Special Board Meeting March 16, 2007

[Diane Blevins]

Proceedings of the Board of Trustees

District No. 2, Yellowstone County

High School District No. 2, Yellowstone County

Billings, Montana

 

March 16, 2007

 

Call to Order

 

The Special Meeting of the Board of Trustees of School District No. 2, Yellowstone County, Montana, and High School District, Yellowstone County, Montana, was duly held at The Lincoln Center, 415 North 30th Street, Billings, Montana, March 16, 2007, at 5:15 p.m.

 

Those present included: Trustees Katharin Kelker, Sandra Mossman, Mary Jo Fox, Dale Getz, Malcolm Goodrich, Joel Guthals, Glen Rickett, Thomas Harper, Rich Whitney, Superintendent Jack Copps, and District Clerk Leo Hudetz. Dawn Achten was excused and Susan Messerly was absent.

 

Communication from the Public

 

The Board recognizes the value of public comment on educational issues and the importance of listening to members of the public in its meetings. The Board also recognizes the statutory and constitutional right of the public to participate in governmental operations. The Board encourages members of the public to participate in and express opinions about issues important to the District. This part of the board’s meeting is dedicated to public comment on any public matter that is not on the agenda of this meeting and is within the jurisdiction of the Board of Trustees. Members of the public may also address particular items on this agenda either now or at the time the Board considers the particular item. There were no public comments.

 

Appoint Trustees and Give Authority to Represent Board in Helena

 

Trustee Kelker made the following motion with a second by Trustee Getz:

 

Motion to appoint and approve Trustees Joel Guthals and Sandra Mossman to represent the Board in Helena at the

State Legislature and the Montana School Board Association.

 

Those voting in favor were Mary Jo Fox, Dale Getz, Malcolm Goodrich, Joel Guthals, Katharin Kelker and Sandra Mossman: The vote passed unanimously.

 

Grand Avenue Property: Decision on Lease or Sale

 

Jerry Hansen, a member of the public, addressed the Board with his concern that the lease for the Grand Avenue Property contains no consideration for adjustments due to inflation and growth. He reviewed his handout that was given to those present. The handout showed the adjustments in rent for the property over thirty years.

 

Glen Rickett, a real estate specialist, reported he reviewed the appraisal that was conducted on the Grand Avenue property for the proposed ground lease or sale of the property. He was surprised the offer to purchase came in higher than the appraisal. He felt the appraiser must have taken into account the development of the property. He was concerned the comparable property used in the appraisal was not appropriate as they varied in size and the appraiser applied inappropriate discounts to the district property. Mr. Rickett felt the property was worth more due to its size. He recommended securing a second opinion on the appraisal. Mr. Rickett stated a ground lease should take into consideration adjustment in increases in rent over a period of time. There isn’t a lot of risk in a ground lease as the District could take the land back if there was a default. There should be either an interest adjustment in either a ground lease or a building lease. The developer is paying more for the site, as they must remove the existing building. Mr. Rickett suggested a periodic raise in rent of every five years.

 

Trustee Guthals stated the buyer has given us until April 7th to make a decision. He asked Mr. Rickett if he recommended going back and negotiate or going with a sale. Mr. Rickett reported the offers were good but the District must be satisfied with the appraisal. Another appraiser could look at the comparables used and make a decision in a day. He stated he would reject a lease as not being acceptable if it did not have a periodical adjustment for inflation. Thomas Harper reported he spoke to the developer and was informed they were not interested in an inflation clause in a ground lease.

 

Trustee Getz stated he was in favor of selling the property and the timing is critical, as the buyer has stated he is not interested in a lease. Trustee Fox asked if the District were successful in getting $15,000 per month lease, doesn’t the board need to look at Lewis & Clark and the athletic fields for the future. The District may need this property in 75 years. Mr. Rickett did not believe the District would ever want to build on this expensive of a property. The Board must decide if they can make a lease work. He felt the District should get $15,000 a month for a lease.

 

Trustee Mossman reported the Building Ownership Committee has been meeting for two and one-half years on this issue and has studied it thoroughly. It is time to make a decision and be good stewards of public property. Trustee Kelker asked if they could negotiate for $15,000 and then an escalation clause. Thomas Harper was not sure if they would entertain that or not. Glen Rickett also recommended imposing covenants on the property. Trustee Kelker felt it was worth it to come back with a counter offer. Trustee Guthals reviewed his notes from the Building Ownership Committee meeting. The committee recognized the need of the elementary district to build a new elementary school and the money from the sale is needed to fund that construction. The cost for a new elementary school is approximately $6,700,000. He also saw a few problems in the buy/sell agreement and suggested an attorney review it. The biggest problem related to the portion that dealt with the deed. Trustee Guthals stated he did an analysis of the proposed lease and the formula is interest rate driven, which has a discounted value of $1,800,000 for the first 25 years, and the discounted price of the building is $2,500,000. He took into account that current real property values should be about the same as the discounted value. Mr. Guthals concluded that a lease might be preferable to a sale but it needed to be referred to an attorney who is familiar with ground leases. If we enter into a ground lease, Thomas Harper was to talk to investment brokers. Mr. Harper reported that the District could borrow $1,000,000 against the proposed lease over ten years from the Montana Board of Investments. Payments would be equal to payments coming in from the lease. He stated that he was advised it would be best to wait until a building was constructed before marketing the lease.

 

Mr. Copps reported the Board has declared the property surplus. If the board passes up this offer and there is no other offer, the District has an obligation to do something with that property. Any updating would cost approximately $2,600,000. The District must maintain that property because it is public property. Trustee Getz reiterated that there is only one person who is interested in this property. An elementary school would need ten acres and this property is only 2.9 acres. It is undesirable for an elementary school, as it is becoming a very commercialized area.

 

Trustee Kelker asked how much it would cost to demolish the building. Rich Whitney reported the cost was approximately $200,000. Trustee Kelker agreed with Trustee Getz in that the property was undesirable for an elementary school. Trustee Guthals recognized the need to have a legal description and reported Rich Whitney has been given the authority to have the property surveyed. The City/County Planning Department has also been contacted regarding upcoming action on that property. Trustee Mossman reported the Building Ownership Committee also suggested the Hawkins Group be notified that their offer was the only one being considered. No decision was made regarding the lease or the sale of the Grand Avenue property. The issue will go before the Board at Monday night’s meeting.

 

Washington Elementary: Decision on Lease of Property to Young Families, Inc.

 

Superintendent Copps reported that, in opening Beartooth again, the Young Families Program would need a place to house their program. The District supports the program and finds it to be a very critical program, but it is not part of the District. He proposed leasing property on the Washington Elementary site to Young Families for $1 a year. The program would have modulars moved in for their program. Early Child Intervention (ECI) also has funds in their budget to have modulars moved into be a part of that program to reside alongside Young Families. Young Families will go out and raise funds to cover the costs of the modulars. The District would approve any architectural decisions. The Young Families Program provides an important piece for the school district.

 

Trustee Getz made the following motion with a second by Trustee Kelker:

 

Motion to approve in concept the lease of land at Washington Elementary School to Young Families Early Head

Start Program at no cost to the district and to direct the Superintendent to negotiate the transaction and report back to the full Board for final approval.

 

Jerry Hanson voiced his concern that the program was not compatible to an elementary school. Mr. Copps reported the program would not be part of the elementary building and did not feel there were any concerns. Cal Spangler, Director of Young Families, stated the program needs a central location for the Met bus system. The mothers are young, from 14 on up, and most do not drive. The program has had no trouble with teachers now and they share Beartooth with the kindergarten teachers. Trustee Fox felt it was a good program and the Met bus schedule was very difficult for mothers to use to get to Beartooth.

 

Those voting in favor were Mary Jo Fox, Dale Getz, Malcolm Goodrich, Katharin Kelker and Sandra Mossman. The motion passed unanimously. Joel Guthals is ineligible to vote on elementary issues.

 

As there was no further business, the meeting adjourned at 6:40 p.m.

 

 

 

 

Malcolm Goodrich, Chair

 

 

 

Diane Blevins, Recorder