As development for Madison’s Central Park continues, city officials purchased a piece of manufacturing land on the city’s east side Thursday, which sparked controversy over its asking price.

The $1.63 million price tag for the 204 S. Ingersoll St. property is about two and a half times the assessed number released by the state’s Department of Revenue.

The city signed a contract to purchase the 1.9 acre parcel from its current owner, Research Products Corp, said Don Marx, manager of Madison’s office of real estate services. The lot is currently vacant and the city hopes to incorporate the land into its plans for Central Park.

By state law, the department is responsible for assessing manufacturing properties, DOR spokesperson Stephanie Marquis said. She said DOR assesses properties at 100 percent value for what the property is worth as it currently stands. Their assessments are designed for property tax purposes.

After assessing the land and the current buildings housed there, Marquis said the DOR arrived at a $652,000 value for the lot.

However, Marx said the city hired an independent appraiser who assessed the land not for its current use but for the highest and best use for the property, or what the property could potentially be to earn the largest return on investments.

“We’re very confident our purchase price is better than [the DOR’s],” Marx said. “We see these low assessments all the time – it’s not that unusual.”

As to why the DOR assesses manufacturing properties and not the city, Marquis said those properties can be highly specialized and not every small city or town has expertise in that area.

Marquis said rumors of assessing the property lower for competition purposes are untrue. She said the DOR does not receive any money for its evaluation of property but instead the tax revenue goes to the local municipality.

“We don’t undervalue properties,” Marquis said. “There’s no benefit for us. We don’t get that money.”

When assessing the Ingersoll Street property, Marquis said the DOR considered the value of the land itself along with the buildings on the land and then compared the number to recent sales of similar manufacturing properties.

Marquis said the DOR has the ability to compare manufacturing property values with others across the state to arrive at a more accurate assessment of the property’s value.

Marx said the city also looked for comparable sales and the price the city is paying is in line with the current market. The city also has review appraisers who examine the independent appraiser’s work to see whether the methodology was accurate.

The city will now enter a 90-day contingency period during which officials will conduct an environmental assessment for contaminants among other inspections, Marx said.

“We’re not expecting those types of surprises,” Marx said. “We have a pretty good idea of what’s out there.”

During the three-month period, Marx said the city can terminate the agreement at any time if the inspections yield unfavorable results.