Cedar Rapids Gives Away $3.84 million of L.O.S.T.
by Lisa Kuzela on Thursday, February 24, 2011 at 11:57pm
The True North and the Sinclair connection…
Although the City received a $3.5 million for the Sinclair fire from Selective Insurance Company, the AGENT for Cedar Rapids, (who submitted the claim to them) was TRUE NORTH.
True North submitted a claim to Selective in February 2009 for “other damages.” It was declined. In March 2009, they submitted a claim for “flood.” It too was rejected. Then in July 2009, a mysterious fire appeared at Sinclair. The fire was in Warehouse Bldg #4. It was leased at the time of the flood, I believe by Linn Star Transfer. However, this was damaged flooded property at the time of the fire.
One of the reasons it’s mysterious is because still today, no one knows how it started. The fire report reads that “Fire crews on scene stated that there were several separate areas within the fire buidling that were burning.” Usually accidental fires begin from a single isolated fire. Also, there were several gas cans found at the site. However, on August 2nd, “since the products were still smoldering and the integrity of the building was compromised by the partial demolition, we would not enter to do an examination.” Therefore, at that time, the fire was ruled as “Undetermined.”
The Cedar Rapids Fire Department report states a property loss of $2,962,800. Where did this number come from? I have no idea. It was probably told to them by someone from City Hall. Prosser, perhaps?
Although the City owned the property (and therefore “exempt” from property taxes), the part of the property that was leased out to the businesses was taxable and listed on the City’s assessment as such. (Sinclair address: 1600 – 3rd St. SW; parcel 14273-28001-00000)
The 2008 assessor note states: Taxable leased areas: land value=$134,199; building value=$178,274; and the total value (land + building) =$312.473. Note that this is the PRE-flood assessed value. So, the flood even LOWERED this value; it was not valued this much at the time of the FIRE.
Simply put, the total taxable assessed value (BEFORE the flood) for ALL the leased areas was $312,473. Yet, the City, with True North’s help, submitted a claim for $3.5 million! Yes, True North was able to get Selective Insurance to pay Cedar Rapids $3.5 million on just a PART of this leased property – that of warehouse #4.
Move forward to February 10, 2010: The City Council approves using the True North site (located at 401 – 4th Ave SE) for the new public library. True North doesn’t even own the site, but Council is told the cost of the acquisition would cost the City about $8 million, even though the assessed value of the property was a mere $1.5 million!
In March, True North purchases the property from the owners for $3.66 million. The attorney who helps True North with document preparation is Joseph Schmall of Bradley & Riley Law Firm. (Joseph Schmall is also the registered agent for “Lehman, Allsop & Evans,” who owns the property where the Central Fire Station is temporarily relocated. See related articles.)
In September, Council approves to purchase the True North site for $7.5 million. Since FEMA will pay $3.5 million toward the property acquisition for the library, this leaves the local taxpayers to make up the $4 million out of LOST, which Council approves December 14, 2010. Thus making a profit of $3.84 million for True North!
This profit True North received is awfully close to the $3.5 million amount True North managed to get for the City for the fire-damaged Sinclair building assessed at less than $312,473, PRE-flood!
Not only should the insurance industry be investigating this, but the local taxpayers should be screaming about the waste. Wouldn’t it have been the fiscally wise thing to do for Cedar Rapids to purchase the True North site directly from the original property owners who held the deeds back in February 2010 when Council approved moving the Public Library to that location? FEMA would’ve paid for the entire acquisition.