Plans for shuttered TPS Wilson Middle School

[Conan71]

Bottom feeding low-ballers?  I'm pretty sure they are infinitely higher than the next bidder.  They are the most generous bidder out there.  Well, they were anyway.  Why should TU, a prudent institution, "pony up" and bail out an institution that dumped money into an unneeded building?  Better yet - why doesn't TPS stop trying to blackmail TU and sell the property at the auction price to the highest bidder (to be used for education nonetheless)?

What we are failing to grasp here is that when there is NO ONE ELSE TO SELL THE BUILDING TO the only bidder is the best bidder.  I don't care if TPS had $1,000,000,000 in the building - it is far better off the books for $1mil if there is no realistic possibility on the horizon of getting it off the books for more.  I will say it again:  no matter how much money they have in the school it is a sunk cost.  It doesn't mean that is what the asset is worth.  An asset is worth no more than someone is wiling to pay for that asset.

I can put $10k into fixing up my wife's 2001 Taurus, it won't be worth $10k to anyone else. Worse yet, TPS has multiple properties that are the equivalent of a $10k Ford Taurus.

As to the question of how will they pay off the bond:  the same way they were planning on paying off those bonds all along. The citizens of Tulsa will be on the hook for the $4mil or the $3mil - whichever it may be.  What TPS has is the chance to now get a lump sum towards those bonds plus paying off the remainder less the ongoing cost of maintenance.  

If the theory is TPS cannot sell any assets for a loss - I suspect TU will not be selling many structures at all.  Sorry, an old school building in need of serious renovation is not worth much to many people.  Whoever the real estate agent is that told TPS they should expect bidding wars and full value for those properties should be suspect.  Again, they are only worth what people are willing to pay (I apperently cant say that enough).

You make some good points.  

Whether TPS had kept the building open or mothballed it, they still had the $4mm sunk cost in it (or whatever it is).  It's not like a middle school has a cash flow factor to it to help justify values.  If it's worth $1mm to TU and no one else stepped forward with all the development money available in this town, then that's probably the best offer and best logical use.  Anyone else who thinks TU is getting a steal can simply step up and make a better offer at any time.  Sure it's a great deal for TU.  Considering the midtown location adjacent to a good-size university there could be great MUD possibilities, but no one is stepping up.

I tend to agree that TPS's pride on this one could wind up with this building being their own version of old City Hall if they wait around for three more years to do nothing more than draw an additional $100K for the property.

[RecycleMichael]

Maybe the school board has future plans for the building...

[Conan71]

Maybe the school board has future plans for the building...

Hmmmm. Can't wait till you can share.

[rdj]

Maybe the school board has future plans for the building...

Please stop being so logical!

Sell!  Sell!  Sell!

[DTowner]

As I recall, money generated from the sale of surplus school buildings was a significant justification behind the consolidation/closure effort (in addition to operation savings).  Selling for less than hoped would seem to be better than not selling at all if they were counting on the money for budgetary purposes.

[AquaMan]

CF, I just don't buy your reasoning. Value is determined by what a seller and a buyer agree upon that is true. You left out some particulars though. Time. Marketing. Financing. Purpose. Market conditions. You also left out that you are a huge TU boozer booster!.

This property has been on the market for a scant 6 months. Not long for commercial property in a down market. So TU wanted the building and was willing to pay a mil for it. That doesn't determine its value just because the use they saw for it only justified that offer or because they were the only offer. At some point a single low offer may simply mean the seller needs to reconsider whether he wants to even sell the property or keep it and re-purpose it. That is prudent. Your argument is starting to sound a bit like Kathy Taylor's pitch for the glass palace rather than the mis-marketing of the old city hall.

I have watched in horror as people misjudged the value of their property and held "firm", only to subsequently see the property deteriorate and eventually be razed. The corner of 21st and Cheyenne comes to mind. Heirs wouldn't sell at market value. Now its an empty lot and still unused. I also see it a lot on cars. This isn't the same thing imo.

[DTowner]

CF, I just don't buy your reasoning. Value is determined by what a seller and a buyer agree upon that is true. You left out some particulars though. Time. Marketing. Financing. Purpose. Market conditions. You also left out that you are a huge TU boozer booster!.

This property has been on the market for a scant 6 months. Not long for commercial property in a down market. So TU wanted the building and was willing to pay a mil for it. 

True, but what if in 6 months TU offers $750K and 6 months after that offers $500K?  Negotiation is about leverage and pressure.  The seller of a decommissioned middle school in an area without much development (outside of TU) faces a lot of pressure and has no leverage.  Unless Bama decides an old middle school cafeteria would be great for baking pies, the offer price is as likely to go down as up.  Meanwhile, TPS/tax payers get to keep paying indefinitely to maintain the property.

The real analogy to City Hall is what the city did after it moved - refusing to sell based on an inflated appraisal price.  That worked out poorly for the city and will likely work out just as poorly for TPS.

[cannon_fodder]

Waterboy:

I agree that a single low offer in 6 months is not necesarily THE signal that the market is weak.  However, if there is no interest from other parties AND there is other property that will soon be in the for-sale inventory it is certainly a strong indication.  I would not be as put-off if the decision was to hold the proeprty for rebidding in 3 months, or whatever.  My problem is the decision was "no, we will just hold it" so far as the public knows.

I also agree that I am a fervent TU supporter.  Though I lack the financial resources to be a booster  . 

I still disagree with your perception of value though.  An object is really only worth what the market will pay for it.  The seller does not get to set the value except as to himself - that is to say, it's worth more than that to me so I'm not selling.  That price is in no way determined by the market and thus cannot be relied upon as an indicator of value.  For instance, I have an old quilt my grandmother made that I wouldn't sell for less than $10,000 - but realistically it isn't worth more than $500.  I am the (not so proud) owner of stock in McLeod USA which I paid $2.50 a share for (which was a hellova buy since it was down from $20).  I was't willing to sell that at $.50 a share because it was worth more than that to me.  Now it is delisted and worthless... jsut because it was worth more to me doesn't mean that is the fiar market value - what someone else should pay.


RM:  If the school board has other plans for the structure I can't wait to hear them.  My criticism is based on the knowledge available to me.  I stand to be corrected as time goes on and hope TU, TPS, or someone else finds a good use for theat neat facility, in a good location, that benefits the community.

[AquaMan]

True, but what if in 6 months TU offers $750K and 6 months after that offers $500K?  Negotiation is about leverage and pressure.  The seller of a decommissioned middle school in an area without much development (outside of TU) faces a lot of pressure and has no leverage.  Unless Bama decides an old middle school cafeteria would be great for baking pies, the offer price is as likely to go down as up.  Meanwhile, TPS/tax payers get to keep paying indefinitely to maintain the property.

The real analogy to City Hall is what the city did after it moved - refusing to sell based on an inflated appraisal price.  That worked out poorly for the city and will likely work out just as poorly for TPS.

When "ifs" and "buts" are candy and nuts we'll all be happy at Christmas.

From what I can tell there is no negotiation or pressure. This was a first offer, one much lower than real estate people had estimated and worthy of a tepid or negative response imo. Retrench, re-assess, and be patient. Lots of people think negotiation for anything is like those two morons on American Pickers or the guys on Pawn Stars. They think public buildings should be cheap in the open market place, that dealing with public organizations is just a matter of showing them how its done in the "real" world. Guess not.

TPS is a favorite whipping boy for everyone. No doubt had they sold to the first offer at 1/4 the asking price there would be much criticism. I don't see TU as a bully or cheap. Truth is the building is very well built, very attractive historically, and has newer additions that would suit many businesses. It is also true that it has some mold problems that must be addressed since a boiler failed years ago. If the parties are serious a deal will emerge. If not I don't see any reason to attack either one of them.

[AquaMan]

Waterboy:

I agree that a single low offer in 6 months is not necesarily THE signal that the market is weak.  However, if there is no interest from other parties AND there is other property that will soon be in the for-sale inventory it is certainly a strong indication.  I would not be as put-off if the decision was to hold the proeprty for rebidding in 3 months, or whatever.  My problem is the decision was "no, we will just hold it" so far as the public knows.

I also agree that I am a fervent TU supporter.  Though I lack the financial resources to be a booster  . 

I still disagree with your perception of value though.  An object is really only worth what the market will pay for it.  The seller does not get to set the value except as to himself - that is to say, it's worth more than that to me so I'm not selling.  That price is in no way determined by the market and thus cannot be relied upon as an indicator of value.  For instance, I have an old quilt my grandmother made that I wouldn't sell for less than $10,000 - but realistically it isn't worth more than $500.  I am the (not so proud) owner of stock in McLeod USA which I paid $2.50 a share for (which was a hellova buy since it was down from $20).  I was't willing to sell that at $.50 a share because it was worth more than that to me.  Now it is delisted and worthless... jsut because it was worth more to me doesn't mean that is the fiar market value - what someone else should pay.

I don't think there is much you posted that I would disagree with. Let me make a real life analogy as well.

My son was given a set of beautiful, barely used polished chrome and aluminum wheels. They were still in the boxes with lugs and valve stems. Turns out he was given them because his friend couldn't sell them. They were 4 lug on 4.25, 7inch wide wheels. Not all wheels fit all cars. In fact these were made for 1980's-early 90's Mustangs. I tried to sell them at the market rate I determined from internet and Craigslist analysis. Problem is there aren't too many owners and rehabbers of those Mustangs. And, 4 lugs are not very common. So, turns out the market value of those wheels was their weight at the recyclers. About $20 at best. My last effort was to sell them to a Pawn Shop. They assure me they couldn't be sold at any price and they had tons of wheels filling their garage too.

So, with no offers and little estimated market I had a choice. Do I like them enough to keep them as decoration in my garage? Do I sell them for scrap or do I hold to my price of $125 till that one person with a 86 Mustang stumbles upon my Craigslist ad. The value at this moment was 0 but I wasn't through. I researched the size and configuration of the wheels to see what else they fit. Strangely, there are guys on the net that like to figure these things. I found out this same wheel configuration was used on a couple dozen cars ranging from Ford Escorts, Merkurs, Peugots, and other European cars up till the early 2000's! Market just got bigger. I rewrote the ad in Craigslist detailing the cars the wheels would fit and included pictures.

Bottom line is that within a week I sold the wheels for a $100 bucks. I would have sold them to the Pawn shop for $25. The fair market value of this set of wheels changed several times and all were accurate based on that moment in time.

[Conan71]

Waterboy, I can relate to your story of perceived market value.  I deal with it every day in my professional life. I can even think of a recent encounter with that in my Harley collecting hobby, that if there's no demand for a rare item, it's simply a lump of metal which can be recycled for less than a few dollars.

Neither of those are really good comparisons though to the Wilson property.  If you were looking to invest in the property, you would take a look at how the basic structure suits your needs and what modifications are necessary to make it fit your needs 100%.  Then you need to look at any mechanical and structural deficiencies or code compliance issues which come up with a change in ownership and what those costs will be.  Finally, if the building doesn't suit your square footage needs, then there's additional construction costs.  Or in the complete alternative, let's assume the building doesn't meet any of TU's needs and they can't do an adaptive re-use.  They need to look at what the land is worth after they pay to demolish the structure and do any and all land remediation issues after demolition.  It's quite possible they are looking at the land as being worth $1 million after they have the old building hauled off.

TPS does have a fiduciary responsibility to tax payers and bond holders. Are they better to accept a $1mm offer now or wait for a lower bid three years down the road when the building needs serious rehab from neglect?

[godboko71]

To bad the economy isn't doing a bit better, maybe we could hope for a smaller version of the reuse on Cherry Street. Some build out to 11th for retail and a restaurant/bar. Parking would be in the back near Delaware. Living (Apartments/Condos) in the second floor of the school and new development.

[carltonplace]

Is the main concern TPS's responsibility to the tax payers?
If so, the way I see it the tax payers can still benefit from the sale of this building below its appraised value if the purchaser makes such improvements and usage changes that it becomes a contributing part of the community again.
If its new owner and use is something that increases the actual footprint property value and by osmosis increases the adjacent property value the tax payer will see benefit. The new owner will pay ad valorem taxes; TPS did/does not contribute to property tax receipts. If the new use incorporates retail business then the new endeavor will also contribute to sales tax receipts.
If it sits empty for a long time and becomes blighted then the tax payer loses as they continue to fund upkeep and maintenance and see their property values fall by proximity.  

Modified punctuation error

[jacobi]

If so, the way i see it the tax payers can still benefit from the sale of this building below its appraised value if the purchaser makes such improvements and usage changes that it becomes a contributing part of the community again.

+1 I have the same feeling about Roosevelt (I realize it has its own thread) and the school for the performing arts that was shut down by TPS.  That would have been a huge boost to a neighbourhood that is on the rise and to the city in general.

[Conan71]

Does anyone know if TU pays property or ad valorem taxes?  If they do, certainly that's a win for the tax base. 

Anyone know if churches pay ad valorem or property tax?  Nearest neighbor to the south is a church.  There's no doubt residential properties could see an uptick in value if a med school is located there.  It will help create demand for housing in the immediate area for med students with families for certain.