Board accepts $1M offer on OMS property

Posted: Feb. 24, 2010

Oconomowoc Area Schools — The Oconomowoc Area School District has accepted an offer to purchase the former middle school property for $1 million from an Oregon, Wis. developer.

Gorman & Company plans to renovate the former school into mixed use residential space. The proposal calls for 60 lofts, office space and an exercise room among other amenities.

"We negotiated for three months with Gorman. We're confident the price we negotiated is a fair price," said Assistant Superintendent of Business Services Mike Barry.

The offer to purchase is subject to a final review by OASD legal counsel.

A major contingency tied to the sale is securing appropriate financing, which includes a number of tax credits for the project.

Key among those is approval by the Wisconsin Housing and Economic Development Authority to issue $9 million in tax credits.

"The WHEDA application process begins with a March 25 application," Barry explained.

A decision on that round in the application process is expected by June 1.

The district has set a closing date of no later than Jan. 17, 2011, and no earlier than Nov. 15 of this year, to allow for one more year of "Haunted High School", a successful Halloween-themed fundraiser that used the middle school as a venue last fall.

"That generated over $50,000 to the Oconomowoc Area School District this year. It is the largest single fundraising event of the year," Barry noted.

In addition to the WHEDA process, the developer will apply for historical credits following the June WHEDA announcement. In all, the project hopes to secure $11 million in grants.

Under the agreement with the developer, the bulk of the purchase price will be paid at closing, with the balance to be paid off, with interest, over a 15-year period. That timetable would be accelerated if the developer's margin of profit is greater than anticipated.

In previous discussions, the board said funds from the sale of the middle school property would be applied to the land purchase for Silver Lake Intermediate School.

District officials met last week to investigate the findings of an analysis of the former middle school property as it related to three options: sell the building, use all or part of the building for District or a combination District/community use or demolish it and save the property or demolish it and sell the property.

The study, conducted by Oliver Construction, determined that the cost of partial demolition of the structure, rehabbing and using only the first floor of the original 1923 building, as recommended by the study, would cost approximately $4.2 million, including asbestos abatement and filling in the sites that were razed. The second and third floors of the facility would be shells that could be finished by interested parties.

The costs of total demolition of the property were tagged at $1.9 million.

District officials had concerns that long-term needs of the high school might warrant a decision to hold the property for future use.

However, board members found that a project being planned by community members for expansion and improvement of the high school athletic fields, including the utilization of Musebeck Field, (often referred to as the Shoe Factory field) which is contiguous to the high school, would provide for the future needs.

A timeline has not been determined yet for that project which would be paid for by a combination of school and community funds.

Board President Don Wiemer said that Gorman does not plan to raze any part of the structure, but will not utilize the auditorium portion of the building.

The board accepted the offer on a 5-2 vote, with members David Guckenberger and Donna Scholl in favor of the sale, but requesting conditions that failed to find support.

The City of Oconomowoc has granted conceptual approval to Gorman & Company's project. Units would be priced for the affordable housing market focusing on the $25,000 to $40,000 income bracket.

Barry agrees.

"We believe it is a sound investment in the community. This is a $13 million investment in the neighborhood and should have a positive impact on the community. It returns the property to the tax rolls; those are all positives from our point of view," Barry said.

Fast facts

→ OASD accepted $1 million offer from Gorman & Company to renovate former middle school

→ Building will be turned into mix of residential and office space among other amenities

→ Sale is contingent upon legal counsel approval and securing $9 million in tax credits

→ Sale should be final next January meaning one more year for Haunted High fundraiser