School board approves sale of Orchard building

It took two motions and nearly an hour of discussion for the Summerland Board of Education to approve the sale of the Orchard site to the Village of Orchard.

The sale, for $10,000, was approved April 12, during the board's monthly meeting. Per the motion, the village will retain all contents in the school building. The sale also includes the parking lot, across the street, to the south of the site.

Prior to the meeting, Village of Orchard officials presented a proposal for the building purchase and contents. Per the agreement, the village offered purchasing the building and contents for $45,000, with credit for payments already made to the district for utilities since November. The school district would also agree to pay for heating, in the amount of $77,385, since the current HVAC system is inoperable.

The proposal would have resulted in a net cost of $39,840.88, to the school district.

During board discussion, school officials asked district attorney, Steve Williams, of KSB Law, to outline the district's liability of a potential sale. According to Williams, under the law, the district is "supposed to receive fair market value for any school property."

"That's always the stumbling block when it comes to these deals when another political subdivision wants our property," he said.

The easiest way to receive fair market value would be to auction the property, according to Williams.

"Anyone interested puts an offer in and that sets fair market value," Williams said.

Board member Steven Thiele asked what would be the statute of limitations to contest a sale below fair market value.

Williams said four to five years, if someone files a lawsuit to reverse the sale.

Board president Ed Nordby questioned if provisions could be added to a sales agreement.

Williams said an indemnification clause could be added. It would require the buyer to indemnify the school district for any attorney fees or other costs incurred during litigation.

"It would take the risk off us and put it on the buyer," Williams said.

Board member Jeremy Wagner asked Williams if paying the heating system would increase the fair market value of the building.

In theory, yes, but in reality, no, according to Williams

"It doesn't make much sense to your current taxpayers to spend $100,000 to get less than that back," Williams said. "It doesn't make sense to invest money that you're not going to be recoup on the sale. That looks fishy to a court, if it ever got there."

Williams suggested having the building appraised, with and without a heating system.

"Then, you have to make a basic business decision, based on that appraisal," Williams said.

Nate Schwager said he liked the proposal presented by the village.

"It shows everyone exactly what we're doing. We've all went around and said we want to do something good for our communities. At the end of the day, what kind of example do you want to set for our kids? I think everybody being on the same team, going forward, it's a lot easier when everybody's winning than when you have one fighting against," he said.

"We were elected to the school board, first and foremost, to look out for the school district, financially and from a risk perspective," Thiele said, noting he would understand the village's hesitancy to invest money in a building if potential litigation could occur. "What's the building worth?"

Board member Candice Hoke said she appreciated everyone's input regarding the sale.

"While the original motion by the Orchard Advisory Board to set back $400,000 is no longer legally binding, we would agree there are political ramifications. I appreciate everyone working with us," she said. "We all agreed to let two people presiding from each town to handle their buildings."

Hoke said the district did not plan to make money on all three sites.

"The longer it gets strung out, it gets messier and messier and brings back a horrible feeling in my stomach I do not like."

Hoke said she thinks the village proposal is "doable."

Schwager's motion to increase the purchase price to $50,000, with the district keeping the contents to be auctioned off, received a second from Hoke.

Kerkman, Nordby, Thiele and Wagner voted against the motion.

Thiele reiterated the building is not worth a negative number as it sits now.

"I'm not looking for the school to profit, I'm not. I want to get as close as we can, north of zero.

Village board chairperson Stephanie Cleveland asked what the fair market value is without heat.

Village board member John Ferguson said if the village does not own the structure, the village will pursue condemnation on the 1923 building.

"We'll start the process of condemning it," he said.

Cleveland said the village hopes to cover costs, if they own it.

She said the village used area school building sales to determine the $45,000 cost.

Kerkman suggested $10,000 for the sale of the Orchard building and contents, including the parking lot across the street. Nordby seconded the motion, which was approved 6-0.