Keith Roysdon

The Star Press

MUNCIE — The Muncie Sanitary District bought an eastside flea market building for $395,000 — more than twice its sale price about a month earlier and three times its assessed value — in a move that has raised allegations of insider knowledge and a complaint about "lies" from a district representative.

The MSD administrator defended the purchase price for the Main Street Flea Market, saying the price was in line with two appraisals done for the district. The property in the 1700 block of East Main Street is needed by the district for levee work on White River, MSD's Nikki Grigsby told The Star Press.

But the man who sold the property to the district and the man who owned it just weeks earlier are crying foul.

"I was lied to by a representative of the sanitary district," said Jeff Burke, owner of McGalliard Guns and More, who sold the property to the district on Sept. 23 for $395,000.

"They paid him four times the assessed value on that building for some reason," said Carl Barber, who sold the property to Burke on Aug. 6 for $150,000. "I think he knew from inside the sanitary district they were going to buy those properties so he and somebody else could make money on it."

Burke denied he had any knowledge before he bought the building from Barber that the sanitary district wanted it. Barber noted that Burke also asked him about purchasing from him the former Ed's Warehouse building on Martin Luther King Jr. Boulevard, but Barber sold it to the district for $125,000.

The flea market building is one of dozens purchased by the district in 2015, but its sale price is many times higher than most other properties purchased.

Dozens of properties purchased — for less

The Muncie Sanitary District has been on a property-buying spree for two projects: Improvements to win federal recertification of the White River levee as it passes through Muncie and ongoing, multi-year separation of storm and sanitary sewers to eliminate sewage spills into White River.

For months, The Star Press has reported that property owners have been contacted by the district's representatives, often Julie Bering of ADM Commercial Real Estate, Property owners have expressed outrage that the district offered them as little as $9,000 for their homes. Grigsby said those offers were based on appraisals.

A list of properties purchased by the sanitary district in 2015 obtained from Delaware County government by The Star Press shows that most of the prices paid for more than 70 properties, including vacant parcels of land, range from a few thousand dollars to about $75,000.

The only substantial purchase price besides the flea market purchase was $225,000 paid to purchase property in the vicinity of the Rutter Communications building, which is being purchased by the city as part of Mayor Dennis Tyler's proposed White River Canal District. Tyler told The Star Press recently that the sanitary district — which is the unit of government created by the city in the 1960s to handle trash and sewer service — had purchased land around the Rutter building.

The city and the sanitary district often work together on projects, including the Liberty Pass canal and downtown stormwater improvements, and Tyler appointed the three-member MSD board that appointed Grigsby.

'I was lied to'

When contacted Thursday, Burke initially said he still owned the flea market building.

"I bought it last year," Burke said. "If everything goes through, we're going to put in a gun range."

When The Star Press told Burke that Delaware County property records reflect that he sold the property to the sanitary district in September, he said, "Well, that is correct. They have the right to do whatever they want with it. I'm waiting for a conclusion from the sanitary district as to what they plan to do."

"I was lied to by a representative of the sanitary district," Burke added. "I'm not going to get into it. I don't want to get anybody in trouble. I do have some emails.

"I know the game. I did not want to sell the property. My long-term ability to make money was much greater than what the property was being used for."

Burke cited the lack of a gun range in Muncie besides that used by the Muncie Police Department. (A local gun club also has a gun range.)

Burke is familiar with the police department. City records show he has sold the city more than $46,000 worth of guns and ammo since 2014.

Burke denied knowing in advance of buying the property from Barber that the sanitary district wanted the property.

"You can't fight city hall," Burke said. "I turned down the sale of the property four or five times. They tried lying to me. I'm not gonna get into it. I have the emails that came back and forth from the representative. It's done and over with."

Grigsby, who said she met Burke only at the closing of the property and "never had any conversation with him," adding that she "absolutely does not believe" that Burke had inside knowledge of the sale in advance.

"The only way that anybody would know what area we were looking at would be from (district) board meetings. I have to go before the board to ask permission to make any contact and they have to give permission for any realtor to make contact."

In response to Burke's assertion that he had been lied to by a sanitary district representative, Grigsby said, "A representative or an employee? I guess I don't know what that means."

Saving the district money?

Grigsby said the flea market building will be demolished for construction of a river levee tie-back, a levee structure that helps control flooding. The work is part of the district's levee recertification project, to which district officials have not attached a price tag. Grigsby said purchasing the property for $395,000 and building the tieback for the nearby White River "would save the sanitary district over a million dollars in comparison to what we would have to do to build up the levee."

Grigsby said the district is obligated to pay the average of two appraisals for properties it plans to purchase. She said appraisals on the flea market property were $399,000 (in an appraisal by Adam Covault of FC Tucker) and $462,193 by Austin Schmaltz of ADM, the real estate firm where sanitary district real estate representative Bering is a principal.

When told that Delaware County records indicate the assessed value of the property was about $120,000, Grigsby said, "I don't know anything about that. The attorneys give us certain rules."

'It just doesn't make any sense'

Barber owned the flea market property for several years before selling it for $150,000 to Burke. Records indicate Barber bought it in 2009 from a company that owned it after an auto dealership closed at the location, which is where East Jackson Street and East Main Street split east of downtown Muncie.

"A lot of people are asking questions" about the sale of the property, Barber said. "I come in contact with somebody every day who asks about it and what's going to happen to the flea market."

Barber maintains that he believes the sale came about because someone knew the sanitary district wanted the property.

"He made a quarter of a million dollars on it in just a few weeks," Barber said. "The property is not worth anything, but then they turn around and pay four times the assessed value? How many people can flip something in a month and make that kind of money on it? It just doesn't make any sense."

Contact Keith Roysdon at 765-213-5828 and follow him on Facebook and Twitter.