Why politicians make lousy real estate developers and vice versa

Other peoples money. That’s the key to real estate, and especially real estate deals managed by those we elect who are supposed to be working in our best interest.

We’ve see stupid deals in Dayton for a long time, and they seem to slide along into oblivion in the mind of the public. No one got hoisted by their petards on the Arcade deal, or the Arcade tower, or the Wayne Avenue Kroger, or…. the list gets really long.

Let’s just say this: politicians raise bad real estate deals to a new art form. And locally, there are plenty of failures. However, it would appear that the deals by the Dayton Public School Board of Education may take the cake. This is a long video. But, it should make it pretty clear that there are serious questions about the deals they’ve done, the ones they’ve refused to do- and who’s been driving the deals- and questions about his entanglements.

We look closely at the site downtown on E. First Street where Patterson Co-op once stood, a greenfield, ready for development, and the site on Wyoming at Alberta where Patterson Kennedy Elementary once stood- near Miami Valley Hospital and the University of Dayton.

We’ve spent the last two months pursuing this story- and trying to figure out why Dr. Adil Baguirov seems to be the only member of the Board of Ed- including the school superintendent, that knows what’s been going on when it comes to these deals- and we’re wondering if this is by design.

If the schools wanted to optimize the value of these vacant properties, the key factor would be what property taxes will the development generate to the district in addition to the sale price- nothing else.

Watch the video. We’ll post supporting documents later.

Here is “Dirty Deals Done Dirt Cheap” featuring the Dayton Public Schools Board of Education, the Dayton and Montgomery County Port Authority, the former DPS operations Chief John Carr, the DPS board attorney, Jyllian Bradshaw and CareSource.

It takes time and money to do videos and research like this. If you value exposing Dirty Deals Done Dirt Cheap, please consider making a donation: www.esrati.com/donate.

Dayton Public Schools : We’re broke, and we don’t want your money for idle real estate

Just two weeks ago, Dayton Public Schools were dead broke, because they’d lost 577 students, which worked out to $4.6M shortfall, and that this was a reason to cut contracted administrators and even teachers mid-year in a Reduction in Force.

Only next thing we hear is that it’s really only a $2M drop because of decreased enrollment, and well, we’re not sure exactly what the actual number is:

The new enrollment data from ODE shows there are actually about 17 fewer Dayton students attending charter schools this year, but almost 300 more attending private schools on state vouchers.

Source: DPS will lose $2.6M less than board president claimed

It would seem that management of numbers and money under the new administration is run with some kind of new math- where things no longer have to add up. Which brings us to the disposal of real estate by the board.

We just saw the board go into executive session on Wed Oct 26th  just before the election to sell the old Patterson Co-op location downtown for a million dollars to CareSource. At that meeting, Dr. Baguirov told DDN reporter Jeremy Kelley that the board was anxious to sell other properties because of holding costs, and that they’d come to some sort of agreement with the city that when they needed additional land to expand schools near downtown that are at capacity- they’d have the cities help. He also mentions some additional concessions by CareSource to the district, which weren’t described then, but in a conversation with me, he identifies them as: “along with mobile health clinic, medical equipment, internships, and other in kind contributions” and keeping CareSource in Dayton and bringing 900 jobs.

Problem is, immediately after selling the property to CareSource, it was transferred to the PortAuthority permanently ending any chance of property tax revenue to the schools.
Here is the video link-

http://www.mydaytondailynews.com/videos/news/dps-sells-prominent-land-downtown/vDrPNp/

The newspaper also had this to say about the real estate:

The grassy field, located at 118 E. First St., has been described by some developers and officials as among the most desirable and development-ready sites in downtown.

Source: Downtown school property to be sold for future CareSource use | www.mydaytondailynews.com

The question is, when was this parcel up for auction? When was it offered for sale? Were multiple bids asked for? The answer, of course not. But, what was done was  that CareSource kicked over $25K to the Issue 9 campaign, to help it raise taxes on its employees, to fund a private organization with an unfettered $4.5M a year to provide the “pre-school promise” through private organizations- and keep $900K a year for admin and overhead. Note, Dayton Board of Education members can be paid a maximum of $5k each a year. The Board didn’t make a peep about their existing 5 star pre-schools, that aren’t at capacity while this campaign was on. Made zero sense, unless another deal has been negotiated- either to send some of those Issue 9 funds back to the district, or that someone who runs for higher office in the future will be supported the same way Issue 9 was- handsomely.

The thing about disposal of old school properties is that any revenue must be used to retire debt on the new buildings. It can’t be put into teachers salaries or the general fund. As to schools near downtown that could be expanded with help from the city, Rivers Edge is the only “downtown school” left- and it is bursting at the seams. Ruskin would be another, but already odd deals have been done for surrounding buildings there. The two other sites that Dr. Baguirov may be asking for help from the city both are near Grandview hospital- the old Julianne School site in FROC or the old  Van Cleve School at the corner of N. Main and Helena. If you want a really interesting history of schools that are no more look at this site: http://www.oldohioschools.com/montgomery_county.htm

  • Patterson Kennedy School in Dayton ready for demolition
    Patterson Kennedy School ready for Demo
  • Timbers from Patterson Kennedy School in Dayton
    Timbers from PK school
  • Harvested stone from Patterson Kennedy School in Dayton
    Havested stone from PK school

Which brings us to the site that didn’t sell at Auction back in 2015- Patterson Kennedy School, which sat as a buffer between my neighborhood South Park and the UD Ghetto- excuse me, we don’t use that term anymore, especially after UD has spent so much money acquiring private real estate to use for student housing. The old PK was the place where all the kids who didn’t speak English were shoved, even after almost all the other new schools were built. It was at capacity plus, with over 900 students when they closed it. When they tore it down, there were parts that almost didn’t want to come down- with huge timbers providing a structural integrity that modern buildings can only dream of. If I have time, I’ll dig for photos of the demolition I took. But for now- remember it went up for auction in 2015- and didn’t sell, with what seemed like a high beginning bid price of $720K

Monday, Aug. 17, 2015

All 24 vacant properties that Dayton Public Schools is trying to unload went unclaimed in an online auction that closed last week, but there is still a chance that some of the sites will change hands.

“We had several parties who posted the initial bid deposits, but unfortunately we did not have any bidding whatsoever,” said Louis Fisher, national director of Sperry Van Ness auction services.

“I’ll make a recommendation that we go back to all those that registered and ask, ‘What would you offer?’ We had several parties who said they would love to make an offer, but the minimum bids were at too much of a painful threshold.

”With few exceptions, school districts are required by Ohio law to offer such properties via public auction. But since the properties remained once the auction closed, Fisher said the school board can negotiate with individual buyers.

Dayton Public Schools spokeswoman Jill Moberley said the district will wait to receive an executive summary from the auctioneer and will consider all options.

The 24 parcels once housed prominent local schools such as Colonel White, Orville Wright, MacFarlane and Fairport, but the buildings have been demolished, leaving empty lots ranging from 1.7 acres to 16 acres.

DPS officials said they are trying to sell the properties to eliminate the cost of maintenance, including significant mowing work, given that 10 of the properties are larger than eight acres.

Minimum bids were less than $10,000 for the six smallest sites (1.7 to 2.6 acres), just over $30,000 for most of the sites around eight acres, and $40,000 to $65,000 for the six sites ranging from 11 to 16 acres.

One major exception was the 3.27-acre former Patterson-Kennedy school site, at 258 Wyoming Street. Because of its location on the edge of the thriving Brown Street corridor, between the University of Dayton and Miami Valley Hospital, the minimum bid for that site was about $720,000.

“I think we will work something out (on that site),” Fisher said. “We have to go back and say, what is it worth, and have a competitive environment. We have to protect the school district so they’re not giving it away, and so they maximize the highest price that’s available in the market today.”…

Fisher said more than 1,200 people visited the auction website.

“With the real estate market crash (of the last decade), some of these sites were challenging at best, but there were some good sites, too,” Fisher said. “Hopefully we’ll be able to do a Round 2, and tie some of these properties up with third-party buyers.”

Source: Dayton Public Schools don’t sell any properties in auction. | www.mydaytondailynews.com

Fast forward to Sept of 2016. Some developers out of Columbus decide to offer the District a premium over the minimum bid: $900K. They try repeatedly to submit their offer, yet, the legal counsel for the district, Jyllian Bradshaw (nee Guerriero), refuses their offers. In an email, labeled 3rd rejection by the bidders, on Oct 19th at 2:38 PM she says:

“Thanks for reaching out. At this time, the Board is not interested in selling the Patterson Kennedy site. I’ll reach out if anything changes.
Best,
Jyllian Guerriero”

The thing is, Jyllian can’t make that decision. It’s up to the superintendent, treasurer and the board. Multiple board members say they knew nothing of this offer, except Baguirov, who thinks the offer is “too low.”

Which makes me wonder if it was too low, why was the board willing to sell for $720K a year earlier? And, what if it was to someone who was going to build a 5 story apartment building which would bring in huge property tax revenues to the district? Or a grocery store?

Other emails hint that the Superintendent was the one standing in the way.

But, if we look at other real estate deals done in the area: UD bought over 115 acres from NCR, including the World HQ for a paltry $18 million in 2009. The Marriott by UD, critical to business and university visitors went for $18.5 million, in 2014, of course this came with an operating business included. Down the street on Warren, you have a 5 acre property the city mistakenly sold for $650. Then CityWide, the quasi-public slush fund selected Oberer Development to do “development”, but no one knows how much they had to pay for the property or what they will eventually put on it, or what the taxes will be to the schools, because, well- that’s how we roll in Dayton. When Jeff Samuelson wanted to use the property for a new Kroger, he was shooed away, much like these developers for the PK site, and then the city went down a rabbit hole over at Wayne and Wyoming.

Since Dr. Baguirov isn’t a real estate appraiser, or developer, and the former minimal acceptable bid was $720K, the question is why isn’t a $900K bid at least entertained? According to board lawyer Bradshaw, there are 4 offers on the property right now. Funny thing is, there is no for sale sign at the corner of Wyoming and Alberta.

One would think if this was the case, the property would be auctioned again.

UPDATE

5am. Nov 22 2016 Just one more cost in holding the real estate- the city street light assessment tax. Looking up PK site: R72 02803 0025 258 WYOMING ST $175.56 annually $1,053.34 total. I remember reading somewhere that DPS was charged millions for this Nan Tax that was shoved down the publics throat right after her very expensive election.  Premier and UD both protested and failed at lowering their $2M combined assessment according to a DDn article.

Or, are they trying to figure out a way to transfer the property to either Premier Health who was the leading donor to Issue 9 through their membership in the Greater Dayton Area Hospital Association GADAH- who tossed $30K in the hat. Of course, Premier would want a CareSource style deal- where they won’t have to pay property taxes either. UD would want the same deal, even if they were turning it into graduate student housing.

Through all of these attempts to buy the property, the auctioneer is desperately trying to get the deal done. He is reaching out to John Carr, who was in charge of the real estate for the district when the auction was conducted, but wasn’t still supposed to be on the DPS payroll in 2016. Carr says it’s more an issue with the Superintendent than the board. This would be the new superintendent, Rhonda Corr.  The developer is told to try to route this through Tami Kirby at the Porter Wright law firm which is assisting the district (additional costs).

I talked to several superintendents who all said the same thing, if they were presented an offer for real estate that is currently not in use, it would be their responsibility to present it to the board and ask for the boards guidance. In this case, the only person I can ascertain knew anything of this was Dr. Baguirov who reportedly meets with the superintendent weekly.

In the last set of personnel cuts (Nov 8 review session), the Interim Chief Operating Officer, Jo Wilson,  the person tasked with property management, maintenance, and disposal was cut. Could this have been to keep her quiet about the CareSource deal and the plans for the Patterson Kennedy site. This batch of cuts was made with the bad numbers, and reportedly isn’t up for re-evaluation like the round of cuts that was punted from Nov 17th to the December 6th meeting. This was the meeting where Dr. Baguirov threw a temper tantrum and walked out of executive session, and told the press he had “personal business”- which opened the door for John McManus to take over as President Pro Tem and run the mobbed meeting like a true statesman.

So far, people who were reporting inaccurate numbers to the board that “legitimized” the RIF on Nov 8, still have their jobs. Is anyone starting to see a pattern here?

Rhonda Corr was asked for comment on this deal, she didn’t respond.