My conclusions are drawn from a modest six page report which was sent to the School Board. I have pulled back the report itself at the author’s request.
There is an easy answer to all the parents and students who want to save the Zero hour. In fact for almost the next four-plus years there is a means by which we can eliminate much of and maybe most of our future budget shortfalls and eliminate further cuts to ISD 709’s programs. Four years of stability may stop the mass exodus of our students. The solution for the next four years will be voted up or down on Monday night but the explanation for this has been made very clear by an expert.
I’m going to tempt fate and explain the five page analysis this attorney has provided our School Board relating to our property sales to date and our financial open spigot that will cost us over $3 million is budget cuts next school year.
One portion of the Red Plan’s twenty year costs, $43,345,000 million dollars worth, is being paid off with the sales of unwanted school buildings. Not all of this cost was expected to come from building sales, only about $27 million dollars worth of it. The rest of the payments would come from somewhere else. Bankers are smart. They have back up collateral for our buildings just in case they didn’t sell. That back up collateral is called the General Fund which I would prefer to call the classroom fund. You know. That’s where we get money for the zero hour and for social workers and lots of other good things.
And guess what? We failed to sell $27 million dollars worth of buildings by 2012 which is what ISD 709’s leaders planned on. How much has ISD sold to date? Answer, $3,600,000. That’s $23 million less than we thought we would have sold it for four years ago.
So that means that the bankers are being paid off with General Fund dollars. Next year when we cut the zero hour we will have to pay the Red Plan bankers $3.37 million dollars because we haven’t sold any school facilities. And we will have to pay it the next year and the next year and the next year until the year 2032 by which time I will no longer be 65 but I will be 81. Some of you reading this will be dead.
By coincidence next year ISD 709 is facing a $3.3 million dollar cut. Note that this is almost the same as the $3.37 we will be paying bankers because we have sold no buildings. If only we could sell a building.
This analysis doesn’t end here. It calculates how much it has cost the taxpayers to subsidize the developers who are buying our old schools. This information is fascinating. The analysis includes in these “subsidies” the money ISD 709 planned to make on sales but failed to achieve. Now, before you have a heart attack remember that some of these subsidies are by the City of Duluth in the form of TIF Districts, not just the school district, and includes a few miscellaneous other entities. To sell $3.1 million dollars of old schools it has cost taxpayers $17.1 million dollars in lost revenue. So much for the argument that we are putting our old schools back on the tax rolls. They are one hell of a tax burden.
There is one other shocker in this report. Its author explains over the past five years since Central High School was closed (You knew I was going to say Central didn’t you?) Yes, over the past five years ISD 709 has spent over $4 million dollars on the Central Property. The analysis totes up these expenses on its last page. And remember, according to the Ramsland and Vigen report with the likely demolition of Central High, the value of the 77 acres is only about $7 million dollars. That’s eye popping.
That seven million dollars, or whatever we sell Central for, will put a small dent in what we owe the banks if and when we sell it. As the Ramsland and Vigen report makes clear the best price we could get for the sale of Central is to some entity that would keep it as a school. And guess what? Someone wants to buy Central as a school. A school mostly for Duluth taxpayers who helped pay to build and maintain Central High for decades. And that someone is willing to pay the Duluth School District $14.2 million dollars or more than double the price almost anyone else will likely offer for the site and it will do it today – cash on the barrel head.
How far would that cash go? Well we face recurring $3.3 million dollar payments for the Red Plan because of our unsold schools. Every year for the next sixteen years those payments will continue. If the Duluth School Board sold Central to be used by the DPSA, which will build a school anyway somewhere else, the $14.2 million dollars they pay ISD 709 will cover 4.3 years of Red Plan payments making severe budget cuts unnecessary until such time as the District can get back on its feet and slow down the loss of unhappy students.