A development company that acquired the site of the former A.G. Holley state tuberculosis hospital last year in Palm Beach County wants a $1.29 million refund from the state because the property has less land than advertised.
However, state officials contend that while the advertised acreage was an estimate, the Lantana property was sold under "as is, where is" terms.
Gov. Rick Scott and the Florida Cabinet will be asked next Wednesday to decide whether to approve the requested refund for Lantana Development LLC.
The Delaware-based limited liability company acquired the deed to the land last August from Southeast Legacy, which was the top bidder for the property advertised by the state as 79.2 acres. The Palm Beach Post reported last year that Lantana Development LLC is a partnership between Southeast Legacy and the investment firm Wexford Capital.
After several attempts to sell the land, the Cabinet approved the sale to Southeast Legacy in March 2014 for $15.6 million.
Shortly afterward Southeast Legacy determined the land was 73.3 acres.
Requests by Southeast Legacy starting in April 2014 to lower the sales price were rejected by the state Department of Environmental Protection due to the contract terms, said David Clark, deputy director of the department's Division of State Lands.
Clark noted that the contract also included a provision that declared if the "buyer obtains a survey of the property, nothing contained therein shall affect the purchase price or terms of this agreement."
Representatives for Lantana Development and Southeast Legacy said Wednesday the miscalculation is too substantial to let go and said they made the refund request rather than taking the issue directly to court.
"Certainly if there had been a minor deviation of a half-acre or something like that we wouldn't be here talking to you today," Steven Lewis, an attorney for Lantana Development, told state Cabinet aides during a meeting in the Capitol.
Lewis added that even if the property was advertised with fewer acres, Southeast Legacy still would have been the top bidder.
"We wanted to try to work it out with the DEP and work it out directly in a manner like this, where we talk about this from an equitable standpoint as opposed to throwing it into a court of law," added Mike Langolf, the managing director of Southeast Legacy.
Clark said the state had estimated the acreage based upon adjacent parcels. He added that the state didn't conduct a survey on the A.G. Holley land due to the cost, which could range from $10,000 to $25,000.
Robert Tornillo, Cabinet aide to Chief Financial Officer Jeff Atwater, said he could understand the request from Southeast Legacy as "it's like" the state misled the bidders.
"If the survey was done, we wouldn't be here," Tornillo said.
Rob Johnson, Cabinet affairs director for Attorney General Pam Bondi, said the state is on "sound legal ground," but it's the "fair and equitable" issue for Scott and the Cabinet to determine.
Brooke McKnight, Cabinet affairs director for Agriculture Commissioner Adam Putnam, expressed concern that the issue could establish a precedent for other land sales conducted by the state.
"I'm having a hard time recommending to my boss that there was an error when I feel like DEP in their due diligence was clear in the contract," McKnight said.
