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Questioning what part of the Forest Ridge High School site sale is wasting taxpayer money

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When it comes to the site of what would have been Forest Ridge High School, what's more of a waste of taxpayer money?

Was it the decision by the prior Republican board majority to abandon work on the site and sell the property in favor of building Rolesville High School? Or was it the decision by the Democratic board majority to sell the property for $900,000 less than what it was purchased for?

Both sides made the charge before the vote Tuesday to sell the parcel.

Betty Parker, director of real estate services, introduced the proposal to sell the 80.08-acre parcel on Forestville Road in northeast Raleigh for $3.8 million.

Wake had paid $4.7 million in 2008 for the land at a time when it was assessed at $5.5 million. It's now assessed at $3.6 million.

Parker was asking the board to approve the highest of three offers.

Board member John Tedesco, who had backed abandoning Forest Ridge High, spoke from the perspective of his current job as the vice president of a land appraisal company.

“I still remain concerned that we are selling this too early and thus putting ourselves in the position where we bought high and are selling low and shortchanging the people of Wake County," Tedesco said.

Tedesco said that across North Carolina, the land appraisal market in the state has gone up the last two quarters. He said he had attended a national appraisal conference in Las Vegas last week in which they talked about continued projected growth in land appraisals over the next five to six quarters in 10 "key" states, including North Carolina.

“We’re seriously shortchanging ourselves at this time," Tedesco said.

Board member Susan Evans, who had criticized the abandonment of Forest Ridge before she was elected, challenged Tedesco on what was the waste of money. She focused on the "opportunity cost" of not taking the offer.

“Well I’d just like to say that I think it’s unfortunate that we had a tract of land that we were planning to build two schools on that a previous board decided to abandon," Evans said. "If we want to talk about poor use of taxpayers money perhaps we should talk about that.

But that time has come and gone and so the decision was made to do that and the high school was relocated on another location and now that has created another situation where we have this property and we no longer, according to Ms. Parker from previous discussions, need a high school in that particular area nor will we in the near future.

And the tract of land, as I understand it, is too large for just an elementary school so there are a lot of reasons that it appears that it doesn’t make much sense for us to continue to hold this property.

I certainly wish we were selling it for what we paid for it, but we all know that we’re coming out of a recession and perhaps if we held it for two to three more years maybe we would get what we paid for it. But then there’s opportunity cost with that.

So I’ve gone back and forth with my thinking on this, but this seems to be a decent offer and we’ve had discussion in a work session and I believe in a facilities committee meeting about this pierce of property and Ms. Parker has made it clear that she doesn’t believe that we have a high need for this amount of acreage in that particular location in the near term.”

Board member Bill Fletcher, a real estate agent, asked staff and was told that there's no set time when the property has to be sold. He was also told that the cost of ownership is low.

“We’re not paying taxes on it," said Fletcher, who wasn't on the board at the time of the Forest Ridge decision. "We’re not having to insure anything, maybe run some high school parkers off but that’s about it.”

Board member Jim Martin, who had criticized abandoning Forest Ridge before he was elected, said they shouldn't have been placed in the position where they had to vote on selling the site.

“I don’t like selling for lower than what we paid for it anymore than anybody else does," Martin said. "I’ve thought about what happens if we just sit on it and are able to sell for the value that we paid for it. We could do that, but then the dollars that we get out of it we have to use to buy land that has also undergone that same level of inflation, if not higher.

By contrast if we sell right now, which is well above the market appraised value, we can take that land and buy at market appraised value. It strikes me from the math that I have heard that we can come out ahead by doing this sale in today’s dollars, buy land in today’s dollars as opposed to being able to sell once we hit the value that we paid for it but then all other land has increased in cost.

So from that perspective, it sounds to me like it makes the most fiscal sense, given the situation that we’ve been put in which I don’t think we should be here in the first place, but given the situation that we’re in, I think it makes the most sense to sell while we can sell above market value."

Tedesco challenged the idea that they had to sell the site now to use to buy more land for other sites. Last week, staff said that they need to find land for 19 sites for 36 new schools they project to build in the next two bonds.

“Well Ms. Evans and Mr. Martin, I am trying diligently tonight not to talk about board’s wasting dollars," Tedesco said. "What was determined at that time in the past was that the site wasn’t appropriate for a high school and there might be a variety of other needs, including the fact that it is within several of the geographic circles for an elementary school or a nearby middle school circle or other areas.

But more to your concern in particular, we’re not required to use the dollars in net proceeds of that to buy more land. We’re required to put it back into our capital fund so that means it could easily go to some of the roofs that are struggling in some of our schools. That could easily be an extra net million dollars, within likely probably four to five quarters, to put computers and technology in some of our new buildings that those technology dollars are calculated under capital costs and new construction.

So there are several areas that could be used to better help the children of Wake County and if anybody has the ability to sit on that right now, it’s probably the Wake County Public School System."

School board chairman Keith Sutton, who had opposed abandoning Forest Ridge, urged his colleagues to vote their conscience.

“I think it’s unfortunate that we are here, at least on this particular piece of property that is surplus, but nevertheless we’ve got to make the decision to what we do with it," Sutton said. "I think with any piece of property, be it land or the personal property — a car — you can always decide whether you want to sit on it or sell it and what’s your opportunity cost that you run into. So I’d just encourage all of you to vote your conscience.”

The vote was 6-3 with Fletcher, Tedesco and Deborah Prickett the dissenters.

1371819608 Questioning what part of the Forest Ridge High School site sale is wasting taxpayer money The News and Observer Copyright 2011 The News and Observer . All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Neither...

When you buy land, you buy an asset whose value increases or decreases generally along with the value of other land. The right thing to do is to sit on it until you need the money to buy other land.

In other words, let's say that you sell it today and use all of the proceeds to buy lot "A". If those proceeds are less than what you paid for the Forest Ridge property, have you lost money?

I think the answer is to look at what lot "A" cost at the time you bought the Forest Ridge property. If the value of the land then was, say $5M, you haven't lost anything -- in fact, you gained. Basically, you spent $4.7M to buy something that, at the time, was worth $5M.

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About the blogger

T. Keung Hui covers Wake schools.
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