Bleak House

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Interestingly, May's offering price was typewritten on a bid contract while Bebbling's was handwritten. This is odd because during the first round of bidding, both May and Bebbling submitted typewritten offers.

The next day, Tseffos delivered the two offers in sealed envelopes to ASU real estate officials. Shortly after 5 p.m. on July 12, May's real estate agent called and told Tseffos that May would offer $10,000 more than any other bid up to $1.5 million.

"I called him and told him we wanted to put in an escalation clause," Norris, May's real estate agent, tells me. "His response was, 'Why aren't you paying $1.5 million?'"

Tseffos did not relay Norris' offer on behalf of May to ASU officials. Instead, Tseffos stated in a July 12 e-mail to ASU real estate director Bott that Norris was asking to "add in an escalation clause allowing him to pay $10,000 over any $1.5 million offer."

Norris tells me Tseffos misrepresented his offer because no one had submitted a bid over $1.5 million, thereby making the escalation clause meaningless. Tseffos did note in his e-mail to Bott that it appeared that May would pay $1.5 million if ASU wanted to continue the bidding past ASU's self-imposed July 12 deadline.

Records indicate ASU was not interested in extending the deadline. Bott forwarded Tseffos' e-mail to his superior, Ray Jensen, associate vice president of administration, and stated that he thought the "high offer is the deal."

At first glance, the high offer appears to be Bebbling's of $1.375 million. But that's before taking into account the real estate commissions.

And that's where an embarrassing problem for ASU arises.

Since Tseffos was representing ASU and Bebbling did not have a real estate agent, the university would have to take 4 percent -- or $55,000 -- off the top to pay Tseffos, thereby reducing the amount of money going to ASU to $1,320,000.

Unlike Tseffos, Norris had agreed in writing to accept no commission as May's real estate agent. This meant that May's bid of $1,354,600 would have generated $1,327,508 to ASU after paying for Tseffos' 2 percent commission for representing ASU.

So what's the bottom line?

May submitted the highest net offer for the property by $7,508, even without consideration of the last-minute proposal to top any bid by $10,000 up to a maximum of $1.5 million.

But ASU sold the property to Bebbling, who is a major contributor to ASU. (He's given more than $300,000 to the university in recent years.) Bebbling also is a member of Crow's ASU President's Club, a group of about 120 families and individuals that pledge to give a minimum of $5,000 a year to the university to help provide for, among other things, scholarships.

May, meanwhile, was left out in the cold -- despite having the higher bid.

"They would have gotten more money from our offer than they received from the other offer," Norris tells me. "Now that really makes us angry."

ASU spokeswoman Shafer says the university did not consider the cost of commissions when it selected the winning bid.

"All bidders were informed that the award would be based on the highest total bid," Shafer stated in a June 2 e-mail. "None were told that net proceeds would be used as the basis for award."

But Norris tells me ASU never made such a statement to him during the bidding. Furthermore, Norris says it makes no sense for the university to accept an offer that provided fewer net proceeds to the state.

"The state of Arizona should be taking the highest net proceeds no matter what the bids are," Norris says.

ASU sold the property to Bebbling on August 16, 2005, for $1.375 million. By that date, Bebbling already had cut a deal with Cordo Company, a Phoenix luxury home builder, to develop the property. In fact, Bebbling had obtained financing for up to $4.125 million secured by the property, county real estate records show.

Bebbling, who is vice chairman of the city of Tempe's Golf Committee, quickly obtained approvals from the city's planning commission and city council to build eight luxury homes on the lot.

Since the property was already zoned for up to four homes per acre, Tempe was not required to hold public hearings. Neighbors in the adjacent subdivision were never given the opportunity to express their concerns over the doubling of residential density next door. With the approvals in hand, Bebbling had the president's house razed.

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John Dougherty
Contact: John Dougherty