school district real estate purchase

Given Our Economic Times, How Can T/E Afford A Real Estate Purchase?

Here we are nine days and counting until school starts, in the midst of contentious teacher contract negotiations and parents in the District hoping that school starts on time.  Residents have repeatedly been told that T/E School District cannot afford the demands of the teachers … escalating health care and pension costs.  With decreasing revenues and rising costs, in June we witnessed, as tough decisions were required to balance the District budget.

During the discussion on the Fact Finder’s report at the August 20 special School Board meeting, school board members weighed in on why they could not vote in favor of the report.   Karen Cruickshank, Board president, commented in part,

“… The public knows how hard the Board has worked to balance the budget over the past 3 years.  We have explored ways to increase revenues.  We’ll be charging students an activity fee for the first time this year. We have raised taxes 2 years in a row to the Act 1 limit with allowable exceptions to referendum. We have cut $10 million from our budget, or one tenth. We have held administrators, aides and paras at zero raises over the last 3 years. The members of TENIG agreed to a 4.5% cut last year. The custodial staff has agreed to waive both the 4.5% increase for next year and has given back an additional 10% of current salary. The numbers still don’t balance. It is the responsibility of the Board to balance the budget. The Board has no control over large increases in state mandated pension obligations put in place by the legislature in 2001. The District has also suffered significant financial losses through commercial and residential real estate reassessments and tax appeals. These reassessments and appeals have resulted in the likely loss of $1.5 million this year. These factors together have wreaked havoc on what was once a stable T/E budget…”

For the most part, I think that residents are starting to recognize the economic problems facing the District and the importance of School Board members to make responsible and sound fiduciary decisions. It is because of this, that frankly I was astounded to see a specific item listed under the ‘Consent Agreement’ on the agenda for the School Board meeting, Monday, August 27. According to the agenda, a ‘Consent Agenda’ requires Board action but “… it is unnecessary to hold discussion on these items. With the consent of all members, they are therefore grouped and approval is given in one motion.”  

There are probably 15 or 20 consent agenda items listed on Monday’s agenda, ranging from approving minutes, and acceptance of gifts to ‘purchase property’.  All of these consent items are lumped together and then rather than going through them item by item, approved by the School Board in one motion.  The purchase property item caught my attention but I had to read to page 45 of the agenda’s supplement materials to find the following:

Consent VII, E, 3:Purchase of Property

“That the Board of School Directors authorizes the Superintendent to execute, and the Board Secretary to attest, and deliver to the record owner of property designated as Tax Parcel No. 43-10L-2 [which is property adjoining the District’s property], the Agreement of Sale in the form attached to the resolution…….”

The agreement of sale that follows further identifies the property as 892 Old Lancaster Avenue, the seller as the Estate of Arthur Fennimore, and the price as $265K.  The date of sale is left blank.  On Saturday morning, I stopped by the property to take a photo and spoke with the grandson of Mr. Fennimore.  He and his brothers were cleaning out the house in advance of the purchase by TESD.  Mr. Fennimore was 97 when he passed away and was the original owner of the house. According to the grandson, closing between the Estate and TESD is expected by the end of the week.

I have attended most, if not all, of the 2012 School Board meetings and have absolutely no recall on the discussion to purchase additional real estate property, …  especially given the agonizing budget decisions, the possibility of demotion and the contract negotiations with the teachers.  Therefore, I don’t think that I missed the discussion about purchasing additional real estate.

This past Friday there was a Facilities Committee meeting and although I did not attend, according to the agenda there was no discussion about the upcoming purchase of the Fennimore property. To be clear, in the past, there have been on/off discussions about the maintenance building and the need to expand the storage facility.  In fact, there are existing architectural plans —  but as far as I knew, the project was ‘on hold’ for obvious economic reasons.

The Fennimore house is the last remaining property between the current maintenance building and T/E Middle School on Old Lancaster Rd. – the District previously purchased all other properties.  So … I guess from an overall planning standpoint, the acquisition of this property makes sense.  However, given the District’s current economic climate and the unsettled teachers’ contract, it would seem that the topic to ‘purchase’ would still require some discussion, not just buried with 20 other consent items.  Unfortunately, the word that immediately comes to mind … transparency, or rather ‘lack thereof’.

Based on my conversation with Mr. Fennimore’s grandson, the estate has a deal with the school district and that closing and settlement will occur later this week. Given that there appears that there will be no discussion about the School Board’s decision to purchase the property, here are my questions …

How did they arrive at the price for the property?  The sale price is listed as $265K.  My friend Ray Clarke did the research and determined that the assessed value is $129,500.  According to Ray, if we “… multiply $129,500 by the current Chester County Common Level Ratio of 1.70, you get $220,150.”  Subtract $220,150 from $265K, and you have to ask, why is the School District paying a $45K premium for this property.  Regardless of future development plans, for the time being, the District will need to tear down the house, which means an additional expense.  Another question — is the maintenance-storage facility project still on the back burner or does the Fennimore house purchase have the timetable moved up on the construction project?

Some may suggest that a $265K real estate purchase in the T/E School District is a ‘bargain’ and a ‘smart’ move for the District in these depressed economic times.  But the bottom line for me, is $265K really such a bargain for a property assessed at $130K?  And what about the public – do we deserve an explanation about the purchase?  What is the plan for the acquisition? And if there is a plan, how much will that plan cost? 

I have the questions, but it doesn’t look like there will be much in the way of answers.

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