City redevelopment tract mistakenly sold

South Park man gets $340,000 parcel for $650.

By Cornelius Frolik
Staff Writer

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The city of Dayton transferred the deed of a 5-acre parcel with an assessed value of $340,000 to a private company for just $650, a mistake involving a major redevelopment project.

The property, located near Miami Valley Hospital, is the proposed site of new cottages, townhomes and other housing that is part of the Warren Street redevelopment project.

If the city wants the property back, it will have to pay a “fair” price, based on market value, said Eric Segalewitz, the deed’s new owner.

“I would like to mediate this with the city,” he said. “It doesn’t matter what I paid for it. It’s the value of the property.”

Aaron Sorrell, Dayton’s director of planning and community development, admitted the city erred but questioned Segalewitz’s legal right to the land.

He said the city has no plan to fork over a big payout for administrative oversight.

“We’re not going to unduly enrich somebody for a mistake,” he said.

Segalewitz, 50, who owns the company Upscale Realty, a few years ago applied to purchase a vacant lot next to his home at 32 Alberta St.

Segalewitz applied for the land through Dayton’s Lot Links program, which allows people to buy abandoned, tax-delinquent properties for a relatively small fee.

Segalewitz’s request was approved, and he paid about $650 for the property, which was transferred in March 2012.

The lot belonged to the city of Dayton, which had purchased it from Greater Dayton Premier Management in December 2011, as part of a larger land deal.

The city acquired the side lot and 5 acres across Alberta Street for about $340,000, or its appraised value, city officials said. The two parcels were part of the same deed.

The five acres was the former site of the Cliburn Manor housing projects, which were demolished in 2008. The city wanted the land to support redevelopment efforts near South Park and Miami Valley Hospital.

But when the deed was written to transfer the vacant lot to Upscale Realty, it also unintentionally contained the Cliburn real estate, Sorrell said.

“We made a mistake with the deed and inadvertently put both pieces of property on the deed, and not just the one he wanted,” Sorrell said.

The quit claim deed was signed on Feb. 27, 2012, by Assistant City Manager Shelley Dick-stein and Assistant City Attorney Jonathan Croft.

Segalewitz said he only learned he owned the deed to the Cliburn property about six weeks ago while preparing to sell his Alberta Street home and the adjoining lot.

The property has been the home to the South Park Urban Garden for a few years and has hosted community events, including a festival last weekend. Segalewitz said the land is being used without his permission by utility contractors and others.

Segalewitz said the deed mishap delayed the sale of his home, and he’s incurred legal costs fighting the city.

Segalewitz last month received a property tax bill for $14,000 for the five acres, shortly after his ownership was established, he said.

Segalewitz said the city should have confirmed who owned the land when CityWide Development Corp. spent considerable sums preparing a site plan for the neighborhood.

“It’s just a big mistake and it shouldn’t have happened,” he said.

Segalewitz said he is willing to negotiate to transferring the deed back to the city, but he expects compensation. He said he has already fielded two offers for the land from private buyers.

He said he would like to avoid litigation, which would increase costs to taxpayers.

“I am not putting any numbers on the table,” he said. “And I think it’s worth a fortune — the property — but I’m a reasonable person, and I’d just like to end this.”

Sorrell said the transfer of the deed was unintentional, and the city has documents and correspondence to prove it.

Sorrell said intent usually matters in the eyes of the law.

“There are some questions as to whether or not he validly owns that property, because it was a transfer in error, and there was never any intent to transfer,” Sorrell said.

However, Segalewitz’s attorney, R. Jason Howard, said intent is not one of the necessary components of a valid deed.

Howard said the deed does not appear to contain any form or filing problems, but noted that this is a complex real estate matter. He said he hopes the city and his client can quickly reach an amicable resolution.

“This does not happen everyday,” he said.

James Durham, professor of law at the University of Dayton and author of “Ohio Real Property Law and Practice, 6th Edition,” said the burden is on the city to prove that a mistake was made and that the legal owner of the property owns it because of the mistake.

“The action the city would bring in Montgomery County Common Pleas Court is to reform the deed,” said Durham, who has no connection to the dispute. “The city must prove a mistake was made.”

The property in question is an important piece of CityWide’s redevelopment plan for the area. The land proposal calls for building two-story homes, cottages, town homes and garages on the Cliburn site.

Steve Budd, CityWide’s president, said the deed dispute has no immediate impact.

The first phase of the project will be commercial space and market-rate housing along Warren Street, built on property already in CityWide’s control, he said.

Construction could begin in late August and will take about 10 months to complete, Budd said.

The next phase of the project has not been decided, and the Cliburn site may not be built out until later stages, he said.

“I think this issue with Cliburn gets resolved long before we talk about developing the site,” he said.

Sorrell said the city has put additional safeguards in place in the last month or so to prevent future deed errors.

He said the deed descriptions are more detailed and documents are reviewed more thoroughly by city staff before approval.

Staff writer Steve Bennish contributed to this story.

Contact this reporter at 937-225-0749 or email Cornelius.F