Although the Welch’s Building has been sold, state Comptroller Thomas P. DiNapoli’s office was critical for how much the town of Westfield paid for the building, noting that local officials expended $361,000 acquiring property for historical preservation, even though the property had an estimated full market value of $243,000.

DiNapoli’s office conducted an audit on the town of Westfield, with the audit period starting on January 1, 2013, extending all the way to May 15, 2019. The main purpose of the audit was to determine whether town officials properly acquired real property for a town purpose.

The town of Westfield purchased property that is located in the town of Westfield in January of 2014 for $358,000. The property is a large office building that was built in 1910 with 13 acres of land. To this day, only three tenants lease about 29% of the space in the building, leaving the rest of the building unoccupied.

Town Supervisor Martha Bills told the State Comptroller’s Office that she was approached by the property owner who offered the building for sale. According to Bills, she had been working with the village mayor and a local development corporation who were both advocating that the owner develop the building with tenants. Even though the board and Bills had concerns about becoming a landlord of a large office building, they wanted to make sure it did not end up like another historical building in the town that was demolished shortly before this.

In September of 2013, the Westfield Town Board authorized the Supervisor to proceed with negotiations for the building. In October of that same year, town officials had the building inspected to see if there were any concerns about major repairs for the building. According to the town, the inspection came back clear.

After the inspection, the town held multiple meetings with the town attorney and the local development corporation to decide whether they should purchase the property. During these meetings, the officials reviewed a building acquisition analysis that includes the current lease and the building inspection. The building was only leased to one tenant at the time. If the property was to be purchased, the town would have to assume the current lease agreement the owner had with the tenant. This included approximately $144,500 in net gain for the property over the remaining lease term (January 2014 – June 2020).

Unfortunately, according to the office of the NYS Comptroller, the analysis the town officials reviewed during their meetings did not consider potential major repairs that could be required between the purchase date and the end of the lease term. According to the inspection report, it showed an area of the building that would require significant reconstruction before tenants could occupy the space.

The Comptroller’s Office noted the board did not obtain an independent appraisal of the property because officials said they were familiar with the building’s value due to a prior tax certiorari proceeding with the owner. Even though a court had issued an order and judgment incorporating the parties’ settlement agreement which reduced the assessed taxable value from $500,000 to $200,000, the town officials felt it was worth more than the new assessed value. According to the office of the NYS Comptroller, the fair market value of the property was $243,000 at the time. The town of Westfield ended up buying the property for $358,000, which was $118,000 more than the fair market value.

According to the office of the NYS Comptroller, although the purchase of property for historic preservation is authorized by law, the supervisor and board did not perform a thorough analysis before making their purchase. This should have included obtaining an independent appraisal. The office says that they cannot be certain they obtained the property for the best price possible. During their audit, the office of the NYS Comptroller found that overall, the town of Westfield did not follow good business practices when they bought the property.

The office of the NYS Comptroller gave the town three recommendations for the future of Westfield buying property. First, they recommended that they should use a thorough process when pursuing the purchase or sale of property to help ensure it generates the best price obtainable or maximum financial benefit for taxpayers. Next, they recommended they obtain one or more independent appraisals on real property it intends to purchase or sell to help ensure the price is reasonable. Lastly, they recommended to review the long-term financial impact and other implications before making a decision to purchase a building to help ensure it is the best financial decision for the town and its taxpayers.

Martha Bills, Supervisor, wrote a response to the office of the NYS Comptroller. In it, she wrote that their key findings may be misleading, as there is no requirement for that the town use the historic building in order to justify the purchase of it. The preservation of the building alone justifies the purchase, she says. She also adds that the town had seen so many other historical buildings in surrounding areas decline to the point of demolition and she didn’t want that outcome for this building. She said the board and herself wanted to find a developer who wanted to re-develop the building and ultimately decided that the town would be best-positioned to do it.

Bills next said in her response letter that she and the board worked with several professionals in Westfield who were all familiar with the building and its worth. She said that after careful review, the committee determined and the board agreed that $358,000 was a reasonable price to pay for the building and the land that went with it. Then in her letter, she lists all the positives that have come out of buying the building and property, including most importantly that they used the rent revenues to pay down the amount borrowed to buy the building. The final payment is to be made this month, December 2019. After this final payment, the town will own the building outright.

Bills concluded her response to the office of the NYS Comptroller by explaining their actions comport with policy goals frequently urged upon them by Albany such as smart growth, preservation of downtown areas, development of waterfront access, historic preservations, and others. She also says that there is renewed interest from developers in the building and the town’s ownership puts it in a position to exercise some discretion about how the building is used. She ends the letter by stating that she and the Board believe that this will accomplish the preservation of the building while protecting local taxpayers.