos that the school deal was no longer possible, Bosshardt said he did not sign the real estate services contract his firm had been awarded.
Just three days after Drotos told Bosshardt the deal was dead, Drotos pressured the school board to act quickly, telling White the owner of the land was getting “increasingly antsy” having to hold off other buyers, emails showed.
Shortly after leaving Bosshardt, Drotos and Ryals emailed then-school board staff attorney Brian Moore about switching the real estate contract from Bosshardt to Colliers. In April, White told the agents to resubmit their proposal under the Colliers name – but some school board officials said the move was improper, since it came after the deadline for proposals expired.
Representatives at Bosshardt Realty and Front Street Realty say they were never interviewed by the school board during this period as required by school board policy even though the firms submitted proposals prior to the deadline. Additionally, Certain and other school board officials believe the agents and some school board staff violated rules barring communication between the parties during the approval process.
The board in July 2019 entered into a three-year, exclusive real estate services contract with Colliers International.
Some school board members opposed the land deal because the county had access to free, donated land.
Two more appraisals in late 2019 put the value of the land at $3.8 million and $3.2 million, according to documents. These also were based on the plans to build residential homes on the property. After averaging the two appraisals, the school board submitted a letter of intent to purchase the property in February 2020 for $3.68 million. That was a substantially higher figure than initially planned and more than twice as much as Trematerra paid for the land in 2018.
Then-Superintendent Karen Clarke signed the purchase agreement in March 2020. Two months later, the board voted 3-2 to approve the land purchase. The board accepted Clarke’s resignation in November, citing her handling of the pandemic, a lost grant and her relationship with minority students; the land deal was not listed among reasons she was forced out.
In the end, the school system paid a premium price for land that factored in subdivision entitlements for which it had no feasible uses. Proponents of the deal saw the high price as necessary to secure prime real estate, but there are currently no plans to build any type of facility on the property, according to superintendent Simon.
An education sales tax oversight committee said it was only made aware of the purchase after the fact, and said its members were unable to provide a check on the process.
Certain, one of the board members who opposed the deal, said she was skeptical of the purchase and believed board members were rushed.
“After looking at emails and things of that nature, it wasn’t an urgent matter,” Certain said. “It was a manufactured urgency on behalf of some of our staff (and) the real estate agents.”
Simon said the residential neighborhood entitlements that increased the property’s cost will eventually expire, leading to a dramatic drop in its value.
“The taxpayers paid for something that they had no need for,” Simon said. “Then over time, that value will disappear, because the entitlements will expire. So, then, the district now owns a less valuable piece of property than what they purchased.”
Simon said the school system is exploring a way to sell the property, but said she was uncomfortable doing so until the board could end its contract with Colliers.
This story was produced by Fresh Take Florida, a news service of the University of Florida College of Journalism and Communications. The reporters can be reached at [email protected] and [email protected]
https://www.gainesville.com/story/news/local/2021/10/27/real-estate-agents-school-land-deal-accused-inflating-price/8569280002/
