Audit criticizes land purchases

Auditors suggest that appraisals may have been inflated to justify paying sellers' prices.

TALLAHASSEE - Several major state environmental land purchases, including the massive Babock Ranch tract in southwest Florida, were based on questionable appraisals that may have improperly inflated values, a state audit said Tuesday.

Auditor General William O. Monroe wrote that documentation for the Babock Ranch purchase last year made it appear the Department of Environmental Protection had influenced appraisers to increase its value to meet the seller's "bottom line price" of $350-million. It was the biggest environmental land deal in state history.

The audit also found appraisals for some other purchases made through the state's Florida Forever program from 2004 through 2006 were based on unlikely or erroneous assumptions that increased value estimates.

Department Secretary Michael Sole, who was appointed this year, defended some of the appraisals in a written response published with the audit, but in other instances he agreed to make procedural changes recommended by the audit.

Sole also denied his agency did anything to influence or bias independent appraisers in the Babcock Ranch deal.

"This administration is confident that the Department of Environmental Protection will take the auditor general's recommendations under consideration," said Anthony DeLuise, a spokesman for Gov. Charlie Crist.

He said Sole is moving the department "in a new direction with greater transparency."

The auditor general cited an undated, unsigned document in the department's files that says developer Syd Kitson's asking price for Babock Ranch was $117.2-million more than the initial appraised value in 2004.

"Our challenge is how to meet his price with the appraisals," the document stated, adding the seller "would rather we NOT pay above appraised value ... he says he'll get criticized for it."

Kitson said he didn't recall making such a comment but "that doesn't mean I didn't have that discussion." He said his intent always was to sell for below the appraised value.

The document lists two alternatives: pay more than the appraisals or have the property reappraised. The appraisals were updated about a year later and both increased to more than $350-million - one at $394.7-million and the other $390.15-million. Both included a 43 percent increase in the value of agricultural land.

"This document appeared to summarize a plan of action to use the new appraisal reports to accommodate the seller's price requirements," the audit states.

Then-Gov. Jeb Bush and the Cabinet approved the purchase at $350-million - $308.5-million from the state and the rest from Lee County. Crist served on the Cabinet as attorney general at the time.

The property was reappraised to reflect "rapidly increasing prices" in the real estate market, Sole wrote. He added that the document "summarized ideas from meetings and did not represent the department's strategy."

Appraisals for the 5,067-acre Overstreet Ranch purchase in Polk County indicated the land was suitable for one-acre residential lots based on a similar development in South Carolina.

The audit said no local, regional or state market evidence backed up that value-raising assumption, noting the land previously had been used for lime rock mining and agriculture. The state contributed $24.1-million to the $53.2-million joint purchase with the Southwest Florida Water Management District.

[Last modified October 3, 2007, 01:39:58]