Milton School District says it could save thousands with building purchase
MILTON — The Milton School District reports it could save about $64,000 a year over the next five years by buying the former Daland building and relocating its district central office and MECAS alternative school there.
The district unveiled the estimate this week in a cost analysis. District officials plan to present the school board Monday with a comparison on the costs of leasing space for its central office and alternative school versus relocating them to the Daland building.
The district plans to ask residents to authorize buying the Daland building at a special electorate meeting Monday, Aug. 29.
The building has been vacant since February, when former tenant CESA 2 relocated to Whitewater.
The district now leases space for its district offices at the Shaw Municipal Building, 430 E. High St., and it houses its alternative school in leased space at the Burdick building, 35 Plumb St. A district analysis shows rent, utility and operations at those locations will cost the district an average of $138,000 a year over the next five years.
The analysis shows that if the district bought the Daland building and moved its central office and the alternative school there, it could save about $320,000 over the next five years—an average of about $64,000 a year.
The district reports that estimate is based on the assumption that the district would pay for the building using district cash reserves. Officials have said the district could use a blend of reserve funds and borrowing to buy and upgrade the building. The board is not required to decide how the district would finance the building prior to the electorate meeting Aug. 29.
Business Services Director Mary Ellen Van Valin told the board earlier this month that the potential cost of buying the Daland building is not factored into the district’s preliminary 2011-12 budget. Residents will vote on the budget Monday at the district’s annual meeting.
It could cost the district as much as $1.4 million to buy and upgrade the Daland building. The district has agreed to an option to buy the building from a private owner for $875,000 and has negotiated that price down to $850,000.
The district estimated this month it would have to sink an additional $500,000 into work in the Daland building, including changes to room layouts and code upgrades that would be required to use the building as a school.
Board member Besty Lubke told district staff she wanted more details on costs for upgrades before asking residents to OK buying the building.
The district this week released figures by consultant Plunkett Rayisch Architects that show it could cost the district $100,000 in code and maintenance items, which district officials have said would include a sprinkler system.
And it could cost the district as much as $190,000 for interior construction and security changes as well as HVAC and electrical costs tied to new room layouts in the building.
Aug 15, 2011 at 7:41 p.m.
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Nice thought for ANYTHING to be "crystal clear".
Tossing money at a rental property though, holds true for municipalities as well as renting an apartment vs. buying a home. There is value in ownership. The refurbishments... in the long run, will pay us back in time.
Aug 14, 2011 at 3:12 p.m.
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The NPV over a long period of time, with residual value, would almost certainly show this to be a better deal than continuing to lease space.
However, my guess is the school board isn't thinking long-term. They'll do this deal now, because it makes sense, and within a couple years we'll be hearing again that a new high school is needed. If or when that ever happens, then this purchase will turn out to have been a bad idea.
I wouldn't vote for this until the district's long-term plans were crystal clear and did NOT include new school buildings...
Aug 13, 2011 at 11:05 p.m.
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School districts are exempt from local property taxes if they bought the building and used it all for school district purposes the building would become tax exempt.
Aug 13, 2011 at 9:24 p.m.
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They need 1.5m bonding it out will cost roughly $7500 month for 30 years(normal for buildings). So the savings are not real! If they continue to rent,the builing will be maintained by the owners, who will pay property taxes, and be responsible for the structure and main elctrical and plumbing.
If the schools purchase the taxpayer is on the hook for everthing>
BAD DEAL
Aug 13, 2011 at 6:41 p.m.
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crunch_munch, it will be paid for by cash reserves, which presumably can then be replenished by the savings. The district expects to keep the building and reap savings well beyond the next five years (but it probably isn't prudent to project out any farther). If they need to borrow, then the borrowing costs will be spread out over the lifetime of the bond issue.
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