BEN DOUBLES DOWN: $2.3 MILLION CASA DEL NYLON BUY OK

Special to El Rrun-Rrun

Stung by his runoff opponent Pedro Cardenas' charges that he has stayed mum about the controversy surrounding the city's purchase of Abraham Galonsky's Casa del Nylon for $2.3 million in 2012 because of his personal ties to the downtown businessman and his city commissioner daughter Nurith, District 4 incumbent Ben Neece has doubled down on his support for the deal.  

He has defended the deal posting that "misinformation" by "nay-sayers" went against the data provided to him by the City of Brownsville, mainly the Certificate of Value and Salient Facts and Conclusions of the original appraisal by San Benito appraiser Lauro Leal of Rapid Appraisals to justify the highly-questionable deal. 

El Rrun-Rrun questioned the deal January 15, 2013. 

And other bloggers voiced similar concerns about the use of the document to justify the giveaway to his landlord Galonsky, who rented one of his downtown properties to Neece so he could run for District 4 four years ago. 

Brownsville Observer publisher Jim Barton said in March 2014 that the Casa was "purchased by the city for $2.3 million in 2012, based on an obsolete appraisal done in December 2010."

And Neece's propagandist and fellow wine imbiber Jerry McHale of the McHale Report said as late as March 2019 that:

 "Nothing has undermined Mayor Tony Martinez more than the $2.3 million purchase of La Casa del Nylon, which the City of Brownsville bought at his behest. Like many (Neece included?), Martinez was a sucker for disgraced and humiliated educator Julieta Garcia's pitch who fooled him into thinking that UT/Brownsville was interested in the building as part of the university's expansion."

The Casa has remained vacant and a magnet for the homeless since its purchase eight years ago. It turns out that the UT System had no interest in the empty shell located in dying downtown after all. 

Only the use of another  "$2.4 to $2.5 million" in public funds by Brownsville Community Improvement Corporation and the matching grant from the U.S. Economic Development Administration will allow the city to use it as a so-called “e-Bridge Center for Business & Commercialization.” 

So the taxpayers, instead of having to pay "only $2.3 million" for the shell of a building, will now foot the more than $5 million and keep on paying for the COs for decades to make it usable.

Josh Mejia, the BCIC executive director and city commission water carrier, called it an “expansive project” and said the project was being  undertaken in collaboration with the city, the Brownsville Chamber of Commerce, the University of Texas Rio Grande Valley-Brownsville and the Economic Development Administration through the U.S. Department of Commerce.

At the time, Martinez and the city commission faced stiff criticism for the binge of downtown real-estate purchases that included the Casa to be paid by taxpayers through the issuance of  $13.06 million Certificates of Obligation.

Back then we requested a copy of the Lauro Leal appraisal, who works out of his home in San Benito, thought his report was overly biased toward the $2.3 million, and agreed with numerous other appraisers that questioned the dubious assumptions in his document. That Neece finally came out on the subject defending the payment of $2.3 million only because of political pressure from Cardenas, his opponent in the runoff, speaks volumes.

Appraisers use at least three methods to arrive at a number. There is the cost approach, the income approach and comparable sales approach. They then combine and average, make adjustments, and come up with an appraised value.

This is where the problems begin for some who saw the Casa Del Nylon appraisal.

The Cost Approach

In the cost approach category of the Casa Del Nylon property, the three comparisons for site valuations involve no properties in the downtown area. They were:
1) On Alton Gloor Road: 37,024 square feet valued at $5.40 a square foot.
2) Off Alton Gloor Road: 25,500 square feet valued at 11.22 per square foot
3) Frontage Road south of Boca Chica: 8,640 square feet valued at $13.89 per square foot
Based on these comparisons, the appraiser set the value of the land at $15.00 a square foot, or $540,000

The Income Approach

The income approach (from rent) also contains improbable assumptions. The appraisers compared Galonsky's site to:
1) 700 E. Levee, circa 1984, 23,302 s.f. leased at $1.35 per foot.
2) 647 E. St. Charles, circa 1876, 2,180 s.f. leased at $165 per foot.
3) 1033 E. Adams, circa 1925, 5,900 s.f. leased at $0.55 per foot.
4) 444 E. 8th, circa 1950, 3,950 s.f. leased at $0.55 per foot

In the Levee St. site, the owner said the appraisers had gotten the square footage and the rental cost per foot wrong. The E. St. Charles site is a historically restored residence. The Adams St. site is the one-story Elizondo Second-hand  Store, and the E. 8th St. site is the tiny two-story building in the parking lot of the Wells Fargo Bank.

La Casa del Nylon site would need major (and costly) improvements in both the ground floor and the second story empty storage space of 18,000 before it could ever rent office space. Nonetheless, the appraiser said that renting the 52,586 total square footage would get the owners at least $0.50 per s.f. and gave it a potential of $126,400 in rental income a year. Since the 18,000 square feet on the second story has been demolished, the price would have been even lower.

The Sales Comparison Approach

In the sales comparison approach, Galonsky's property was compared to three previous real estate sales, only one of which was downtown. They were:

1) 1220 E. Adams, 17,000 s.f. (two stories) sitting on 9,000 s.f. sold in June 2010 for $750,000 averaging $44.12 a s.f.
2) 942 Wild Rose Lane, 4,028 s.f. building on 26,800 s.f. of land sold on Nov. 2010 for $250,000 averaging $62.10 per s.f.
3) 1225 N. Expressway, a 4,900 s.f., one-story building sitting on a 10,739 s.f. lot averaging $67.35 per s.f.

Based on these highly-dubious "comparable" sales, the Leal set a value of (52,586 s.f. @ $45.00) = $2,370,000 on La Casa del Nylon property.

After performing a "reconciliation," the value of La Casa del Nylon properties were set at the $2.3 million price tag the city paid Galonsky. 

"We feel that this city has been good to us and we feel we should do something in return," Galonsky said. As far as Martinez's law Horacio partner – and Galonsky's neighbor – having negotiated with him on the sale on behalf of the city, Galonsky said that both served as members of the board of the First National Bank in the past. 

On the political side, when Nurith Galonsky ran against Rick Longoria for District 1, Ben embraced her message of "change." Today,as his opponent Cardenas asks for the same, Neece is urging District 3 voters to abandon change and to keep things as they are.

He hasn't forgotten the Galonskys' political and financial support. One of the first things Neece did was to appoint property-rich Abraham Galonsky on the Planning and Zoning Commission.

Galonsky hasn't forgotten Ben either. In the latest campaign reports, he joined Jim Tipton and chipped in a cool $2,000 each to his reelection. Galonsky added another $1,000 a few days later.

"Horacio has been my friend for years," he said. "He never negotiated on my behalf. The city made an offer based on their independent appraisal and we took it even when they had offered us more than $1 million more less than four years ago."

Today is the last day of early voting. Election day is Saturday, June 19.