A Wyoming County campground was sold at auction Saturday for $237,000, but city residents still lost about $1 million on the investment.
The city pumped $1.2 million into the failed real estate venture through a non-profit housing group, which six years ago bought the 100-acre campground as an investment under the direction of then-Lovejoy Council Member Norman M. Bakos.
City officials have criticized the campground deal for years but argued there was little they could do because the group never signed a contract with the city.
In short, Bakos' housing group was free to spend city funds on anything it wanted and was under no legal requirement to report what it did.
Although the city came out the big financial loser, Lovejoy Council Member Richard Fontana says he intends to recover whatever money he can from the sale for taxpayers.
"This place has been run by deceit and greed for years, and now we have to make City of Buffalo taxpayers the winners by giving the money back to Lovejoy," Fontana said. "It will soften the blow."
The auctioneer began the bidding on Rolling Pines Campground, formerly Yogi Bear's Jellystone Park, by asking for $400,000.
He was disappointed. The price quickly dropped when there were no takers among the 90 people who gathered in front of the park's general store for the auction.
Eventually, the bids started at $200,000.
Jerome F. Kern, a Western New York food broker who resides in Glenwood, emerged the winner from a brief volley of bidding, with a bid of $237,000.
Kern described the purchase price as a bargain and said he was willing to spend as much as $400,000 for the property, which he plans to continue as a campground.
"I think it is an incredible deal. We'll probably put another $75,000 in improvements into the campground," he said.
Fontana plans to sponsor a resolution at Tuesday's Common Council session demanding that Home Equity Living Plans, or HELP, turn over any money left over from the sale after the mortgage on the campground is paid off.
Bakos, who resigned last year from HELP, declined to comment Saturday evening.
Once all the bills are paid, there won't be much left over, according to HELP officials, who expect a $50,000 surplus.
"We have to pay off a $159,000 mortgage and other closing costs," said Dennis Penman, who recently took over as chairman of HELP's board of directors.
He and Stephanie Barber, secretary of HELP's board, did not embrace the idea of turning over the surplus.
The organization, they explained, has a financial obligation to maintain the homes of senior citizens who previously obtained reverse mortgages from the group.
"We could find ourselves legally responsible if we walked away from the eight elderly people in our program. We have a commitment to them to maintain their houses and pay their taxes," Ms. Barber said.
Fontana disagreed, insisting that HELP already is financially healthy and does not need the $50,000.
"They have $177,000 in their bank account," he said.
Although the sale price represents only a fraction of the $1.3 million HELP used to buy, improve and subsidize the campground, Fontana says that money rightfully belongs to the city.
"I want to see it used for low-interest loans for home improvements for Lovejoy senior citizens," said Fontana, who had pushed for an auction, rather than support HELP's proposal to surrender the property's deed to the trust company holding the mortgage. "More money was made through the auction that we forced."
Penman and Ms. Barber commended Fontana for proposing the auction.
"At the end of the day, there will be some cash, and we could entertain projects from the community. The money could be reinvested in the community," Penman said.
Most of the people who attended the auction rent sites at the private campgrounds situated in the backwoods of North Java.
They expressed relief when Kern said he planned to run it as a campground oriented toward families.
"We plan to live on site and put in tennis and basketball courts, a heater in the swimming pool, clean up the pond and maybe build a nine-hole golf course," said Kern, whose family operates Brookside Motel in Chaffee.
April Kern, his wife and the mother of their two young children, said, "We're going to add more recreation for kids. We'll probably renovate the playground."
"We love this campground. We weren't sure what was going to happen. At least now we know," said Sharon VanNess, a Town of Tonawanda resident who has been camping at Rolling Pines for two years.