METRO severs real estate consulting contract

High commissions in old deal

Jon Boyd, Jul 22, 10.

The METRO Board met yesterday and voted to end its contract with real estate consultant, McDade Smith Gould Johnston Mason + Co, according to the transit agency’s web site. In December 2009, METRO’s outgoing board had voted for a three-year contract with the consultant.

In place of the previous three-year agreement, the METRO board negotiated a new one year non-exclusive contract with the consultant, reports Michael Reed of the West University Examiner (via Off the Kuff). The new contract is available on METRO’s web site.

The previous contract had included a significantly augmented commission structure, according to an investigative report by Reed published in the West University Examiner last month:

If acquisition of land needed to build four light rail lines goes as planned — $134.98 million worth, according to the April 2010 board of directors report — the real estate broker could earn more than $4.8 million in commissions for that part of the project alone.

That rate is based on a revamped payment formula that, in effect, increases McDade Smith’s standard commission rate to 3.6 percent.

The same amount of commission would bring in between $1 million and $1.46 million for 23 acres of land needed to build the University Line. That based on the route’s January 2010 final environmental impact study and sales prices of between $30 per square foot and $40 per square foot.

Total commissions for the five lines would total roughly $6.25 million. This even though the land to be used has already been predetermined by the route and could be taken through eminent domain, if need be.

In other news from Thursday’s meeting, the METRO Board approved an agreement to purchase 100 hybrid buses annually from Daimler Bus North America for $53 million.