Bottom Line Cost of Demolishing and Paying Off School Board’s Old ITT Property: $1.27 Million
FlaglerLive | December 3, 2015
When all is said and demolished, the Flagler County School Board will have spent $1.27 million between last August and next June to be rid of the old building known as Corporate One off Palm Coast Parkway, and to move some services from that property. The building once served as ITT’s headquarters and as the school board’s offices before entering a period of decline as the home of the district’s adult education operations. It was deemed unfit for school use last year.
On Tuesday, the board voted 4-1 to approve a bid process to solicit a demolition company by January, with the demolition completed by mid-May. The cost of the demolition is pegged at $200,000. The district is also spending $300,000 to move some operations and renovate another location to accommodate the move, though that move was planned as far back as 2008 and is not necessarily tied to the building’s fate. This is also the year when the district’s remaining $770,244 debt on the building was to be retired.
The district made a payment on August 1 of $394,799, and will be making another payment of $395,445 by next June out of its capital budget to pay off the remaining loan on the building, “which really doesn’t have to do anything with the building because we would have to pay that anyway, it’s like your house mortgage,” Finance Director Tom Tant said. The cost applies to the land as well. “We would have to make that bond payment whether the building was there or not.”
The total comes to a $1.27 million hit on the district’s bottom line, though that cost is not a consequence of the demolition of the building as much as the sum total of coincidental costs having to be paid in conjunction with the eventual demolition. “It’s a coincidence that it just happens to be the same year we’re doing both,” Tant said of the demolition and the move of certain services to Education Way. (An earlier version of this story inaccurately tied the various costs as consequences of the demolition.)
The building has been costing $70,000 a year to maintain.
The board has been discussing the fate of the dilapidated building for almost a year. It found no buyers when it advertised it earlier this year. Its appraisers placed more value on the land than on the building. The property is valued at $1 million. So the board opted for demolition.
The Adults and Disabilities program is currently at that site, in portable buildings next to Corporate One. The program would move to a site behind the old school district offices near Flagler Palm Coast High School, and the district’s custodial and maintenance services would move to Education Way off of U.S. 1. Costs could yet go higher. Board chairman Colleen Conklin said the move of facilities and custodial services “has nothing to do with Corporate One closing,” and the $300,000 would have been spent anyway.
“We have to remember that this is just an RFP,” Superintendent Jacob Oliva said, referring to the request for proposal the board was about to approve Tuesday. “If the bids come back and it’s not within the parameters we allocated we’ll have to come to the board with some adjusted figures to say this is beyond the scope of what we’re planning, and we might need to do a budget amendment then to move the project forward, or we might need to revisit the vision moving forward. So as far as both these projects are concerned, the allocated amount that has been approved was $300,000 for the move and $200,000 for the demolition.”
The bid process drew opposition from one board member. Janet McDonald found the demolition unnecessary at the moment, though she said it could be more feasible in a few years. “We’re seeming to get rid of something that’s a vital asset,” she said, asking for the original price the school board paid to buy the building. “Just to make everyone aware, I know it’s not current dollars.”
Oliva put the price at “just over $3 million.” It was actually $3.5 million when the board bought it in 2002, or $4.63 million in current dollars, according to the Bureau of Labor Statistics’ inflation calculator. The building had sold just five years earlier for $1.1 million. Buying it had been the idea of Steve Edwards, the director of Adult and Community Education at the time. The investment–which also subtracted upwards of $3 million a year in taxable property at the time–didn’t quite live up to its billing as a step forward for adult education as the building soon became a burden on the district while the adult education program shrank. Only one board member in 2001 cautioned against buying it–Eddie Herra, who thought the district was better off building new for the price it was putting down on Corporate One.
Demolishing the building now is intended to end “carrying costs” while making the property more attractive either to a potential buyer or to the district’s uses in the future.
“The building did not add additional value to the property, the property maintained the same value whether or not the structure was there or not because of the amount of refurbishment necessary for that building,” Kristy Gavin, the board’s attorney, said.
“So we’re paying to make it easier for someone to come in and build their dream project at taxpayers’ expense,” McDonald said.
“No, what we’re doing is we’re paying to reduce the overhead costs,” Oliva said, recalling the recent history of the failed attempt to sell the building and the decision to eliminate the operation costs burdening the district, leaving the land fallow “till we need to build schools again or to determine that in the future. The real value in that property is its proximity in Palm Coast and the fact that the feeling is that western kind of Palm Coast and northeast quadrant is going to start seeing some real development, so there will be a much more desired interest in that parcel in the near future.”
“Right now we’re talking about taking $200,000 to demolish a structure that’s costing us $70,000 a year,” McDonald said.
But demolishing the building doesn’t change the value of the property, Oliva corrected.
“The positive attributes of that building are highly overrated,” school board member Andy Dance said. “I spent two to three years in that building as a tenant, and the problems encountered on a daily basis are laughable, window leaks, roof leaks, elevator troubles, smells, the list goes on and on. It is not a Class A office building. It’s just worn, it’s a bad design, bad construction, and it really doesn’t have value for our purposes at this point in my opinion. The value is in the land, and the land will appreciate more without the building.”