City seeks realtor to help sell Logan Apartments
The Fairfield City Council’s ways and means committee met Monday and decided the best way to sell Logan Apartments was with help from a realtor.
John Revolinski, chairman of the ways and means committee, said he and the other committee members will search for a realtor in the next few weeks, and hope to recommend one to the full council at its next meeting July 14.
Mayor Ed Malloy said the lack of interest from potential buyers of Logan Apartments has been “puzzling.” The city advertised the sale of the apartments and set a bid deadline of May 30. The date came and went without any bids coming in. The council decided to extend the bid deadline to June 23 in the hopes of attracting bidders who were previously unaware of the sale, but still no bids came in.
The appraised value of Logan Apartments is $1.7 million, and the city is obligated to sell the property for no less than the appraised value.
“No one wanted to bid that or higher,” Malloy said. “At this point in time, our decision will be to list the building at its appraised value, and then begin to entertain constructive negotiation on the sale of the property. We’re completely fine with taking this new approach of listing the building and giving potential buyers the time to explore the possibilities.”
According to the city’s website, Logan Apartments is designed for persons 62 years of age or older and persons with a handicap. Residents pay 30 percent of their income as rent. The three-story building has 48 one-bedroom apartments, of which six are handicapped accessible.
Earlier this year, the building’s certification as subsidized housing was renewed for another 20 years. Malloy and Revolinski said the city intends to sell the property to a buyer who will keep it as subsidized housing.
Revolinski acknowledged he was initially hesitant to sell Logan Apartments because it was a source of revenue for the city.
“There has been some hesitation in the community about whether this is a good idea,” he said. “Logan Apartments is a money-maker. Given the fact the sale is going slower than we anticipated, I asked the committee to discuss again this whole concept, to double-check our thinking. Ultimately, I am convinced it is a good idea.”
Revolinski said Logan Apartments produces about $45,000 in profit every year. However, the city collects no taxes on the revenue since it owns the property. If the building were owned privately, it would generate about $25,000 in taxes, meaning the city is really netting close to $20,000 by owning the property. Revolinski said the city needed a large infusion of cash in its general fund more than it needed the extra $20,000 a year.
Revolinski and Malloy said the city could put $600,000-$700,000 from the sale of Logan Apartments in the city’s general fund to increase its reserves. Malloy said that will make the city look better to lending institutions when it comes time to borrow money. He said banks like to see a city keep 20-25 percent of its annual budget in reserves, and the sale of Logan Apartments will bring Fairfield close to the 20 percent mark.
The advantage of having a large amount of money in reserves is that it can improve the city’s bond rating, which in turn can lead to lower interest rates when the city borrows money.
Malloy said the city would like to sell the building soon but the city is under no time pressure to do so.
“We’ll just let the market process run its course,” he said. “Realistically, we’d like to see it sold in the next three to four months.”