As he introduced the topic, Thompson said there were parts of the policy that each councilor may agree or disagree with, but he wanted to have a discussion on what was worth keeping and what should be thrown out or revised. He noted that there would be more properties to dispose of in the future as City Administrator Carol Webb is now in place.

Thompson began to work through the first section of the policy when Councilor Barry Kell interjected that there may not be a consensus on the need for a change at all.

“The reason I asked for this to be on the agenda is, if we are going to agree to sell surplus property by sealed bid, be it physical lots or other apparatus, and then if we’re going to… The sealed bid policy itself says, if you read through this, that in essence, that is setting the fair market value by sealed bid,” Thompson said. “If we’re gonna say that a city policy is to sell surplus property by sealed bid and then we turn around and vote no, whoever it be, then let’s clean up why we’re doing that. Do we need to set a minimum value, a minimum bid? I just want to clean it up so we’re not putting stuff out for sealed bid and then putting it back and putting it back out and putting it back out. We need to come to a consensus. I hope you agree that we’ve gotta figure out a policy that works.”

Webb jumped in and said the main questions she hoped to settle were whether the council wants to revise the policy as it’s currently written and which property disposal methods the council should utilize as options. Councilor Jeff Schneider then said that he didn’t feel the discussion was necessary, and the council should still have discretion over selling or not selling a property.

The council again discussed the disposal process for a pair of vacant lots at 817 and 819 N. 5th Ave. on Monday night before opting to hold off on any action until a new housing and community development director is hired.

Councilor Melisa Fonseca liked the way the policy outlines methods for selling the real estate ranging from sealed bids to live or online auctions, listing with a realtor, direct sales or requests for proposals (RFPs).

“I read through it, and it details out what we need to do. And what I like about it was that it said that it’s on a case by case basis for vacant lots,” she said. “And I think that if we think it needs (to be) changed anywhere, we need to say exactly where and what.”

After speaking with Fonseca over the previous weekend, Councilor Mike Ladehoff felt realtors should be used more often, and he thought past failures to sell property were a result of a lack of marketing.

“Other than that, I’m pretty happy with the way it’s written,” Ladehoff said.

Fellow Councilor Greg Nichols hoped that whatever policy was in place would be consistent, and Kell then said he was “lost” and wished someone would come out and say what they specifically wanted out of the discussion.

“To me, it seems like there’s some consternation around the sealed bid process. I’m getting the impression that there’s a thought or a feeling that if we do (a) sealed bid, then we’re forced to sell to the highest bidder,” Kell said. “Maybe I’m jumping to the wrong conclusion, but that seems like where this conversation originated in reading this policy. But if that’s where we’re going, let’s just get there. Let’s stop dancing around it.”

Thompson responded that such a change was “exactly” where he wanted to go.

“Where I have a problem is when we choose sealed bid, we are telling the public — and Mr. (Dan) Oswald touched on this earlier in the meeting — we’re telling you ‘Hey, this is a sealed bid. We’re gonna take the highest bid,'” he said. “So when the citizen does the right thing and then we come back and say ‘Well, you know, you own some other properties and we’re not happy with those’ or ‘You did some quiet title stuff in the past, and we’re not happy with you as a person,’ it doesn’t matter… The goal was to get these properties back on the tax rolls, and if they buy the property in sealed bid and it’s just a vacant lot, you know what? That’s 70 or 80 bucks a year that’s flowing into the tax revenue pool, and it’s not our concern.”

He added that he didn’t like the caveat allowing the council to reject any and all bids and wanted a policy they could “stick with,” which drew another sharp rebuke from Kell.

“We do have a policy. You’re just stating you have a policy you don’t like, but that’s not to say we don’t have a policy,” Kell said. “If someone’s bidding on a sealed bid process, there is a disclaimer on what we’re doing. They can read it. So there’s no guarantee that a sale will go on. I have things for sale on (Facebook) Marketplace right now. I’m not forced to sell it. I think we need to look at the longer view as a city and try to help the direction that we want to go, not just make it as inexpensive as possible to buy properties.”

Kell said he drives by four surplus properties on his way to work every day, and they generate “pennies on the dollar” in tax revenue while serving as a detriment to the neighborhood. Thompson countered by asking how long the city would spend taxpayer money on mowing lawns and shoveling sidewalks to hold onto a property whose full value may never be realized. He cited the North 5th Avenue lots as an example, estimating that the city paid nearly $140,000 to buy and demolish the house that once stood on it.

“Think how many acres we opened up right there for the industrial development. I don’t understand our urgency to do something right now, and in five years time, that could be a completely different landscape. And that value of that land has multiplied exponentially,” Kell said. “And we’re talking about such a small fraction of our budget to remove snow if there is a sidewalk, to mow (the) lawn. I don’t know, I just think there are incidental costs.”

Thompson suggested taking a poll of the councilors to see if there was any interest in proceeding further on changes, and Mayor Joel Greer then opened the floor up to public comments. Dan Oswald, a Marshalltown firefighter who had also bid on the North 5th Avenue property during the last two rounds, cited Kell’s reference to Facebook Marketplace and how frustrated he gets when he tries to buy a product and agrees to a price only to find out the prospective seller has reneged on the deal.

Oswald commended the council for its work to clean up the town and offered any member the chance to discuss plans for his properties with him. Lonnie Hogeland praised the councilors for having an open debate on the matter and referenced the fact that the former police station was sold to YSS of Marshall County for $35, well below market value, even with a much higher bid on the table. Recounting his own purchase of the former BPW Park, now known as “Hogie’s Playground,” he called for increased transparency in the selling process.

Dave Grieve said he has found the city “difficult to deal with” as he’s attempted to invest in a downtown building and didn’t agree with the idea of rejecting high bidders. He added that he didn’t necessarily feel sealed bids were the best way to dispose of the properties and felt a live or online auction might be a better option.

“Even if you don’t like the price, oh well. If you don’t like the buyer, oh well. If you wanna get rid of it, get rid of it. (That’s) my two cents,” Grieve said.

Ladehoff replied that he didn’t think live or online auctions would garner much turnout, and, in his view, “everything’s not black and white.”

“Gary keeps saying that we put a bunch of money into that property there on 5th Avenue, and that’s true because we needed the property to build (the) Edgewood (extension) on through,” he said. “Nobody in their right mind would give $180,000 for those two lots. That’s a false premise to begin with. It’s what the properties are worth, and what I know is those properties are worth more than $13.”

He reiterated his call to have real estate professionals get the word out and see if more people can be attracted to bid on properties. Jim Shaw said he has seen several lots sell for low prices at meetings over the last few years and wished he would have known about them. The lot on North 5th Avenue, he added, is the only case where he’s seen sealed bids be rejected, and he suggested a process capping the number of rounds at two if the prices aren’t high enough the first time.

“This is like playing games with the system,” Shaw said.

Oswald returned to the podium and noted that when the council had previously rejected Catherine Gooding’s $2,350 bid on the lots due to her previous use of Iowa’s quiet title law to acquire a property the owners hadn’t abandoned, he had bid $2,001. During the most recent round, he bid $1 on the lots and lost out to Thompson’s high bid of $16.36, which was rejected regardless. Oswald, who had planned to build starter homes on the lots, reiterated his frustration with the process.

And despite the admittedly low price of the bids this time around, Thompson listed several other expenses that come with buying a property including an updated abstract and securing a clean title. Currently, the city sells the properties by quit claim deeds, whereas Thompson felt warranty deeds might generate higher bids as the buyer would know they’re acquiring a “clean” lot.

“Don’t leave out the details of everything that has to go into it because there’s more to it than just the bid,” he said.

Fonseca asked if past buyers had been able to have a title opinion completed, and Thompson and City Clerk Alicia Hunter said it would come at the cost of the buyer, not the city. Fonseca touted her background in real estate as an asset toward selling the properties and exposing the listings to as many people as possible.

“That way, it would help the Marshalltown community see these opportunities. It would create community transparency and community opportunity, and for those individuals that don’t ever use internet or have a computer, if they have a REALTOR ® that they hired to find them pieces of real estate and their method of contact is a direct phone call, that’s what their agent will do,” Fonseca said. “And that way, it reaches the most amount of people.”

If there had been 50 bids for $2 each, she added, it at least would’ve shown a higher level of interest in buying real estate in the city. Councilor Mark Mitchell expressed his support for sticking with the principle of selling the lots to the highest bidder and getting them back on the tax rolls. Fonseca hoped that her preferred method would include drone videos and marketing done by “actual professionals.”

Marshalltown Area Chamber of Commerce President/CEO John Hall said turnover at the city staff level had complicated efforts to explore “highest and best use” for the properties and what options exist and shared his support for starter home construction.

“The speed at which we can get housing developed, we can’t do it fast enough,” Hall said. “I can comfortably report that, representing probably about of the 4,500 employees here in the community, companies are expressing that housing is the number one concern they’re struggling as it comes to continuing to grow in our community. So the more that we can do housing development on any of these lots, the better. Just allowing them to go for highest bid vs. highest and best use, I think, is missing (an) opportunity. I think there’s some development partners that could be explored on this.”

In closing out the discussion, Thompson asked for a poll on who supported potentially changing the policy and who wished to keep it the same. With only Thompson and Nichols raising their hands, the matter was settled, but the next item was related as the council considered the disposal process for the same two lots that had been a focal point of the previous discussion and have remained unsold after four rounds of sealed bidding.

Webb laid out a few prospective courses of action to sell the lots and said criteria could be attached to the sealed bid process if they choose to go in that direction — such as a stipulation of a home being built within 180 days. Fonseca motioned to direct staff to put the lots out as an RFP for real estate services from brokers, agents and REALTORS ®.

Nichols asked if a time limit could be set to move on from the real estate services if the lots aren’t sold.

“We don’t want to sit on these properties forever,” he said.

As Greer left the chambers for a quick restroom break, Thompson asked Fonseca if the city would need to spend the money for a warranty deed if they wanted to work with a REALTOR ®. She said the terms would need to be listed in the agreement, and she felt a 90-day sale period was “doable.”

Schneider argued that the proposal seemed like spending $20 to sell a $1 bill, and he didn’t think it was the right time to list the property. During the public comment period, Shaw raised the question of a conflict of interest considering Fonseca’s background in real estate, and Ladehoff said she would not be able to be involved or profit off of the marketing due to her position as an elected official.

Still, Shaw contended, she could potentially route the business to a friend, but Ladehoff didn’t believe it would constitute a conflict of interest unless she was bidding on the job herself. Grieve liked the idea of putting conditions but worried about out of town residents buying the properties to put in more rentals.

“We don’t need more slumlords here, as far as I’m concerned. We need people building their own house,” Grieve said. “So if you put a stipulation that the person that buys it has to live in the house that they’re gonna build, that would be nice because that’s what we’re trying to get is single family real ownership homes to build up the value of the town. More rental properties don’t help us.”

Oswald felt the previous high bidders should have another crack at obtaining the properties, and Hogeland agreed with Webb’s suggestion that the council should have some say over the “highest and best use.” The motion to direct staff on an RFP for real estate services failed by a 5-2 margin with Fonseca and Ladehoff as the only affirmative votes.

Thompson subsequently motioned to sit on the lots until a new housing and community development director is hired and in place, and it passed unanimously. Before the meeting adjourned, Greer said “interviews are coming soon” on filling the long-vacant position that Michelle Spohnheimer left in June of 2023.

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Contact Robert Maharry

at 641-753-6611 ext. 255 or

maharry@timesrepublican.com.