Clare Jellick reports that the District 150 School Board has “agreed to pay $750,000 for the 22 acres of land” on which they want to build a replacement building for Harrison Primary School.

The land is appraised at $178,000, but the PHA has maintained that it should recoup some of the costs for razing buildings there. The cost of demolition was about $1.4 million.

My question is, why? Why should they recoup costs for razing buildings there? These buildings were going to be razed anyway. The process was started at least a year before the school district expressed interest in a land swap with PHA for the land.

In fact, their first application for federal approval to raze 200 units (30 buildings) on the south side of Harrison Homes was reported in the Journal Star on March 30, 2005. On August 23, 2005, they added another 11 buildings to be demolished on the north side. “The decision to raze the additional buildings brings the total number of units to be destroyed to 306”; it was all part of a “10-year plan to tear down and rebuild the entire housing complex,” the paper reported at the time.

The paper also said, “Most of the latest buildings approved for razing are located near Harrison School, in the block between West Krause Avenue and West Seibold Street.” The “latest buildings” were the 11 that were added, with a total of roughly 106 units (306 total minus the 200 units initially reported in March). How much would that cost to raze? “The cost of demolition is estimated at about $4,000 per unit, said Regina Simpkins, director of facilities management.”

At $4,000 per unit, the cost to raze 106 units near Harrison School would be $424,000. But according to later reports, demolition of all 306 units cost roughly $1.4 million total, which comes out to about $4,575 per unit. Even then, the cost to demolish the 106 units near Harrison School would only be $484,950. Add that to the $178,000 appraised value for the land and the cost comes to $662,950.

So, if my reading and calculating is correct (which it admittedly may not be, since I’m only going from published reports) the school district is still overpaying for the land even if they eat all the demolition expenses for the land they’re purchasing. And that doesn’t even take into consideration this little nugget from that August 2005 article: “The PHA plans to apply for demolition grants so they can reprogram their budgeted funds for other uses, [Simpkins] said.” How much of this demolition cost was already paid for with grant funds?

This is a big coup for the PHA. It basically takes over half a million dollars the School District collects from our property taxes and transfers it to the PHA, an agency that has lost considerable federal funding as of late for a variety of reasons, including low occupancy in PHA properties.

In April 2006, the Peoria Housing Authority (PHA) was talking to Peoria Public School District 150 about possibly swapping some land. The idea was that the PHA would give District 150 some land near Harrison Primary School for the District’s plans to construct a replacement building there, and in return, District 150 would give the PHA the site of the current Glen Oak School so the PHA could build public housing in the East Bluff.

Well, there was quite a bit of outrage over that plan, and before long, the PHA said emphatically that they were not interested in the site and those negotiations were halted. Not long after that, the Park Board also decided it didn’t want to enter into a land-sharing agreement with District 150 to use a portion of Glen Oak Park for a new East Bluff school.

Since then, District 150 switched tactics and started negotiating to simply purchase the land from the PHA outright rather than swap land for it. But that has led to a big discrepancy between what PHA is asking ($800,000) and the appraised value of the land ($178,000).

So now we have to ask, what’s the next step?

One rumor is that the land-swap idea is going to reemerge, only this time it will be some of the properties the District bought adjacent to Glen Oak Park that will be traded, allowing the PHA to build public housing in the East Bluff after all. Rumor has it that Superintendent Hinton favors this option. It’s unclear whether the properties would be bundled with (a) other District-owned properties elsewhere in the city, (b) a cash offer, or (c) both.

PHA officials have stated that the reason their asking price for the land is so high is because that land swap the District was originally going to do required that all land involved be free of buildings. That’s why the PHA razed the buildings on the land adjacent to Harrison School. When the District decided to do a direct buy, the PHA felt that it deserved some compensation for the demolition it did on the District’s behalf.

What that tells me is that any land that would be swapped would have to be free of buildings. If there’s a plan in the works to swap land adjacent to Glen Oak Park, that could explain why the school district is aggressively pursuing demolition of the houses on those properties instead of renovating them and putting them back on the market to try to recoup some of the money they wasted.

Clare Jellick has been doing some digging. She found out that District 150 and the Peoria Housing Authority (PHA) are represented by the same law firm (Kavanaugh, Scully, Sudow, White & Frederick) — and by lawyers whose offices are apparently right next to each other. The two bodies are negotiating a land deal so that District 150 can build a new, suburban-style grade school on the site of the existing Harrison Primary School plus land it wants to purchase from the PHA.

While the best course of action would be to retain separate counsel, the district is, of course, going to instead sign a conflict-of-interest waiver. That makes everything legal and ethical, but it doesn’t remove all risk. It appears that such conflict waivers are generally discouraged, and for good reason. According to one resource I found on the web, it may mean that the District won’t be able to get as good of a deal on the land as they could if they had separate law firms. Here’s a portion of a sample conflict-of-interest waiver (emphasis mine):

It may not be possible for a single law firm to represent both parties to the Transaction in the same aggressive manner as would two separate and independent law firms. By giving the consent requested in this letter, you are, in effect, waiving that kind of zealous representation of your individual and conflicting interests with respect to the Transaction. It is possible that each or both of you might be advised by independent counsel to demand or offer different or more favorable terms and conditions with respect to the Transaction than we can or will demand or offer.

Here’s why it makes such a big difference: According to the Journal Star, the 22-acre parcel of land the district wants to buy from PHA is appraised at $178,000. The PHA, however, is asking $800,000 for the land because they want to recoup the cost of demolishing the slums that sat there until just recently. That’s a huge difference. Remember, this is the school district that supposedly can’t afford $40,000 to keep their truancy center open or $63,000 to pay for their own marketing director (she’s paid by Caterpillar). This is also the school district that paid way over market value for eight homes on Prospect road that they can’t use, wasting $877,000 in taxpayer money.

The district doesn’t really even need this extra land (a total of 25+ acres for a K-5 school?), but if they’re going to buy it anyway, the least (and I do mean the least) they can do is try to get the best possible price for it. True to form, the school district is poised to waste more money by not getting separate representation.