Board agrees on price, not on sale
Compromises may be needed
By Bobbi Mlynar
Thursday, February 14, 2008
Board of education members on Wednesday night agreed to a sale price for the district’s administration building at 501 Merchant Street. Members retained the right to turn down the sale if certain aspects of the contract cannot be agreed on, or if another buyer submits a better offer before the March 12 board meeting.
The action came, after much discussion, on a 6-1 vote, with Mike Couch dissenting.
The building had not been offered for sale, Superintendent John Heim said; however, in recent weeks, two bidders had come forward. The first potential buyer withdrew his verbal offer.
The second buyer, Deuce Holdings, represented by Brad Hase, offered $228,860 in the form of a sale contract. The sum represents Lyon County’s appraised value of the building.
The district asked for independent appraisals from Ray Toso of Toso Appraisal Service and Mike Hinkson of Valuation Services LLC.
Toso valued the building at $265,000; Hinkson set a value of $296,000.
An additional 3,000 square feet of parking area is not included in the proposed sale.
Toso noted that of the 46 sales that occurred here in 2007 and to date in 2008, 34 were for more than the county’s valuation. Toso noted that the property is zoned for public use and would need to be rezoned.
The building was donated by the federal government to the school district in 1960. It had served as a post office from 1903 until then.
Because it has been in the hands of the school district for more than 30 years, the district should be able to keep any monies received from sale of the building, Heim said. Funds received from sales of federally donated building must be returned to the government if the time period involved is less than 30 years. A letter confirming that verbal authority from the federal government is to be sent to the district.
Assistant Superintendent of Finance Susan Hernandez told the board that selling the building and moving to remodeled space in the Mary Herbert Learning Center would save the district approximately $25,000 annually in utility fees.
The cost of insurance also would go down.
Hernandez recounted several maintenance and repair items that had been budgeted for but would not need to be completed if the building were sold.
Projects on the capital outlay list for 501 Merchant St. included about $64,000 for adding more electrical power to accommodate technology needs and about $35,000 for work on the HVAC system that was installed in 1960. Another $50,000 in repairs would be needed for cement steps.
Mary Herbert was renovated in 2003. Its electrical power should be adequate for the administration’s technology needs.
Some meeting space would be lost at Mary Herbert if the administrative staff moved in, and additional parking would be needed at a cost of approximately $35,000.
Board member Mike Helbert asked if the square footage at Mary Herbert would be adequate for district needs for another 10 years, and Heim said that it would but the answer was not that simple.
“Yes, we will,” Heim said, “but other people are going to have to move with us moving over here.”
“It looks to me like the amount of money that we’re going to have to pour into this building (compared with the cash offer) is pretty much a wash,” Helbert said. “So the question is, what are we going to save in a year?”
Board members Mike Crouch and Mary Helmer were uneasy about the speed with which the sale was being presented.
“I feel like we’re rushing into something that needs some more thought and more consideration,” Couch said. “… I just think we need to be cautious.”
Helmer said she believed that members needed to remember they are part of a public board.
“I agree with Mike. I think we’re going ‘way too fast. I just think we need to slow down a little bit and look at the options.”
She cited the City of Emporia’s methodical process when it sold Lake Kahola to cabin owners.
“The only thing, I think, that is holding all of us back is the fact that it might appear to the public that this is not a transparent transaction,” Helbert said.
Helmer questioned a contract provision that would allow the district to remain in the building for 12 months, though the district would pay $2,500 rent per month, plus utilities.
“I don’t want to pay rent on a building we already own, and we’ll still be paying utilities,” Helmer said. “That doesn’t mean a savings to me. Why can’t we just delay the contract a year?”
That tactic would save the buyer money and the district as well, she said.
Board member Angie Schreiber asked about a section of the contract that said it was “contingent upon the Seller purchasing The National Teachers Hall of Fame property … on or before April 1, 2008.”
The contract also was contingent on the district leasing the Merchant Street building for 12 months beginning April 1, 2008, and continuing maintenance and utility costs for the duration of the lease. Deuce Holdings would pay property taxes and property insurance, and would retain the right to show the building to prospective tenants.
Ek Real Estate agents Jeff Kitselman and Larry Ek, representing Deuce, explained the buyer’s position.
Kitselman said that Deuce did not want to become involved in a bidding war.
“In my opinion, another opportunity comes along tomorrow, he’s taking that other opportunity,” Kitselman said. “I’m not trying to put any type of pressure on you guys at all. I totally respect whatever decision you guys make.”
The remark drew a response from Helmer.
“I was raised if someone says ‘Take it or leave it’ to walk away,” she said.
Board member Homer Garza said that he could see potential long-term savings if the purchase went through, and several members noted that Deuce may be the only buyer interested in the unique administration building.
Ek suggested that the board could approve the purchase price, subject to final approval by the board at a later meeting “and that would give you a total out if you decided you didn’t want to sell it or somebody came in with a better offer.”
Strickland, who supported the sale, added that option would “go toward transparency.”
Strickland made a motion to approve the sale price, but to negotiate with the seller on the contingencies that made the contract unattractive to several members. Schreiber seconded the motion.
Crouch remained skeptical of the wisdom of selling the building.
“This may be an outstanding offer. This may be the best offer we ever receive,” he said. “… “My gut tells me ‘Slow down, just breathe a little bit.’ If that scares off our potential buyer, I’m sorry. I’d love for this to happen. … I think we need to slow down and think this through more.”
The board will vote on the finalized version of the contract during its meeting on March 12.
The board also heard a report from Heim about the impact of the Tyson downsizing on the district.
Heim said that approximately 1,200 of the district’s 4,800 students are children of Tyson workers. An estimate is not yet available on how many children will be affected.
“There are a couple of things you’re going to need to be thinking about between now and then,” Heim said of a meeting next month. “One of the things is that will be the last day you have to cancel the Village project. Because you’ve already approved that project, we’ll need to put it on the agenda to cancel it if you decide to do that.”
Remodeling at Lowther South Intermediate School also may be affected.
A number of teachers already have been hired to fill vacant positions and those contracts will be honored, Heim said; a hiring freeze is in place for other positions.
According to the teachers’ contract, the district must notify teachers by May 1 whether they will be rehired for the next school year. Administrators, however, cannot estimate now how many students will move from the district because of Tyson’s downsizing, nor will they know how many teachers will be needed.
“Teacher contract law is that if you don’t notify a teacher that they are not going to have a job by May 1 … they automatically do have a job,” Heim said.
Kansas school districts send in student headcounts on Sept. 20. State aid is based on those counts, and additional monies are added in for English language learners, at-risk students, bussed students and other categories that traditionally cause extra expense for a school district.
The headcount here is about 4,800, but with weighted categories added, the figure is bumped up to about 7,500. “So we will know for sure how much money we will have Sept. 20 to pay the teachers we hired May 1,” he said. “It’s a great system.”
Local legislators are working to get additional monies for the district for one year to help ease the district through what otherwise could become a financial crisis.
“I just can’t emphasize enough how much of a problem this is,” Heim said.
In other action, the board approved
F new procedures for designating accelerated and honors courses
F a donation of $4,615 from Timmerman Elementary PTO for a SMART Board for its new computer lab. The board makes the computer lab a “smart” classroom through use of an interactive whiteboard.
F a donation of $15,000 from the Emil Babinger Trust to the EHS theater department to purchase microphones, headsets and lighting equipment.
F a donation of a $3,700 sled from the Football Boosters Club to use for football practice and by other students in the training room during weights and physical education classes
F accepted a $200 donation from Tri-County Telephone Association
F approved early graduation for Jody Hollern.
truelovecharlie (anonymous) says...
Something sure smells fishy to me. It was not a consideration to move the district office until some realtor found a buyer for a building that wasn't for sale? I would have to say that; if, Mary Herbert is not being utilized to it's full potential and the move could be done without added expenses to the taxpayers for renovations to convert; then it may be a wise decision. It sure beats spending big bucks to build another building. My concern would be the open meeting act. How did all this come about without SOMEONE initiating the proposal? If the building is truly worth $50,000-$60,000 more than the offer being made, would it not be more prudent to put the building on the market so the school district can maximize it's sale? If they could put it on the market at fair market value will still occupying it; they stand to get a better price AND need to lease it back for a shorter time. Just a thought.
February 14, 2008 at 9:06 a.m. ( permalink | suggest removal )
wanderer (anonymous) says...
I'm with Mary on this -- when someone tries to rush you, walk away. The same thing happened when a developer tried to push the city commission for an immediate decision on the Modine zoning ... it almost collapsed the deal.
Isn't this the same Mary Herbert that once upon a time was too crowded and cramped to use as a school? I know there's been a lot of remodeling (and it's good work) but I hesitate to start shoving everything in there again.
By all means, study it carefully. I wouldn't use Kahola as a model, though. Yes, the city took its time, but if I remember correctly, that was partly because of indecisiveness, not thoroughness. It took years and two or three city commissions (at least) before the trigger was pulled.
February 14, 2008 at 11:58 a.m. ( permalink | suggest removal )
bobhornet (anonymous) says...
This is so wrong. Yet another Emporia landmark is getting sold without any consideration for its historic value. ESU has the Anderson Library on the market, which they never would have attempted while Joe Cannon and Earl Sauder--the men who donated the building to the university--were still alive. Now the school district is trying to hastily push through a sale that we know very little about.
February 14, 2008 at 12:10 p.m. ( permalink | suggest removal )
poacher (anonymous) says...
What a deal for USD253! Have your cake and eat it too! Receiving an outstanding cash offer on your somewhat “White Elephant” property. Having your cash in hand and retaining for peanuts the use of the property for up to a year in order to orderly consolidate, relocate and further sort through the student number dilemma as the result of the Tyson Decision. And guess what fellow tax payers, for a change we are putting a property back on the tax roll to help all of us carry our local tax load. I commend the foresite and the guts of our board to respond so promptly and so wisely to the situation. We now know that neither Helmer nor Crouch should ever be retained as our County’s Emergency Management Coordinator. If finally feels good to be a taxpayer.
February 14, 2008 at 6:50 p.m. ( permalink | suggest removal )
truelovecharlie (anonymous) says...
I also don't understand when they say they would rent it back and still pay all the maintenance for the 12 month duration. Isn't it usually the landlord's responsibility for maintenance of their holding? I still say there is something fishy with this whole thing and the fact they seem to be so rushed to push it through just adds fuel to the fire of suspicion.
February 14, 2008 at 9:35 p.m. ( permalink | suggest removal )
JohnDoe (anonymous) says...
TLC brings up an interesting, yet seemingly obvious, point. Why rush to sell a building that wasn't officially for sale? Overlooking the fact that the bid is $35-65k below the appraised value. It also sounds as though the bid is a passive attempt at acquiring a good deal on property. Mike Crouch is absolutely right about being cautious. The potential buyer is fishing for a bargain. All the characteristics are in place: bid on unlisted property, low-ball offer, and intentionally eluding other bidders by requesting an uncontested offer.
Put the property on the market. No one thought to sell the building until this ridiculous offer was made. What is the loss? I am also not sure that Mary Herbert is the answer. That building certainly isn't getting any younger. The facility no doubt needs more improvements to function as a district headquarters than what is being discussed. While the space needs to be utilized, how long before the building is outgrown again? New buildings aren't cheap either. If we must sell the building, the bid needs to be much more competitive. And discussion should take place on a plan for when Mary Herbert "no longer meets our space needs."
February 15, 2008 at 1:34 p.m. ( permalink | suggest removal )
truelovecharlie (anonymous) says...
From the outside looking in, this appears to be driven by an aggresive realtor looking for a quick and easy commission. Seems to me there are so many critical issues ahead, that selling the current building and relocating the district office could wait a while longer. It would be different had the district first decided to put the building on the market and then everything else came about. It just looks to me like the school board saw dollar signs and now need a reason to justify selling the current building and relocating. It would be prudent to approach this in the same manner they would any other issues. If THEY decided to explore a potential sale, then they should put it on the market at a fair price and go from there. That is their responsibility to the taxpayers. No matter where they relocate, they should have a good maintenance schedule that includes preventative maintenance.
February 15, 2008 at 6:34 p.m. ( permalink | suggest removal )
Cliffy (anonymous) says...
I too think something just isn't right about selling this building at 35-60 thousand dollars BELOW appraised value. Maybe I should stop by the Civic Auditorium and tell them I know of an offer to buy that building for say $300,000, never mind it is worth a million. Let's all go make offers on all the schools and see if it makes sense to sell them all like a Monopoly game.
February 28, 2008 at 8:41 p.m. ( permalink | suggest removal )