Jan 082016

peary court property report

by Naja and Arnaud Girard…….

Some recent independent home inspection testing at Peary Court has brought a worrisome result.

“My mold assessment led me to advise the tenants to vacate the apartment,” says Hugh Johnson. Johnson is the owner of “Inspect Key West.” He’s a Florida licensed home inspector and mold assessor.

On March 15th voters will decide whether the City should purchase the White Street property, including the 49 buildings that were once used as Navy housing.

Plan A for inspection of the buildings ran into some rough weather early this week after The Blue Paper published a detailed report about some of the extravagant items included in a $165,951 inspection estimate.

Saltz Michelson Architects, the Fort Lauderdale firm, chosen for the job, wants $29,000 for hotels and travel expenses, $61,000 to conduct a “visual inspection” (including flipping electrical switches and opening faucets) but of the 157 apartments, only 16 would be thoroughly inspected. They also claim to need 553 hours worth of “police escorts” estimated at $24,885. The total cost for the very limited inspection would be over $1000 per unit.

According to Commissioner Sam Kaufman, the standard price for detailed home inspections in Key West is around $300 per unit. “At least that’s what I paid every time I needed that service,” Kaufman told The Blue Paper.

There is little doubt that information obtained from a thorough inspection is needed before voters can make a careful, informed decision about the purchase. Costs associated with refurbishing those apartments could affect the City’s ability to pay back the 55 million dollars in bonds that would be used to purchase the property and an estimated ten million dollars from the City’s share of the Monroe County Land Authority affordable housing fund would be put at risk.

If the City Hall restoration project at the old Glynn Archer elementary school is any indication, restoring a building can be just as expensive as new construction. “During one quick mold assessment [at Peary Court],” says Hugh Johnson, “I noticed air conditioner condensate drainage issues, plumbing leaks and poor attic ventilation, all leading to high humidity and high mold spore counts.”

City Manager Jim Scholl says inspections are part of the due diligence process. But why hire an architectural firm from Fort Lauderdale at three or four times the cost of a local home inspection outfit? Saltz Michelson Architects is on retainer with the City under a “continuous agreement” that allows the City to quickly contract for architectural services without having to go through the formal competitive bidding procedures.

On Tuesday night, City Manager Jim Scholl, withdrew his proposal to accept Salz Michelson’s $165,951 estimate. “We are looking at some other options,” says Scholl, including relying on “documents provided by the current owner.” He also mentioned, “not want[ing] to spend too heavily prior to the referendum as we still don’t know if the acquisition is able to move forward.” Could we be going from an exorbitant proposal to not getting inspections done at all?

Echoing public concern over the true condition of the Peary Court buildings, Mark Songer, President of the local government watchdog group, Last Stand, has offered a solution. In an email sent to City Commissioners last Monday, Songer suggests that the City engage several local home inspection companies, “so that each may provide inspection reports on a portion of the units at Peary Court.”

Under City code, any contract over $20,000 must normally go through a formal competitive bidding process. However, there is no longer enough time prior to the March 15th referendum for that 60-90 day process to run its course. However, under Section 2.797 of the code, the City Manager can declare an “emergency” and contract directly with private companies, avoiding the lengthy bid collection process. It would seem that the housing crisis, coupled with the referendum deadline and the rare opportunity to purchase Peary Court would qualify as an emergency.

We expect, wrote Songer, “that the City will receive the same or enhanced information from the local inspectors because full inspections can be performed on more than 16 units at a substantial savings from the Saltz Michelson Architects proposal.”

Scholl told The Blue Paper he and his staff will “discuss the range of reasonable value options and present a recommendation to the Commission if [they] determine there is a good alternative.”

Meanwhile, here’s a copy of the general inspection report prepared by Atkins Engineers of Key Largo in the summer of 2013 on behalf of the current owners of Peary Court.


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 January 8, 2016  Posted by at 1:20 am * Featured Story *, Naja and Arnaud Girard  Add comments

  12 Responses to “PEARY COURT / What to do?”

  1. A few months ago, Michael Miller, a local architect who lives in one of the Peary Court units sits on the Key West Historical Architectural Review Commission which rejected several designs offered by the Peary Court Developers, represented by Jim Hendrick and his wife Donna Bosold, told me the buildings were full of mold and were not being maintained by the developers.

    When the developers bought Peary Court for $35 million, they intended to tear down all 157 units and build entirely new homes, plus 48 “affordable” homes using 48 free building rights given to them by the city and the Florida Department of Economic Opportunity. For that reason, the developers had no incentive to maintain the 157 existing units, on which they had placed zero $ value. Zero. They paid $35 million for the land and the 48 new free building rights..

    Manny Costillo, Executive Director of the Key West Housing Authority, was reported in the Key West Citizen as saying all the appliances in the 157 units might need to be immediately replaced. Stoves. Refrigerators. Dishwashers. Air conditioning units. R2 D2s. Anti missile defense systems. Etc. How much will that cost? Will it be deducted from the purchase price, or will the city pay for it? Traditionally in home sales, serious defects in a home and the estimated cost of their repair are deducted from the sales price at the closing.

    It is unthinkable today to buy a home and not have it inspected before the closing. It was unthinkable to do that back in 1983, when I published HOME BUYERS: Lambs to the Slaughter?, which eventually was acquired by Simon & Shuster’s Prentice-Hall division, and got me interviewed by Jane Pauley on “Today”, January 2, 1985. It is unthinkable the voters will not have the information they need to assess the condition of the 157 units BEFORE they vote on the Peary Court referendum.

    When they vote, the voters also should know how the city’s crack negotiating team, consisting of Manny Costillo, City Commissioner Jimmy Weekley and City Manager Jim Scholl, got the city such a good deal: $55 million for the 156 units, with the developers keeping the 48 new building rights and 2-plus acres of the land on which to build the new 48 units.

    Manny explained it at Jimmy Weekley’s town hall meeting in the Ferry Terminal building, as follows.

    The developers wanted $67 million for Peary Court, they said it was worth that: $55 million for the 157 existing units and all of the land, and $12 million for the free new 48 new (free) building rights. Manny told the developers 48 new (free) building rights would not collect rents to pay a mortgage, so the city could pay the developers for the 48 new (free) building rights. Okay, the developers said. We will keep the 48 new (free) building rights and 2+ acres on which to build them, and we will sell you the 157 units and the rest of the land for $55 million. Great, the city’s crack negotiating team said to the developers making, not a $20 million profit in 2 years’ time, but a $37 million dollar profit.

    Do you see any negotiations in what Manny reported at Jimmy Weekley’s town hall meeting? What I see is the city’s crack negotiating team agreed to pay the developers’ asking price for the 157 existing units, but declined to pay the developers for the 48 new building rights, which the developers had gotten for nothing, plus the 2+ acres on which to build the new 48 units..

    What a deal! for the developers, who sure looked to me to be on the ropes, facing a bad investment, after being repeatedly hammered by Michel Miller and the Historical Architectural Review Board. Michael told me he was glad he had defeated Jim Hendrick.

    Now just for further yucks, consider a recent blast from a friend of mine named Rick Roberts, suspected reincarnation of Nikola Telsa, who goes by the handle, “Ricky Raccoon”:

    “The only somewhat sane ‘leader’ appears to be Sam Kaufman. But even that guy is about a bubble off level. Instead of getting the inspection lowered, like Sam says, how about we won’t buy the damn thing until the owners can prove the worth of that Navy toilet bowl? Make them pay for the third party inspection. After all, these “leaders” at the city want to throw $20,000,00 extra in and watch all that cash go around the bowl and down the hole. The current owners won’t bat an eye tossing $75,000 of that in for an inspection. They even get to keep the best part of it, the raw land to make another killing on…

    “And why is this even happening at all? Since when is it the government that is allowed to compete for rentals against the folks that own apartments, trailers and complexes out there for rent? In telecom, say in municipal Wi-Fi, that’s illegal. The city can’t build a Muni Wi-Fi or Wi-Max system and compete for sales with say Comcast and ATT. Why don’t these “leaders” spend $65,000,000 on a state of the art Muni Wi-Fi network? Because that’s illegal competition with existing private enterprise…

    “Back to good ole Sam Kaufman. The legal guy, the attorney. I think it would be great for this Raccoon to buy a single trailer before they can dump $55,000,000 into that toilet bowl. I’d slap a for rent sign on the sucker. Then let these profiteers flush the taxpayer’s cash down the Peary Court abyss. Sam better intercede before that happens…

    “Why? Because I’d rack those suckers with a law suit in Federal District Court in Miami for illegally competing with this capitalistic Raccoon’s trailer rent. I win. Now it becomes res judicata for the 1,000 or so other rental landlords here. Each files a suit under the same reasoning. Each time the suit ends in their favor on a motion for summary judgment based on the Raccoon’s racking of the City in his lawsuit. They would love the Raccoon…

    “Fact is the City would have no defense; the matter is “already decided”. The City’s Peary Court becomes a black hole. The City can’t rent it, and in fact all that lawsuit money they payout will be sucked in by it.

    “Perhaps they can just use it as the new KOTS for the homeless.

    “Or sell to private business for what it’s really worth. Tear down land value. Probably $35,000,000. How ironic. To this Raccoon that whole Peary Court thing is moronic, why beyond ironic.

    “Raccoon out.”:

  2. dear naja and arnaud
    what was the cost of this ‘inspection’ for comparison and which seems quite comprehensive.
    much thanks to you and your publication with 3 cheers. wjm

  3. Another excellent story by The Blue Paper!
    When I first saw the Citizen article about the proposed inspection by an architectural firm, I was immediately aghast at the pricing in excess of $1,000 per unit with only a small percentage actually inspected closely. Even the one Home Inspector in KW who does a rather poor job (based on his reports I reviewed for friends) could be expected to give a more thorough analysis of condition than a mainland architect walking around outside…. for about 1/3 the money! A good Home Inspector would give a very good analysis of condition.
    I read the Atkins Engineering report from 2013 that was linked in this article. The written report conveys a condition far better than revealed by the photos. It was like two different properties were described. Not much will have changed between 2013 and now, so a repeat performance by an architect is a total waste of over $165k. The City should just donate half of that money to The Blue Paper for publishing the old inspection and call it a bargain. Meantime, I suggest that the City have a few representative units inspected by different local licensed Home Inspectors, followed by hiring a few local contractors by the hour to walk around and give ballpark estimates of repairs needed in the opinion of those contractors. Much of the units’ infrastructure (plumbing, electrical, AC) is roughly 25 years old, and if it has not been repaired or replaced it is due. Things like electrical switches and receptacles might even benefit from overall precautionary replacement. Electrical fires are more likely to start from bad connections getting hot than shorts. Thermal imagery of the circuit breakers can spot trouble brewing there. Count on having to replace any original AC, water heaters, and appliances in the near future. Likewise with faucets and toilets. Has an experienced local home appraiser been asked for an opinion of value? Use local resources, not mainland glossy report generators to evaluate the proposed purchase. Keep the tax money in the community.

  4. The people of Key West are currently the landlords of the most rental units in town.
    The city budget is 166 million a year and only receive 16 million a year from taxes – Yet our streets and OLD Town look very bad !
    Housing is needed ! If a business needs workers then buy hotels like the Weston and put your staff there and get benefits from the US Gov. and State. Not Key West.
    Disney has been doing this for years. Orlando does nothing for Disney, for Disney wants to run it’s own show.
    The city is to “Protect and Serve” like the Police, Fire and inspectors…why do we have a realty department? To support more city personnel…that may/might lower our already high taxes? Citizens need to look at where your money is going by the elected officials.
    It is starting to follow the $351 toilet seat…if your old enough to remember.
    Remember to vote in relation to your wallet and common sense…

  5. Split the inspection between 8 appraisal companies, pull 4 out of a hat,with the fee being averaged between the bidders. Get estimates to repair and replace building parts ,kitchens, floorings,hvac and underground utilities to the city code as well as to proper living conditions standards,and deduct that amount from the price. Move the election three months to June to allow time to do the work. Where is the rush here??????

  6. Thanks Bluepaper . The point was made by another reader that the Atkins inspection verbiage seems from a different planet if you look at all the photos in the report. I agree. I wonder what that cost also, because it seems more detailed than the one that was proposed , but it’s not a pretty picture.
    I am amazed that the sheathing is half inch OSB , generally prohibited and that they did not build to code ,even back then, and now code is much stronger. I love the bars on the second story windows where the windowsills are 18 inches above the floor ,so no one falls out, but may not be able to get out in a fire either, and there is no sprinkler s =?US-ASCII?Q?ystem_which_would_make_me _nervous_i?= n a triplex building for sure. Also think all the vinyl siding would should be replaced with something not so flammable like hardi board. It’s in bad shape anyway.
    If you look at all the photos and consider how much work needs to be done I think it’s way beyond reason to buy from these scoundrels and give them a 30 million profit to boot.
    No wonder they were going to tear it down. Let them have the headaches of maintaining it. The rents will never be affordable either way.

  7. I put together a slide show that illustrates the horrible condition of the Peary Court buildings. How can anyone claim that “The structure of the buildings was in excellent condition with minor signs of moisture or deterioration in some isolated units. We were satisfied with the condition of the wood and particularly the OSB wall sheathing” when their own photos show the exact opposite?


  8. The Peary Court deal is really a bad idea for just so many reasons. Clearly, it’s a monkey on the back of the high-level Brazilian investors who saw the sunlight and want out. Key West is spending beyond its means if it buys and the taxpayers will PAY for years to come, with one bond after another needed just to keep up payments. Thanks for this very informative article, yes indeed, you continue to be the voice of real investigative journalism. I place you as journalists in the same category as muckrakers Lincoln Steffans and Jacob Riis. Martha

  9. Perry Court…did the 35 million dollar sale
    go back to the tax payer, military or the rental group?
    It was our/people’s property and why was the property not given back to the people/Key West like the Outer Mole?

    Something stinks…

    The city gets the HAZMAT land (Outer Mole) and private company gets the maybe safe land (Perry Court).

    Eminent domain was an option and still is?

    As History goes; 1. Island land; 2. Marine Quarters;
    3. Base ball Field, 4. Military Housing; 5. SOLD?;
    6. military finished with Perry Court, then give back to owner – Key West…Key West should have had first-right-of-refusal? Where is the peoples money? $35 million —-Your turn BLUE PAPER….

    Those houses in Peary Court do NOT look like affordable houses, they are too large. I was surprized when the Navy was spending so much money to build them like genteel suburban housing. I watched them go up and saw they are sturdy, long-term structures regardless of the current niggling mold issues.
    Common sense says that affordable houses should be small to be affordable. Great economy is now being explored with the advent of “tiny houses” and with “cargo container habitations.” When style is designed into their implementation, they look charming and are large enough to live in, similar to pleasantly living inside a nice 35 foot houseboat…
    Don’t vote to buy Perry Court houses when the question comes to referendum, if it does. Those two empty acres where the Credit Union used to sit, are alone big enough to build 150 NEW tiny houses or container houses and they will be forever affordable because they are small and undesirable to affluent invaders.
    Make a village there. I’ve seen it done on Ward’s Island offshore of Toronto Canada and it is much more pleasant than standard middle class sterile housing. It’s become a hugely desirable place to live. It has sidewalks instead of streets and carports so it uses land more efficiently than standard middle class ghettos. ;=]

  11. There are two public notices in today’s Citizen stating that the city is moving forward on approving the agreement for the Peary Court Holdings group to build 48 “affordable” housing units. Why now? Wouldn’t is make more sense to just wait until after the March election, and we know if the City is going to purchase the property? Something isn’t kosher about this….Again!

    See the public notices here:

    • The development agreement Colby refers to has been going through the system for awhile. This is not part of the property the City is proposing to purchase. It is the area where the old Federal Credit Union used to be. The current owners intend to retain this approximately 2 acre section and sell the rest. The 48 “affordable” housing ROGOS were given to the developer as part of a compromise, as the citizenry was screaming about how we had a housing crisis and we needed the 30% affordable inclusionary housing rule to apply. The DEO decided our code applied only to new construction and that it did not therefore apply to Peary Court. The “30% rule” in the code states that 10% of that affordable component should be “low-income” and 20% should be “median income”. The 30%, for Peary Court, applies to existing, new, and rebuilt units at Peary Court – it is in the zoning ordinance. Then, for some reason, the City allowed the affordable deed restrictions to be set for “moderate-income” which is 120% of median income. [At the time that was higher than market rate for rentals. Now it is slightly lower.] There are currently 48 units deed restricted “moderate affordable” at Peary Court. The restrictions will be removed and switched over to the newly built 48 at the old Credit Union parcel. One can assume the current owner would want them removed from the units at the for sale property so that the price is not lowered by those deed restrictions…. They can’t be removed unless they are transferred over to other units on the property. The Commissioners at the time promised they would correct the workforce housing ordinance asap. They said they would do all they could to make it apply to re-construction as well. That was back in 2012. We have yet to see a proposed amended workforce housing ordinance. Additionally, the City doesn’t have an ordinance that protects loss of workforce housing when trailer parks units are converted to site-built units. The County has had such an ordinance for [I think it may be decades now.] We lost 44 units on Simonton Street, after the Peary Court debate. The Commissioners, again, said they “had to” vote to allow the development without a requirement for 30% affordable on the newly built units and promised to amend our workforce housing ordinance – pronto. That too was several years ago. When a local judge threw out a prosecution against a homeless man who was drinking in public on the grounds that the code didn’t allow his arrest unless the officer had actually seen him doing the drinking, the code was amended almost before the week was over…

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