Why didn’t Winona get Central?


(1/7/2019)

by CHRIS ROGERS and NATHANIEL NELSON

In closed-door meetings last fall, a seeming majority of the Winona Area Public Schools (WAPS) Board was sympathetic to selling the former Central Elementary School to the city of Winona for continued public use. That is what constituents want, School Board members Ben Baratto and Allison Quam argued. That did not happen because the City Council was not willing to buy Central school as quickly as other bidders or pay as much for it, and in part because of mutual cynicism between the two governments.

WAPS Superintendent Rich Dahman was skeptical that the city might back out of a deal. “Who knows? With the city’s offer, it is still up to the whims of the City Council,” he said.

“The bottom line is [school leaders] are not looking for dollars as much as they’re looking for certainty and a timeline,” City Council member Gerry Krage said, arguing against offering more money for Central. “They want it done. They want to have certainty within the next 23 days because the election is in 23 days.”

This fall, WAPS sold two former schools in Winona — Madison Elementary School and Central Elementary School — to private developers for $250,000 after back and forth negotations with various developers and the city of Winona. For developers, one of the attractions was the school grounds, not just the school buildings themselves. The school buildings came with years of neglected maintenance needs, but each property included an entire city block, with room to develop new buildings.

Many citizens wanted the school buildings to remain in public use. The schools could become badly needed daycare facilities, a new senior center, or community gardens, Winonans suggested. The City Council did make a serious bid at purchasing Central school, but when council members sat down for their first closed-door session to consider purchase offers last September, they did not really know what they wanted it for.

The city’s end goal for Central was TBD

“I am disappointed in the position it puts us in,” City Council member Al Thurley stated. “This is kind of a ready, fire, aim scenario.” The timeline the school district had set for selling the properties meant that the City Council had to decide quickly whether it wanted Central or Madison and how much it would be willing to pay. City leaders had some ideas: a new home for the city’s senior center, a new police and fire station, reselling the property for future private economic development, or some combination of public and private use. However, they had not done much planning to flesh out those ideas, develop cost estimates for them, or commit to funding them.

“I don’t think taking on another property when we don’t know to maintain the ones we already have is a very good idea,” council member Michelle Alexander said. She voted against making an offer on Central. “For me, it’s a rush to purchase something without all of the information we need to make a decision,” she added.

Those reservations did not carry the day, however. The majority of the council felt purchasing Central was a great opportunity, even if its ultimate use was yet to be determined. “I think there’s a lot of opportunity perhaps for the city if we can get it for the right price,” Mayor Mark Peterson said. “They’re not making any more land in the middle of the city,” council member Pam Eyden stated. “We want to be [at] the table,” she added.

So, the City Council offered WAPS $175,000 for the property — with a catch. The city would not actually close the deal until early 2019. The 180-day window would give city zoning officials time to complete their ongoing reuse study for Central, it would allow the city to inspect Central’s condition, and it would give the city time to plan for the future of the Friendship Center, the police and fire stations, or whatever Central’s ultimate use would be.

However, that timeline was not something the School Board was willing to risk. At the first closed meeting to examine offers on the buildings, Dahman said he was skeptical of the 180-day window. He saw the six-month gap as a safety precaution allowing the city to back out of the purchase long after the bids were awarded. There’s been plenty of time for city official to have done their due diligence on those properties, and the district gave them tours in the spring, Dahman stated. “To me, that looks like an out to them,” he explained.

City officials: District wants speed, not money

“[School leaders] are concerned about the risk of holding onto the building for an extended period of time,” Winona City Manager Steve Sarvi explained to the City Council at its second closed meeting in October. Sarvi and Dahman had gone back and forth over the closing date for the city’s purchase offer, and Sarvi had ultimately agreed to reduce it down to 60 days: 30 days for a building inspection and 30 days for the closing paperwork. In that timeframe, city design consultants would also provide a report on a potential fire station and Friendship Center combination at Central. However, Sarvi reported that Dahman wanted a signed purchase agreement right away with a clear closing date. Dahman mentioned that other bidders offered more money, as well. So Sarvi asked the City Council if they wanted to scrap the inspection period and/or offer more money.

“I really don’t think they care about money,” Krage said. He argued that the school district’s real interest was in selling the buildings quickly, before the election, not in getting as much money for them as possible. “They want this to not affect the election so it’s not an issue for those people running,” Alexander echoed. Sarvi seemed to agree himself, adding, “I actually think if I had shown up at that first School Board meeting with a check for $10,000 and an offer to close tomorrow, they would have taken it right then and there. They just want out.”

With the belief that a higher price would not matter to the School Board and an unwillingness to buy the property without an inspection, the City Council declined to change its offer, either in terms of price or timing. “Let’s let it ride,” Krage said. The City Council had already made its best offer. Take it or leave it.

WAPS: Can district afford delay?

In private meetings with the School Board, Dahman argued that the longer the district held onto Central, the more money it would have to spend on winterizing, heating and maintaining the former schoolhouse. He stressed that delaying the sale would ensure ongoing costs from mothballing the building, eating up any potential revenue. However, in its annual budget, the district budgeted roughly $67,000 to cover maintaining Central for the year.

Dahman said the district’s realtor advised against making a counteroffer for the city to consider. While that could get them more money, it would also alienate other potential buyers and narrow the district’s options. He also expressed continued concern that the city would back out after negotiations and leave the district high and dry, even with the shortened window.

Board member Jay Kohner said he would be interested in coming back with a counteroffer for the city and negotiating on the price; however, the city’s strict adherence to the 60-day timeline and inspections were concerning. “I’d prefer as soon as possible — no 60 days,” Kohner said.

Several School Board members were sympathetic to the idea of negotiating with the city. Quam argued the circumstances allowed the district an opportunity to work directly with the city and appeal to the public, and Baratto explained that doing so would be “a heck of a PR thing for us.”

“So, they didn’t raise their price. Well, let’s counter offer,” Quam posited.

Not all members were as optimistic, however.

Beier’s offer: more money, right now

On October 16, WAPS received its highest offer yet for Central from Shawn Beier: $250,000 for the city block as-is. It was $75,000 higher than the city’s offer. Several School Board members argued that the as-is bid was their best option, and Dahman pressed the board to seriously consider the offer.

“The offer is not only higher right now than one that could come up down the road, it’s here right now with no contingencies,” Dahman said.

Board member Jeanne Nelson stated that WAPS should look out for all of its taxpayers, not just those within Winona boundaries. “I’m mindful that this school district is 40 miles long. It does not belong to just the city,” she said. “The $75,000 is an appreciable amount.”

Board member Steve Schild referenced a statement Sarvi made that the district can to sell the buildings to whomever it chooses. “If that is the sincere statement from the city, and if they understand our predicament and spirit of partnership, they should have no reservations about us accepting the best offer and reducing liability and moving on,” he said.

The School Board left that closed session and sold Central, as is, to Dan Nisbit and Shawn Beier’s Central Square, LLC, for $250,000. Quam voted against the sale.

Since then, the city has essentially gone back to the drawing board in its efforts to find a new home for the Friendship Center, and city officials have even suggested keeping the Friendship Center in its current home, the Masonic Temple. Beier stated that his company is open to selling or leasing Central to the city, but city officials have not publicly indicated that they are interested. “We have options — options other than Central,” Peterson told the Post.

Chris@winonapost.com


Timeline of school offers

Madison
September 7: $11,100 from George Duncan with no contingencies.
September 7: $50,000 from Andrew Brenner, continent on zoning.
September 11: $25,000 from Allen Hillary with no contingencies other than more information as needed.
October 4: $75,000 from Mitchell Walch with a financing contingency.
October 4: $80,000 from Andrew Brenner with no contingencies.
October 4: $100,000 from Andrew Brenner contingent on zoning.
October 4: $80,000 donation from Jerry Miller to offset costs of WAPS keeping building for one year, with purchase of lot one year later for $100,000.
October 4: $75,000 from Mitchell Walch, originally as part of $300,000 offer for both properties.
October 16: $110,000 from Andrew Brenner for the building as-is.
October 16: $80,000 donation offer from Jerry Miller to keep Madison in the district for one year.

Central
September 7: $170,000 from Andrew Brenner with no contingencies.
September 7: $11,100 from George Duncan with no contingencies.
September 11: $15,000 from Allen Hillary with no contingencies.
September 19: $175,000 from the city of Winona pending council approval, inspections and environmental testing. One-hundred-and-eighty-day closing date.
September 20: $223,000 from Mitchell Walch with no contingencies. Later raised to $225,000.
October 4: $175,000 from Andrew Brenner with no contingencies. Offered to donate school and 44 parking spots to the city.
October 4: $175,000 from city of Winona, 60-day closing date.
October 16: $250,000 from Shawn Beier for the building as-is.

 

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