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Diversion Authority defends $2.7 million buyout of Oxbow home

OXBOW, N.D. - The property at 5059 Makenzie Circle near here is worth about $585,800, according to a government assessment of its value.

Crews start to work on the south side of Oxbow, N.D. on Monday, June 23, 2014. Carrie Snyder / The Forum
Crews start to work on the south side of Oxbow, N.D. on Monday, June 23, 2014. Carrie Snyder / The Forum

OXBOW, N.D. – The property at 5059 Makenzie Circle near here is worth about $585,800, according to a government assessment of its value.

But in May, a prominent Fargo developer, Kevin Bartram, fetched $2.7 million for the property-almost five times the assessed value-when he sold it to the Cass County Joint Water Resource District, a government agency buying properties as part of the controversial $1.8 billion Fargo-Moorhead flood diversion project.

The price tag for the Bartram home makes it the most expensive buyout by far in Oxbow, a small, affluent city at the center of the contentious plan to divert the Red River around Fargo-Moorhead, flooding swaths of land, including around Oxbow, in the process.

There have been 17 buyouts in and around Oxbow so far, and many were bought for more than twice the assessed value, according to records provided by the Joint Water District chairman, Mark Brodshaug.

Diversion Authority officials have said the high prices are justified and legal under the Uniform Relocation Act of 1970, which applies to federal projects such as the diversion.

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But at the Fargo City Commission meeting Monday, Commissioners Dave Piepkorn and Tony Gehrig criticized what they consider to be overpaying in the buyouts.

Piepkorn blasted Brodshaug for the purchase of Park East Apartments, 1 2nd St. S. in Fargo, telling him: "Who needs enemies if you're our negotiator? You ended up costing us almost $1.3 million."

Piepkorn and Gehrig voted against a diversion-related reimbursement package, which included the Bartram buyout, but were outnumbered by Mayor Tim Mahoney and Commissioners Mike Williams and Melissa Sobolik.

The Bartram buyout garnered scrutiny after a diversion skeptic, Trana Rogne of Kindred, wrote a critical letter on the subject.

Rogne wrote that two properties near Oxbow, both valued at about the same amount by government assessors, were paid two very different sums by the Diversion Authority.

While Bartram received five times his property's assessed value, the nearby Kaspari home did not fare as well, Rogne wrote.

Both properties are in the staging area of the proposed diversion project, meaning they would be flooded if necessary and needed to be bought, said Rocky Schneider, a spokesman for the diversion effort.

The Kaspari residence, with an assessed value of $476,800, was purchased by the Water Resource District for less than twice that-about $787,000.

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Rogne's letter suggests that Bartram got a better deal because of his connections to Oxbow and diversion officials, singling out Fargo City Attorney Erik Johnson.

Rogne wrote that Johnson has worked for both the Water Resource District and for Bartram. Rogne also noted that the Oxbow city attorney works in a building owned by Bartram, and that Bartram is the construction manager on a clubhouse for the Oxbow Golf Course and Country Club.

Johnson acknowledged he has worked as Bartram's attorney but said he was not involved in the buyout. "I had absolutely no involvement in that transaction," Johnson said. Bartram did not respond to a message seeking comment.

Brodshaug called Rogne's letter "scandal mongering" and said Johnson has worked for the Water Resource District, but the attorney did not work on the buyouts of the Bartram and Kaspari properties.

The letter, Brodshaug said, was "insinuating some skullduggery went on in some of the acquisitions and trying to make it look like there was improper preference given to some acquisitions, and that's simply not the case. One of the implications in the letter was that Erik Johnson was somehow exerting influence in the negotiations and that's simply not true."

Rogne did not explicitly allege corruption in his letter, which ended with: "Kaspari got a 165 percent buyout, Bartram 488 percent. Draw your own conclusions."

The properties were bought after being appraised by a professional, accredited appraiser, said Brodshaug. The Kaspari property was appraised at $716,000 and the Bartram house at $2,048,700.

Brodshaug explained the larger buyout for the Bartram property by saying it had a far larger and nicer house than the Kaspari property had.

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Mahoney said the assessed value of the Bartram residence was not accurate and he believed the buyout was fair.

Diversion Authority officials say one reason for the pricy Oxbow buyouts is that there are few comparable home to move to, meaning a buyout-taker needs to build a new home, which is more expensive.

The officials say residents need to be encouraged to stay in Oxbow after taking buyouts, otherwise the tax base for the local school district will crumble.

When Bartram took his buyout, he left the area, probably to Fargo, said Brodshaug.

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