In 2005, Houston’s transportation agency agreed to pay $15 million for 17.3 acres of flood-prone land along the northern bank of White Oak Bayou just north of Downtown, reports the West University Examiner ‘s Michael Reed. Former Houston Rockets and UH basketball star Hakeem Olajuwon had purchased the property from the Union Pacific Railroad for an estimated $2 million six years earlier. But even more eye-popping than Olajuwon’s roughly estimated $13 million profit on the sale is this little nugget: A separate appraisal — conducted the same year as the sale — valued the property at only $2.6 million.

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Just a year after he bought the vacant property, which sits just across Main St. from the University of Houston-Downtown campus, Olajuwon negotiated a contract to sell it to Trammell Crow Residential for $10 million, Reed reports. But the deal fell through because of the buyer’s concerns about flooding on the site. Five years later, an appraisal ordered by Todd Mason, Metro’s VP of real-estate services at the time, supported a $15 million valuation for the property, but included a note saying drainage and environmental issues connected to the property had not been considered. “In other words,” Reed deadpans, “the impact of having been in the proximity of a large rail yard, a paint spraying warehouse, a mirror manufacturer and a wholesale rubber, plastic and foam producer was not taken into account. Neither was the likelihood of flooding.”

But a separate appraisal conducted a few weeks earlier for UH-Downtown, which Metro had tried to interest in a land-swap deal, concluded that the same land was only worth $2.6 million. Included in the reasoning: the fact that 12.1 acres of the property was within the 100-year flood plain, and an additional 4.1 acres was in the actual floodway. Metro hadn’t provided the UH appraisers any environmental assessments of the property, either.

HCAD currently values the still-vacant property at $5.6 million. A hike-and-bike trail along the former UP rail line now cuts along it, close to the bayou. Though the site is near the beginning of the North Line extension to Houston’s sole existing light-rail line, Metro doesn’t appear to have any plans for it. According to Reed, the manner in which the agency completed the purchase — as the 99.9 percent owner of a joint venture with a company called Wellington Development — means Metro has been on the hook for more than two-thirds of a million dollars in property taxes from 2006 through 2010. (Land held in the government agency’s own name is ordinarily exempt from property tax.)

Metro land buys point to less than a dream scenario [West University Examiner]

Photo: Michael Reed/The Examiner. Map: UH-Downtown