CASD building purchase is a disaster waiting to happen

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New admin office, clinic is wrong on so many levels for struggling district

By Mike McGann, Editor, The Times
UTMikeColLogoLast night was quite the dog and pony show at the Coatesville Area School District Board of Education Finance and Personnel meeting.

Of course, we got the denial that the board had approved buying the Cumberland Insurance Building in Sadsbury for $3.45 million, but merely approved negotiations to purchase the building. Since it would appear that the price for the building is set, one wonders what the forthcoming negotiations are about — what snack to serve at the closing?

Then, of course, with a financially struggling district, we got the litany of reasons of why it must happen or the sky will fall, the old Benner Center is very expensive to operate, the district needs to get into the health-care business or it will see a $500,000 deficit next year in health care costs, the district can’t move capital and bond funds to pay for operating expenses and, this is my favorite: “it’s such a deal.”

To sum it up, one needs to drive south to a Kennett mushroom farm to find a stinkier, more putrid pile of manure.

There are so many wrong, misleading and downright disingenuous things that were said last night — based on the reporting of our Kyle Carrozza — it is difficult to know where to begin to help, uh, clear the air — sort of journalistic Fabreeze, if you will.

First on the our list of things Coatesville Area residents should know:

The building is currently owned by Cumberland Insurance Company. The Chief Operating Officer of Cumberland is Rick Ritter. Yes, the same Rick Ritter that is currently Vice President of the Board of Education and chair of the Finance Committee.

Now of course, it’s entirely possible this is a completely innocent fact. But, let’s be honest: it looks like hell. Common sense dictates that buying a building in a depressed real estate market from a member of the Board of Education is, at best, a tough pill to swallow. At worst, it’s going to have people calling for a criminal investigation.

So, that in and of itself should be reason enough of why this is a less than ideal move.

But, the hits keep on coming.

Okay, for the sake of argument, let’s assume that the district administration were to move out of Benner (we’ll conveniently forget the arguments for placing the school administration offices there in the first place, including accessibility to city residents who don’t drive).

Who is going to buy that building? In this economy, it’s a valid question.

Equally valid is to question the premise that Lincoln University — struggling with cuts in state funding itself — is going to be interested in buying the Gordon Education Center, as its Coatesville campus grows (assuming it does — while everyone is hopeful, no one knows if this will be a success or not). At best, that’s a maybe, and a pretty infirm basis on which to spend large amounts of money. Assuming that Lincoln University is going to buy Gordon (also old and expensive to operate) and that district offices there would move to Benner (which would still be old and expensive to operate) is pretty shaky reasoning.

If Lincoln wants no part of buying Gordon and no buyer for Benner is forthcoming — a very real possibility — is the district just going to abandon the building, or will it become an empty, cash-sucking white elephant?

And last night, when supporters of the district’s Air Force Junior ROTC program were struggling with the fact that there’s money to buy this building, but its supporters basically have to hold cake sales to try and keep a worthy program afloat, they were told the district can’t spend bond and capital fund money on operations.

This is true, to an extent. But, with smart financial management, as neighboring districts have done, savings on bonds, debt service and capital expenses can directly impact operating funds.

Under Act 1, by cutting debt service spending, there’s more room to pay for educational operation and stay under the index. If the $3.5 million is cash lying around from an unspent bond issue (and if so, that opens a whole new world of questions about the financial management of the district), refinance the current debt, pay it down, and reduce the debt service. That would mean more of the 3.6% tax hike capped by state law could go to things, like, I don’t know, education, instead of fancy, unneeded buildings.

So Tuesday night’s explanation was a bit like a dad coming home with a new car to his starving children and saying, “we don’t have any money in the food fund, so I had to buy this new car with the money in the car fund.”

And then there’s “it’s such a deal, argument.” Uh, no, it’s not.

The 37,000-square-foot building has an asking price of $3.9 million, which, based on the area and the local economy, would be a bit like me — were I single — holding out for a date with Christina Hendricks. It’s nice to have dreams and all, but, it ain’t going to happen, unless of course, you find a very gullible buyer.

And yes, I know of what I speak. My wife and I own property not far from there, and know first-hand what property pricing is like in the immediate area. While home prices are slowly starting to rebound in the region, commercial property prices remain very low and inventory very high. In short, there’s a glut of commercial properties built during the pre-2007 real estate bubble. And frankly, because of the noise from Carlson Aiport and Sikorsky Heliocopters, the area is somewhat less desirable than other properties in the district.

CASD is not getting a “deal.” One could argue that the district would be overpaying for the building at $3.45 million based on the current market conditions (which makes the whole thing with Ritter look even worse, for those of you keeping score at home).

And then, lastly, and potentially most disastrously: The school district thinks it’s a good idea to get into the health-care business?

As the spouse of a health-care provider, I know all too well how difficult, expensive and risky that is, even if you know what you’re doing — and likely will be a massive financial hemorrhage for the district and taxpayers.

If this were such a smart idea, why not partner with an existing health-care provider, such as Brandywine Hospital? Partnering with Integrity Healthcare is a bit like partnering with the local hardware store on a building project — they can staff the operation, granted, but running it and paying the freight to run it, including malpractice and liability insurance (which by itself for such a clinic might approach $500,000 a year) is another story entirely.

As planned, not only do I not see the district saving $500,000 in health-care costs, I think there’s a better than even chance of losing even more money, further hurting education.

So, yeah, residents, parents and taxpayers have some pretty good reasons to be furious — and it’s not, as some would claim, a media-manufactured controversy. The facts are the facts.

This would appear, on the surface, to be one of the worst ideas — for so many reasons — any school district in Chester County has considered in years.

Tough questions need to be asked in the coming weeks and real answers need to be forthcoming.

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