MSD’s Sale of Butchertown Property to JBS Swift Raises Questions
The walls in Mark Blaske’s kitchen are beginning to crack.
The Butchertown house was remodeled just a few years ago, but he said his walls recently began fracturing because of the “constant vibrations” that rattle his home all hours of the day. The vibrations, he asserts, come from a horde of heavy trucks that run between the nearby JBS Swift pork processing plant on Story Avenue to a 5-acre parking lot on Cabel Street.
“I sit at my kitchen table and my table vibrates when the trucks go by,” he said.
Neighbors of Swift’s plant on Story Avenue have complained about noise and odors for years, resulting in fines levied by the Air Pollution Control District and lawsuits.
But the company’s presence on the Cabel Street lot is newer. According to Swift general manager John Cliff, the company has leased the lot since about 2006, and uses it as a staging area. Last year, documents show Swift entered into a contract with Louisville’s Metropolitan Sewer District and bought the property for $790,000.
But e-mails obtained by WFPL raise questions about the way MSD marketed and sold the property. An ethics watchdog says the move doesn’t appear to be in the public interest, and a business owner believes he was treated unfairly.
Documents suggest that MSD, a quasi-government entity, sold the property to Swift last spring in a very quick turnaround—within 24 hours—while there was serious interest and a matching bid, which was later increased, from a different company.
E-mails between realtors and lawyers representing MSD and Swift show that the groups had been in talks about the property months before it went on the market. The e-mails suggest that despite a veneer of public sale, MSD had always intended to sell 139-151 Cabel Street to Swift.
The MSD Board of Directors in October 2013 authorized MSD CEO Greg Heitzman to sell the Cabel Street lot as surplus property.
When it was listed for sale on April 22, 2014, it was on the market for less than 24 hours before Swift made a full cash offer. But before the property was under contract, MSD received a matching offer from Abby Werner Holdings, a local boat dealer. E-mails show that MSD had little to no interest in the Abby Werner offer.
And several days later, after the property was under contract, Abby Werner increased its offer to $60,000 more than the Swift proposal, documents show.
“There’s no question they did it wrong,” said Abby Werner owner Jess Abby. “Whether they can finagle it and make it legally acceptable or not, it’s still not ethical.”
According to MSD’s own procurement regulations, the agency has three options for disposing of surplus property. MSD can transfer it to another government agency, sell it at a public auction or sell it by sealed bids.
MSD Chief Engineer Steve Emly said the agency’s lawyers determined using a commercial broker still fit the intent of the regulations and counts as a public process.
“By our procurement regulations, we are required to go through a public process, and [using a commercial realtor] was deemed to be a public process,” he said. “Because we thought this property had a substantial value, we thought that brokering it using a real estate broker might advertise it better and have a better return for MSD.”
But if getting a better return was the objective, MSD approached the goal in a strange way.
As early as January 2014, four months before the property was put on the market, MSD officials and lawyers representing Swift were e-mailing each other about the property's appraisal.
The lot on Cabel Street formally went on sale April 22, 2014. At 5:15 that evening, MSD Attorney Scott Porter emailed Bart Greenwald, a lawyer representing Swift, to tell him that the property was listed. E-mails show that by noon on April 23, Swift—through lawyer Nicholas White—had submitted a full cash offer. The offer included an "exclusivity arrangement."
But before the contract was finalized, Jess Abby, owner of Abby Werner Holdings, expressed interest in the property. Abby asked for access to the property on April 24, but that access was denied.
“As soon as we realized it was on the market, my broker called them, and they said they did not have access to the property, nobody’s seen it yet,” Abby said.
Nevertheless, Abby submitted a full cash offer of $790,000 that afternoon, according to e-mails and Abby.
In fact, the property wasn’t technically under contract yet. Gray hadn’t sent Swift the Letter of Intent.
Abby said at the time, he was surprised.
“That’s why when they said they already had an offer, we were floored, because at that time we didn’t know who it was,” he said. “We didn’t know how that was possible, because they told us they didn’t have access yet to get us in, and that we were basically the first person that had called.”
At 2:04 p.m. on April 25, three days after the lot went on the market, Gray checked in with Steve Emly and Scott Porter of MSD.
Two days later, Jess Abby of Abby Werner Holdings upped his offer to $850,000. By now, MSD was already under contract with Swift.
Government watchdog Richard Beliles of Common Cause Kentucky said that as a government entity, MSD had an obligation to maximize the profits of the sale of the land, as well as to open it to the public for bidding.
“It seems to me that when a government organization such as MSD is dealing with property that’s known to be quite valuable, there’s sort of an ownership stake by the public,” he said. “It's necessary in the sale of such a property that the public interest requires that [MSD] is more transparent than usual and that everyone is given a fair chance to bid and compete.”
For his part, Swift general manager John Cliff said he was happy with the way the deal went—as well as the outcome. “I felt like the way MSD handled it, they crossed their t’s and dotted their i’s and handled everything by the book,” he said.
MSD Attorney Scott Porter said the whole transaction was above board.
“We listed the property for the appraised value and we received the appraised value," Porter said. “I think it's as legitimate a sale as I can think of.”
MSD’s sale of the property to Swift wasn’t finalized until last December. For the Butchertown neighborhood, and residents like Mark Blaske this means the noise and odors from the Cabel Street lot are now permanent. In a move that critics say is years overdue, Swift recently formally applied for a permit to use the lot for a “hazardous or nuisance use,”according to the Courier-Journal.
The Butchertown Neighborhood Association is opposing the permit, calling the use of the lot an expansion of the slaughterhouse.
Abby of Abby Werner Holdings said his company planned to use the property to store and sell boats. “It absolutely would not have been a nuisance to the neighbors whatsoever,” he said.