Land trusts hid broker's role in sales
The school district paid him a commission of $4,200 for selling his own property to the district.
By JEFF TESTERMAN and MELANIE AVE
Published March 16, 2006
TAMPA - Real estate broker Fred Edmister acknowledged Wednesday that he benefited from two land trusts that bought five properties and then sold them to the Hillsborough County School District for a 340 percent markup. Edmister also said through his attorney, Buddy Gissendanner, that while he was paid a $4,200 commission by the school district on those sales several years ago, he was not working for the district at the time and thus did nothing inappropriate.
In the wake of St. Petersburg Times stories about the district's freewheeling use of real estate brokers, school officials asked the Florida Department of Law Enforcement to investigate Edmister's role in the property "flipping," which involved land acquired for Middleton High School in east Tampa.
School officials also took immediate action to tighten acquisition procedures.
Before now, brokers such as Edmister were routinely paid thousands of dollars in commissions without competitive bidding, background checks or written contracts. The Times series revealed instances of brokers capitalizing on those lax procedures to cut their own deals or negotiate prices not always in the best interest of taxpayers.
In the assembling of land for Middleton, Edmister bought five vacant properties for $28,165, placed them in two land trusts whose beneficiaries were secret, then - in real estate parlance - "flipped" them to the school district for $123,800.
But Gissendanner, a criminal defense attorney hired by Edmister this week, said Edmister was"just an investor, a speculator" who snapped up land on the cheap with hopes that it was near enough to the Middleton site that the school district might agree to acquire it.
Edmister rolled his purchases into confidential land trusts for competitive reasons, Gissendanner said, "so people living in the area wouldn't know who was acquiring property."
Who were the beneficiaries of the two land trusts? Gissendanner provided only a partial answer. Edmister was, he said. But "no one from the School Board and no one with insider knowledge" was a beneficiary, he added.
Yet Gissendanner stopped short of revealing who else might have benefited from the trusts' sales to the school district.
When the two land trusts did sell to the school district, a $9,200 commission was paid to Edmister: $5,000 by the trusts and $4,200 by the school district. The commission was agreed upon through negotiation, not because Edmister had any sort of working agreement with the district, Gissendanner said.
"That was the deal that was struck," Gissendanner said. "Why they did it that way, I don't know."
School officials remained uncomfortable with the trust deals, despite Edmister's disclosures.
School spokesman Stephen Hegarty said he is troubled by Edmister being a beneficiary of the land trusts since that means the district paid him a commission to sell the district his own property, which pushed up the total purchase price.
"I would have a problem with that," Hegarty said.
Hegarty said the district is awaiting the results of a criminal investigation to decide whether to seek civil damages against Edmister.
FDLE spokesman Manny Pondakos said Wednesday his agency is still awaiting records from the school district on the land trusts' sales.
"All I can tell you is once information is compiled, there won't be a delay in the assessment," he said.
After the Middleton sales in 1998, the school district hired Edmister informally to help acquire land for several school sites, including Sheehy and Oak Park Elementary. But Gissendanner said at the time of the Middleton sales, Edmister had no such arrangement.
"I'm convinced Fred is not facing any criminal liability," Gissendanner said.
Gissendanner downplayed the significance of Edmister's requiring the school district to pay his commissions to National Realty Associates, a company that was dissolved by the state in 1994 when Edmister stopped sending in the annual renewal fee. The failure to send the fee every year for more than a decade was just an oversight, Gissendanner said.
"It just fell through the cracks," he said.
Gissendanner said Edmister believes school officials already have decided not to work with him any more, even though "he's saved them hundreds of thousands of dollars.
"You have to have someone who can help assemble property and handle negotiations," Gissendanner said. "If you have to go through eminent domain every time, you'll never build any schools."