During Monday’s Ludington School Board regular meeting, the trustees rejected the bid of Peter Riley for the soon-to-be-vacant Lakeview Elementary School.
Superintendent Jason Kennedy recommended with consultation from Gordon VanWieren, attorney at Thrun Law Firm, that the board reject the bid from Riley because of the conditions attached to that specific bid.
Riley bid $170,000 for Lakeview Elementary School property. In the bid, Riley stated that property would be subdivided into lots for purchase and the construction of private homes. Riley stated the bidder keeps the playground equipment and modifies one lot to be set-up for a park that will be donated to the City of Ludington.
Kennedy said Riley’s bid contained a number of conditions and contingencies that the district worked to understand the impact with VanWieren. Kennedy displayed a screen shot from the bid itself showing the condition of property and the contingencies to the board.
Kennedy said the conditions included that all buildings and structures be removed except for specific children’s playground equipment for the proposed park. The property was to be leveled and cleared of all building materials.
The contingencies addressed in the bid, according to Kennedy, requested successful completion of soil testing to check for any toxic or hazardous materials. Kennedy said all of the conditions and contingencies are completely understandable on this particular bid.
Because of the contingencies, Kennedy stated it would cost the district $170,000 in razing the school and other items. It would not have gained the district anything, he said.
“In the end, this is a net zero bid for the district,” Kennedy said. “If you were required to level the building, clear it and then receive the proceeds in the amount of $170,000, it would be a net-zero bid.”
Kennedy said that would leave the district with the bid from Todd and Nicole Stowe for $145,000. This bid also includes a provision of taking care of the demolition of the building.
“The (Stowe’s) bid is $145,000 for the bid and the (demolition) is taken on by the bidder,” Kennedy said. “If you add on the $170,000 for (demolition) you get a net of $315,000 bid for this property.”
Kennedy shared with the board the district did get an offer, from an individual and developer, recently. Kennedy said he primarily has shared with the finance, building and site committee some elements of that bid that make it an even greater bid than the current bid.
“Our legal counsel is still finalizing some work to be done with regards to giving you an exact cost of those bids if you were to sell this and do it on your own,” Kennedy said. “The thing to recognize here is the district itself would be able to subdivide the property into 11 or 12 lots and to sell those. We do not have the ability to develop those lots.”
The Michigan Revised School Code prohibits school districts from developing properties according to Kennedy.
“We can however sell those lots. We just can not be the developer of those lots,” he said.
Kennedy said the district is still working understand what the numbers are.
“The recommendation is to take some time between now and the March board meeting to work to understand and potentially negotiate the Stowe bid to see if there is ant potential to increase the net outcome of that bid to the district,” Kennedy said. “(We will) work to understand what is now a second competitive bid that would also include the demolition of the Lakeview property and a site plan to address housing in that particular part of our community.”
Kennedy expects that by the March meeting, the attorney would have all of financial analysis done with what it would look like from the district’s perspective to be able too sell those lots and the net profit the district could expect to see if the district sold the lots.