Houston Community College Trustee Dave Wilson filed a complaint with the District Attorney’s office against HCC Chancellor Cesar Maldonado and Chief Facilities Officer Chuck Smith back in August, for what Wilson considers fraud and misappropriation of bond funds.

“The misstatements by the Chancellor and Smith resulted in excess money being paid for the property,” stated Wilson in his complaint. Wilson has heard no further word from the DA’s office besides that the case was assigned.

Despite several attempts, Chancellor Maldonado could not be reached for comment.

The trustees approved the purchase of the property for approximately $8.5 million at the January 2015 board meeting with a vote of 5-1. Wilson voted against it. Trustee Carroll Robinson, Christopher Oliver and Adriana Tamez were absent. Trustees are officials elected to represent taxpayers at the regular monthly board meetings, where all final votes on college governance takes place.

The deal was put together by the Waterman Steele Group consulting firm.

In November 2014, HCC had the property appraised by Valbridge Property Advisors for $5,300,000. That price did not satisfy the seller. Therefore, HCC had the same appraisers take another look at the property in January 2015, and this time they placed the value at $8,510,000.

For taxing purposes, the Harris County Appraisal District places the value of the property at $2,358,000. This is not the market value of the property; the market value is how much someone is willing to pay for it. The HCC administration was willing to pay a lot for a building that it’s still not using.

There are several reasons why Wilson alleges that HCC taxpayers were robbed. Wilson said that the income method and a low cap rate were used to appraise the real estate, “in order to get it [the price] as high as they could get it.”

What changed between November and January was that there was supposedly a lease for the property in the works with Tesla Motors. The appraisers based the second lease off the assumption that the property would generate rental income, but today the building still sits empty with a giant “For Lease” sign up front.

The second appraisal had the extraordinary assumption that the property would be leased to Tesla Motors at $23 per square foot. Based on the assumption that all 25 thousand square feet would be leased at that rate, the appraisers reported that the market value was $8,510,000, over three million more than what they said it was three months prior.

The property was purchased with HCC bond money, which is collected through district taxes for the purpose of furthering the college’s mission by purchasing things like necessary sites for school buildings.

The Chancellor and Smith informed the Board of Trustees that only 20 thousand square feet of the Conn’s property would be leased. At the same time, HCC would use the remaining 5 thousand square feet.

In a Memorandum to Trustee Wilson dated March 3, 2015, Chancellor Maldonado stated that, “During the last Board meeting, Mr. Chuck Smith mentioned that the college would lease a portion of the store to a third party and that the tenant of choice was Tesla Motors; however, despite our best efforts, negotiations with Tesla ended due to our inability to come to reasonable terms of lease.”

With HCC using the building, it would still fulfill the bond promise in some way. “If you bought that building to rent it all out to Tesla, then you can’t use the bond money to do it,” Wilson thinks, “that’s why they put the 5 thousand [square feet] in there.”

However, the appraisers based the second price on the understanding that all 25 thousand square feet would be leased. If only 20 thousand square feet were to be leased like the trustees were told, then it should have been priced at $6.8 million instead of $8.5 million.

No lease ever materialized, with Tesla Motors or with any other tenant. The January appraisal stated that, “We requested actual [Letters of Intent] documents, but were not provided them.” The appraisers based the price of the property off a lease they had no evidence of. “They just took their word,” said Wilson.

The Chancellor gave Wilson a leasing Letter of Intent with Tesla Motors after the trustee demanded it. It is not on HCC letterhead and it was never signed. The first page is dated January 9, 2015, but in this “non-binding Letter of Intent,” the last paragraph states that it must be signed and accepted by November 31, 2014. If they were changing dates on documents, they missed one.

It would be a poor deal for Tesla Motors, or any car dealership company. The property only has 54 parking spaces. Retail property of that size in Houston requires 100 parking spaces, and an auto dealership would require 138 parking spaces.

The false hope of a tenant and giving the appraisers the wrong number of how many square feet would be leased are, “The misstatements by the Chancellor and Smith [which] resulted in excess money being paid for the property,” that Wilson mentioned in his complaint to the District Attorney’s office.

Since there was no actual lease for the building, the price of the property should have stayed at the original $5,300,000.

In the agenda book for the Jan. 22, 2015, HCC Board of Trustees meeting, the college administration stated that the purchase was proposed because, “the current vacancy represents a rare opportunity for the College to expand the footprint of the West Loop campus without adverse effect on adjacent property owners…”

With no vacant lots nearby, the West Loop campus has little space to grow. Obviously, it is not currently needed because it sits vacant, but the purchase could have been considered a forward-thinking move if the college didn’t use taxpayer money to overpay by three million. The giant “for lease” sign on the front of the building is a reminder that the college never found a “suitable tenant.”

Besides basing the second appraisal off the rumor of a tenant, Wilson sees another mistake in the lease.  They compared the value of the former Conn’s Appliance store to a CVS Pharmacy store’s value. A CVS Pharmacy is a single-purpose facility, which costs more than a big box, empty store building like a Conn’s. “That’s not [comparing] apples to apples,” stated Wilson.

The three licensed appraisers signed off on the second appraisal, with the standard statement that, “We certify that, to the best of our knowledge and belief….We have performed no services, as an appraiser or in any other capacity, regarding the property that is the subject of the appraisal within the three-year period immediately preceding acceptance of this assignment.”

The same appraisers had signed the first document just three months earlier. According to the Uniform Standards of Professional Appraisal Practice, if they have appraised a property within the last three years, what they are supposed to do is modify the first appraisal, not create a new one.

Wilson believes that, “they purposely ignored it [the first appraisal].”

In letters to Wilson dated Jan. 28, 2016, the Texas appraiser board stated that, “The Board has completed its investigation of the above complaint that you filed, and has found that the report contained minor deficiencies. The Board has issued a non-disciplinary warning letter to the appraiser advising the appraiser to be more diligent in the areas deemed to be deficient.”

The appraiser board advised that in the future, the Valbridge Property Advisors should provide documentation to support value adjustments and to acknowledge any prior work on a property.

Wilson said he is “infuriated” with the state board’s response and vows to get Texas Governor Greg Abbott “on them.” In Wilson’s view, what the Texas appraiser board said was, “Ya, they robbed a bank, but we sent them a letter and told them not to rob a bank again.”