The online auction, whereby Niagara County purchased three downtown Lockport properties last week, raised eyebrows as the utterly fantastic price of $3.6 million was bid in by the county following stiff online competition - against at least one other bidder whose name is unknown and who bid $3,550,000.
Who was that bidder?
The trio of properties really - by anyone with the remotest knowledge of real estate values knows - are not worth $3.6 million or anywhere near it. The Reporter beleives that price was such that only the county - who is renting two of the properties - would pay.
With no long term county lease to bank on, any buyer who bought the three, aging properties could be stuck with three 'white elephants " in only three years - when the county's lease expires and they moved out. The value of the properties is the county's tenancy and there was no guarantee of that beyond three years.
A correspondent for this publication reached out to Lockport's uber-confident developer, David Ulrich, former owner of the properties, and he denied putting in any of the bids that drove the price up to $3.6 million.
Frankly we believe him. Ulrich, probably the smartest and most successful developer Lockport has ever known, would not, we think, pay $3.6 million for properties worth - to anyone other than the county - not more than perhaps one million dollars.
So who did bid in and drive the price up?
The Niagara Falls Reporter strongly suspects that US Bank, who wound up owning the three properties after its California mortgagors stopped paying their mortgage, or one of US Banks online agents, bid up the price and were the actual competitors against the county.
While not patently illegal, it may be unethical, since the previously reported "reserve price" for this auction was $1.5 million. That meant that if any bidder met the $1.5 million price, and there were no other legitimate bidders, then the reserve was met and the sole bidder would purchase the property at $1.5 million.
We beleive there was only one bidder in this auction - the county.
But in this auction, the reserve price suddenly shifted - online - live - during the auction itself, leading this publication to the almost inescapable conclusion that the auctioneers for US Bank were bidding against the county - artificially raising the reserve price to anything they damn well pleased - in order to get the county to put in higher and higher bids.The county would bid in - and then this phantom bidder would trump them by $50,000. Then the county would bid in again - topping that bid and so it went on from $1.5 million - to $2.4 million to -$3,6 million - the county alwasy topping the mysterious bidder - until they hit the magic number of $3.6 million and the online auction time expired.
We, therefore, urge the County Attorney, Claude Joerg to demand disclosure of the identity of the other bidder(s) - to ensure that a sort of parlor trick o fauctioneering was not perpetrated on the taxpayers of this county.
If it is discovered that the county was duped into paying $2 million more through US Bank and/or its agents, using the gambit of a phantom bidder, making the county believe there was a real bidder in competition - while internally just readjusting thier reserve price - while the auction was live - knowing the county would pay more than the $1.5 million posted reserve - and if it is true that US Bank did indeed officially post a reserve price of$1.5 million, and if it is true that there were no other bidders, and that US Bank and its agents created a bogus bidding war with the county, then it seems evident that a steep price reduction is in order.
Show us the bidders.
Of course we could be wring. There may have been another true bidder who wanted the property at its triple the value price. Perhaps the old California owners bid in - in order to get their old mortgage paid off - but it seems unlikely. Of the husband and wife team that bought the properties in 2005, the husband passed away and his widow is 83 years old.
So who was the bidder?
Why did the reserve price changed mysteriously?
Sure, even at $3.6 million, the county has justification for buying these properties.
But fair is fair, and, if the county was being played upon by dubious bidding methods, then this should be disclosed at the very least.
After all this is county taxpayer's money.