Tuesday, August 07, 2007

Running with Numbers

Surely I can't be the only one wondering how the District fell into dire financial straits. In an effort to understand the current financial woes of the District, I dug around a bit and discovered something rather upsetting.

First, the District purchased a new administration site in 2005 for $6.2 million based on an appraised value of $5.6 million. The trouble is that the appraisal was provided by the seller. The District's appraisal determined the value to be $3.3 million. Why would a public agency trust the seller's appraisal when they already identified an appraiser of their own through the legally-required RFQ process? The District's appraisal was apparently disregarded and seemingly not even used to negotiate the higher figure down a tad.

Second, the District sold an elementary site in 2006 for less than market value and did not obtain an appraisal for each portion, once they divided it in half. State law requires that the District receive no less than 90% of appraised value. Rather than have both halves appraised, they appraised it just once. Worse still, I am told they appraised it through their legal firm so as to protect the document from public disclosure laws. Even more damaging is the fact that the District will be refunding the costs of demolition. Ouch!

I realize the second point is hard to swallow and not easy to understand. Let me explain a bit more.

The District sent out very few invitations to developers to bid on the property as 11.2 acres. From the few that were invited to bid, not all possessed the ability to demolish a building full of hazardous materials. Among the scant few bidders that were involved, the high bidder was identified as Burnstead. After Burnstead agreed to pay a known price for all 11.2 acres, they were then informed that the available portion was just the vacant half - the building was to be sold to the City of Edmonds. Burnstead was then allowed to modify their offer to reflect the smaller piece of vacant dirt. It stands to reason that Burnstead already deflated their price to accommodate the cost of demolition, estimated at just over one million dollars. Now that they have a vacant piece of land, they have 50% of the demolition discount and no actual demolition costs. Hmm, imagine that?

Then look at the City of Edmonds. They bought the remaining portion of the site, with the building to demolish and purchased it for a price containing a 50% reduction for demolition. Then the Edmonds School District allegedly offered to refund, rebate or discount the purchase price by the cost of demolition. Their discount is therefore 150% of demolition.

What really disturbs me is that the City of Edmonds will have no real motivation to keep costs down while they demolish. After all, the District is picking up the tab.

By my math (and I confess that I was not educated in an Edmonds School District classroom) that adds up to five million reasons to ask a few questions.

1 comment:

Anonymous said...

It's time to tell the papers about all the big and little things that go on at that school district.Who is the superintendent? Who is second? Who is third? Who's running this circus?