Bidders list why the deal fell through

The old Austintown Middle School closed after the last academic year.

By JEANNE STARMACK

VINDICATOR STAFF WRITER

AUSTINTOWN — Developers who backed out of buying the old Austintown Middle School contend the school district violated state requirements for reports on underground fuel storage tanks at the bus garage there.

Ben Post and Martin Solomon, under the company name This Land is My Land Ltd., say that had they known that, they would have offered less money for the property.

They said they found out about what they call a “pattern of nondisclosures” through public records requests.

They told the district in a Sept. 7 letter that they are backing out of the deal they made in 2005 to buy the Mahoning Avenue property for $2.6 million. They had at first tried to negotiate a lower purchase price.

The old middle school closed after this year, with pupils moving to the new one on Raccoon Road. The district and This Land were supposed to close on the sale Aug. 31.

The developers’ attorney notified the state fire marshal’s office Aug. 30 that their environmental consultant had found unacceptable levels of contamination on the property. The state has directed the district to test soil there.

Wants deposit back

This Land had given the district what was supposed to be a nonrefundable deposit of $260,000, but now it wants the money back. The school board is refusing to refund it because the developers agreed to buy the property “as is.”

The district is arguing the developers knew storage tanks at the site may have leaked, contaminating the soil. That information was provided to them in their bid packages, said the district’s attorney, Eric J. Johnson, in a letter to Solomon dated July 17.

This Land is not contending that it wasn’t told about the tanks or that they may be leaking, Solomon told The Vindicator last week.

Rather, the developers believe the district violated state law by not maintaining documents on monitoring and sampling for the tanks, put in in 1989. They said district records obtained through their public records request indicate one of the tanks may have failed leak detection tests on multiple occasions since the 2005 purchase agreement.

The Sept. 7 letter said the district never reported the tank was possibly leaking to either the developers or the fire marshal’s office.

Solomon said the district knew two old tanks that were taken out of the ground in 1989 had leaked, but it had not reported the leaks or taken corrective action that would be required by the state.

While bidders on the AMS property were told those tanks likely contaminated the soil around them, bidders were not told the district had violated state statute 18 years ago by not reporting the leaks, Solomon said. The leaks would have spread, costing more to clean up, he said.

Cleanup costs

Solomon also said the school district knew in 2005 that it would cost an estimated $150,000 to clean up the contaminated soil at the spot where the old tanks were, but it did not disclose that figure to an appraiser who set a minimum bid for the property at $2.2 million.

He said that if the appraiser had known that information, his minimum bid would have been lower.

Superintendent Doug Heuer said the district contends it made available to bidders all the information it had at the time about the property. He would not discuss all aspects of the developers’ assertions because of possible litigation.

Solomon said late last week that This Land is still exploring getting the deposit back. Heuer said that keeping the deposit is legal, and if another attempt to sell the property brings in less money than This Land had offered, the district might seek damages.

He said the bottom line for This Land is that “as is” means just that when it comes to the real estate deal.

Heuer said the district is checking into the developers’ allegations that it violated the state’s reporting laws.

He said district administrators will try to talk to officials who were there in 1989 when the old tanks were taken out, and that it has been in contact with the fire marshal’s Bureau of Underground Storage Tank Regulations.

Change in requirements

He also said the reporting requirements were different in 1989 than they are now.

The state fire marshal’s office said the district has been filing required annual reports on its tanks since 1993.

Shane Cartmill, spokesman for the office, said the BUSTR program began in 1988, but not everyone with tanks was required to report on them right away. He said it will take further research to determine when the school district was required to begin its reporting.

Cartmill said that for now, the school district has to test for contaminants only at the primary site, which is where the old tanks were taken out.

Heuer is preparing to put the property back on the market. He is going to decide whether the district should auction it, list it with a real estate company or sell it on its own.

It was immediately after an auction in September 2005, during which there were no bidders, that This Land and another bidder competed for the property. The other bidder, a Dallas company, bid $3 million, but lost because it would not agree to a nonrefundable 10 percent deposit. Among the Texas company’s concerns were asbestos and the storage tanks.