Daily Progress, Jacksonville, TX

January 22, 2013

Was Lon Morris sale of city property a mistake?

Ben Tinsley
Jacksonville Daily Progress

JACKSONVILLE —

The auction company that represents the Lon Morris College estate in its bankruptcy proceedings has apparently sold off what is essentially city- owned property to a local businessman without the legally-required permission of Jacksonville officials.

News of this mistake, which an AmeriBid official strongly denied, came the same day LMC announced the conclusion of its bankruptcy auction, which began Jan. 14. The results of the auction will not be finalized or the sales completed until Federal Bankruptcy Judge Bill Parker formally approves them in court on Feb. 4.

Jacksonville City Manager Mo Raissi and City Attorney Joe Angle are looking into what happened and why the city's claim to the land was not recognized in the auction, even after formal paperwork in the form of an objection to LMC's liquidation plan was filed to prevent just this kind of situation from happening.

"We're trying to figure out what the deal is right now, but we think this may be an oversight," Raissi explain Tuesday. "We don't know what is happening. The city must agree before any sale of this property can go through and we have definitely not done so. Hopefully we can get this resolved."

Stephen Karbelk of Oklahoma-based AmeriBid, the auction company retained to market the properties and conduct the auction, could not immediately be reached by email to comment on the situation Tuesday. An email to his attorney, Michael J. Quilling of Dallas, went unanswered.

However, C. Brent Wellings, a regional director and auctioneer for AmeriBid, did respond by email and was adamant no mistake had been made. He could not be reached by office or cell phone for further discussion.

"I'm responding on behalf of the company,” Wellings wrote. “The notice filed with the bankruptcy court this morning identifies all the winning bidders, although all auction bids must be approved by the court before any conveyance of title can occur, including the property described in your email. There is no 'mistake' on the part of AmeriBid or any other party that worked to complete the recent auction, which included representatives from the City of Jacksonville.”

After a similar request for comment were submitted to Chief Restructuring Officer Dawn Ragan of Bridgepoint Consulting, Ragan emailed higher auction bidders, warning them that they were, by virtue of contract, not allowed to speak or send press releases to the media unless she cleared them first.

Ragan did not return comment, nor did Houston attorney Hugh Ray III from the Texas offices of McKool Smith.

As far as the auction in general is concerned, the Jacksonville Independent School District, office supply company 11 x 17 Inc. and local businessman William Adcock Jr., took the high bids for a auction total of nearly $2.2 million. The individual amounts bid during the auction were not immediately available Tuesday.

Jacksonville-based office supplier 11 x 17, which accumulated most of the property, will be buying the bulk of the school’s academic buildings, its student residences and its Memorial Chapel. The Jacksonville ISD has agreed to buy the athletic fields, swimming pool, the Wilson Administration Building, and the Lon Morris College gymnasium. William Adcock Jr. and Stephen Allman together purchased rental property and various student housing.

Webb declined to comment on the Ameribid mistake or the results of the auction, citing the same contractual constraints Ragan mentioned. His company manufactures and distributes ring binders and filing supplies for 11"x17" drawings, used in engineering, drafting and construction and sells directly through its website, www.11x17.com. His company is a product of a collaboration with the Jacksonville Economic Development Corporation.

JISD superintendent Dr. Joe Wardell said JISD will benefit from this acquisition. JISD submitted bids on the Lon Morris College Gymnasium and surrounding 10-acres, the administration building and parking lot, and an approximately 40-acre tract of land to be used for educational purposes in the future.

"We all realize how important the college was to the community," he said. "We would have loved for Lon Morris to continue or another college to come in and take over that opportunity. But that opportunity didn't present itself so we feel we had a good opportunity for our taxpayers. We are in a good, sound financial position, not having to borrow money or issue bonds and this takes care of several needs we have."

Acquiring the basketball court solves a longstanding problem for JISD, as games have long had to be relocated to the Lon Morris court because of space constraints.

"We have such limited gym capacity," she said. "Right now, we would have to turn away as many people as we could possibly let in to the gym because of the limited seat capacity. This gives us a whole lot of options for serving the kids in the community."

Dr. Wardell said the three parcels of land will address several needs, such as the need to expand the administration building, and needs of storage space, and human resources offices to work with individual employees.

"We were already looking at opportunities such as the need to take care of the students at West Side Elementary," he said. "It's basically an older facility that is in need of replacement and has very limited opportunities and limited space there."

Adcock did not return a telephone call and email for comment Tuesday. According to the Cherokee County Appraisal District, Adcock owns numerous properties in Jacksonville.

LMC, Texas’ oldest junior college, filed for bankruptcy protection in July.

In a press release issued to all media, Ragan said proceeds from the sale will be used to pay creditors and the school's former employees.

“A great deal of work was done with the creditors, employees, prospective buyers and many others, and it’s good to see a positive outcome,” Ragan stated in the press release.