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Schools' values are in the eye of the beholder

The Duluth school district's property is worth close to $40 million when evaluated as something other than a school. A recent study done by Ramsland & Vigen Inc., a nationally recognized real estate appraisal and consulting firm, looked at wh...

The Duluth school district's property is worth close to $40 million when evaluated as something other than a school.

A recent study done by Ramsland & Vigen Inc., a nationally recognized real estate appraisal and consulting firm, looked at what the district's buildings are worth as schools and what they would be worth as an "alternative use."

This report showed that the schools "value-in-use" is close to $120 million. Their "alternate use" value is about $40 million.

The value-in-use is the value of the property as a school. The value as alternative use is the value of the property as an apartment building or offices, among other things.

"We need to have a realistic value if (we decide to sell a property)," said Jeff Schiltz, an account representative for Johnson Controls, Inc.

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The report was the third of four commissioned from Johnson Controls by the school district. All four reports are intended to help the district and its residents come up with a long-range facilities plan.

According to Max Ramsland, of Ramsland and Vigen Inc., the schools are a special purpose property. This means that they have a limited use, which leads to a limited pool of buyers and a lower price.

"It is highly likely that a property would be sold for an alternative use," said Ramsland.

Duluth Central High School has the highest property value, as far as value-in-use is concerned, at $30.3 million. Their alternative use value, however, drops to $13.7 million. That is a difference of more than 50 percent. The land that the school sits on is worth $8 million.

Denfeld High School has a value-in-use of close to $16.4 million, but their alternative use value is about $1.4 million. Their land is valued at $450,000.

The main reason for the significant drop between alternative use and value-in-use is due to the fact that these schools do not have the attributes needed for an alternate use.

Duluth East High School is in a similar situation. Their value in use is $14 million. Their alternate use value is $1.1 million. East's land is valued at $765,000.

Property owned by Duluth public schools that would not change in value significantly are properties that can be altered greatly. One example of this is a ball field at the old Chester Park School site.

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Its value-in-use and its alternate value are the same, at $170,000.

The building that has one of the smallest percentage drop between value-in-use and alternate use is the historic Old Central High School. Its value-in-use is $4.5 million, while the alternative use value is $3.5 million.

This building currently serves multiple functions for the school district. It serves as administrative office, Unity High School and the Area Learning Center.

The numbers for all of the properties have been developed by Ramsland using several different factors. According to the report, some of these factors are age, configuration, gymnasiums and auditoriums.

Actual cost depends on what a school has to offer, and what a buyer is looking for.

"We are going to want to go into a process to get the maximum amount of dollars (for the taxpayer)," said Keith Dixon, superintendent for the Duluth public schools.

This is the third report released on the future of Duluth public schools. The first one discussed what the demographics were at the local schools. The second assessed each one of the Duluth public school's facilities. A press conference on the fourth report is scheduled for this week, and will go into detail about the educational adequacy of Duluth public school buildings and spaces.

The current process is commissioned by Johnson Controls, a citizens' group, Duluth public schools and other outside entities.

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All of the reports can be found at www.duluth.k12.mn.us or by calling 336-8735.

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