Wednesday, May 5, 2004
Speculative real estate has made fortunes for some and bankrupted others.
Now the Education Fund Board is discussing whether it wants to try its hand in real estate investment.
The Fund Board -- the 13-member group responsible for allocating revenue from the city's half-cent sales tax for education -- spent a good portion of its meeting Wednesday debating a proposal that it purchase the historic house and property used by the North Routt Community Charter School in Clark.
The property, valued by one appraiser at $450,000, is owned by a group of investors called Elk River Eagles, LLC. The group is proposing a sale of the property to the Fund Board or the Steamboat Springs School District for $365,000, of which $100,000 would be funded by a grant from Historic Routt County -- provided the sale meets grant provisions.
The Fund Board's Capital Commission made the request to purchase the property. The Fund Board would need to allocate $265,000 to make the purchase.
"We saw it potentially as a fairly decent investment for either the school district or the Education Fund Board," commission member Tom Ptach said. "Looking at it as a pure investment, the Capital Commission sees it as an opportunity to produce instant equity of $185,000."
Several sizable issues could prevent the Fund Board from approving the use of $265,000 in taxpayer money to purchase the property, including the legality of a school district's ability to charge rent to the charter school and provisions of the $100,000 Historic Routt County/Colorado Historical Foundation grant.
Fund Board member Peter Remy said the request makes him nervous for several reasons.
"I take issue with the appraisal. That's a 100-year-old fixer-upper on a small lot that can't go anywhere," he said, referring to easement provisions that restrict remodeling and property expansion.
Remy and other Fund Board members also expressed concern that purchasing the property would serve only to bail out Elk River Eagles, whose investors need to liquidate their assets, members of the Capital Commission said.
"The whole thing really makes me nervous," Remy said. "Unless there's an educational need, I would say the Fund Board shouldn't touch it."
Concern also was voiced about the long-term viability of the charter school, which has seen enrollment drop in just its third year of existence.
Ptach said he would investigate some of the issues and concerns brought forward by Fund Board members.
"This may be a dead issue before it even gets started," Fund Board President Jim Gill said.
Also on Wednesday, the Fund Board approved three funding requests from its Technology Commission; $20,000 for software maintenance, $12,500 for a small grants program and $5,000 for a video production program. Funding for those items will be offered to the School Board as a gift.
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