Gilbert farmer in controversial 2009 land deal sued

The Gilbert dairy farmer who made millions of dollars in 2009 from a controversial land deal with the town has been sued by a Valley real-estate company that claims it had exclusive listing rights to part of the property.

Scottsdale-based Commerce Realty Advisors is seeking damages worth $468,570 plus interest for a commission on the 60-acre parcel farmer Bernard Zinke sold Gilbert for $300,000 an acre.

The deal was part of a complex transaction that helped Gilbert secure land for future parks and road improvements but cost taxpayers $50.2 million. The deal generated a controversy in September 2010 when The Arizona Republic disclosed that town officials failed to secure an appraisal during negotiations, and that land experts said the "head-scratching" purchase price was out of tune with market prices in the area.

In a civil complaint filed in March, Commerce Realty Advisors claims Zinke signed a five-year exclusive listing agreement in November 2003 entitling the company to 2.5 percent of the gross proceeds from the sale.

Although the listing agreement expired in November 2008 and the land deal didn't close until March 2009, the complaint alleges negotiations between Zinke and town officials began in early 2008 and that the parties reached an initial agreement by midyear. Town officials verify that account, but Zinke denies it, according to court records.

Commercial Realty Advisors claims its commission was due at closing and subject to 18 percent interest per year if left unpaid, according to legal filings. For each day the commission goes unpaid, the interest accrues by about $231, the company claims, possibly totaling about $281,000.

In a response filed in April, however, Zinke denies negotiating a deal with town officials in 2008 and denies owing a commission to Commerce Realty Advisors. Zinke's attorney, Richard Nye, contends that a prior breach of contract had voided the agreement, and he is asking the court to toss the lawsuit and award attorney's fees to his client.

The Arizona Corporation Commission lists commerce broker Philip DeAngelis as president and CEO of Commerce Realty Advisors; Michael Martindale is listed on the company's website as the designated broker.

Phoenix attorney Jennifer Stevens, representing Commerce Realty Advisors, said her client has no comment beyond the information included in court filings.

Nye did not respond to a request for comment.

While land experts expressed surprise at the Zinke land deal's $300,000-per-acre price tag, the lawsuit suggests Gilbert bought the property for more than it had been previously listed by the company.

The deal included 62.5 undeveloped acres on the southwestern corner of Greenfield and Germann roads, where the town envisions a special-events center, and 80 acres on the southwestern corner of Greenfield and Chandler Heights roads, slated for a park. The town lacks the funding to complete either project.

Former Gilbert Town Manager George Pettit led negotiations for the property in 2008 after he was directed by the council to secure parkland in the town's underserved southern region.

Comparable sales and existing appraisals on much of the land suggested a per-acre value of around $67,000. Following The Republic report, Gilbert officials revised the town's land-acquisition policies to include mandatory appraisals for all purchases.

The council referred the Zinke deal to state Attorney General Tom Horne's office for an independent investigation. Nearly a year later, Horne's office announced it found no evidence of criminal activity and closed the case.

The deal was a key theme in last year's town council elections. The four incumbents who had voted for it all lost.

Gilbert used $10 million in voter-approved bond money and about $32 million in public-facilities bonds to buy the land.

by Parker Leavitt - Jul. 4, 2012 10:12 PM The Republic | azcentral.com



Gilbert farmer in controversial 2009 land deal sued