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Fiscal Management Board at its July 26th quarterly meeting

Fiscal Management Board concerned about Gary schools property sales

Contributed By:The 411 News

Round 1 of sales over, round 2 is next

Atty. Clorius Lay, a member of the Fiscal Management Board which monitors the Gary school district’s emergency manager had concerns about the recent notice of 33 unused properties for sale.

At their quarterly meeting last week, Atty. Lay said the prices should be modified. “I’m just making a suggestion. There is no way you’re going to sell a school for $5 million. I believe Beckman was the last time a school was sold and it went for $100,000.” He added, “The hardest buildings to sell are hospitals, theaters, and schools. They almost have to be used for their original purpose.”

When bids were opened Monday, there was only 1 offer for a property. That was from the City of Gary – $100,000 for the closed Benjamin Franklin Elementary School in Glen Park. The asking price was $1.434 million. Franklin sits in the city’s University Park redevelopment plans.

Another board member, former State Sen. Earline Rogers also questioned the asking prices. “I too looked at the buildings and asking prices. Nobody is going to pay this amount of money because of the amount of damages and locations.” Some of the asking prices: Edison High School, $3.374 million; Lew Wallace High, $4.393 million; and the old Emerson High and the adjacent Spaulding Elementary, $2.533 million. All have been subject to weather damages, vandalism or fires.

Asking price for Wirt-Emerson VPA, that closed this year, is $3.165 million. Dunbar-Pulaski had the highest asking price, $5.648 million; the school closed in 2017.

The asking prices are based on the Calumet Township Assessor’s assessed values. Emergency manager Dr. Peggy Hinckley said, “These are just starting prices. Most people in commercial real estate do their own appraisals. If they have to tear down a building, they are going to offer what they know to be more of the market value.”

The school district is counting on those property sales to help reduce its annual deficit and also help pay down the school corporation’s nearly $100 million debt. The emergency manager and her team have created a financial model, their “Viable Deficit Reduction Plan” to balance the school district’s budget and begin paying off long-term debt. The plan lays out ways to reduce expenses and ways to increase revenues.

Board member and Purdue University Northwest Chancellor Thomas Keon wanted to be assured that the expected monies from the sale of the buildings did not match their assessed values, giving an inflated value in the deficit reduction plan.

“We were very conservative in our projections. We didn’t even have control of those buildings when we developed our deficit reduction plan,” said Chief Financial Officer Leonard Moody. The Internal Revenue Service had placed liens on the buildings because of unpaid federal employee taxes. In April, the IRS and the school corporation reached a settlement and the liens were removed.

And from Dr. Hinckley, “We knew at the time those buildings had a negative value.”

The city’s offer came in the first round of bidding, open only to nearby units of government and educational institutions.

The final round of bidding for all interested parties closes on August 24th. The bids will be opened at West Side High School, on August 27th.

Moody said the district is on target to have a balanced budget at the end of 2019.

Atty. Clorius Lay, (l-r), Purdue University Northwest Chancellor Thomas Keon, Kelly Wittman from the Indiana Dept. of Education, and former State Sen. Earline Rogers

Story Posted:08/02/2018

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