Detroit Public Schools Property Transaction: Cass Tech Land Acquisition


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Detroit Public Schools Property Transaction: Cass Tech Land Acquisition

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Detroit Public Schools Property Transaction: Cass Tech Land Acquisition

  1. 1. Detroit Public Schools Property Transaction: Cass Tech Land Acquisition Objective: The then-leadership of the Detroit Public Schools committed to voters that it would replace the Cass Technical High school complex if voters supported a $1.5 billion bond issue in 1994. A four-year college-preparatory high school, Cass Tech has produced some of DPS’ most accomplished graduates, including Diana Ross, David Alan Grier, Lily Tomlin, former Miss USA Carole Gist and many others. Rationale: Created in 1907 with land donated by former Gov. Lewis Cass, Cass Tech moved to its former location at Second and Grand River in downtown Detroit in 1922. By the 1970s, the 800,000-square-foot, 7 _ story structure was in severe disrepair and despite updates in the 1980s, was not physically adequate for preparing Detroit’s highest achieving high school students for college. • Old Cass occupied 13 acres, and did not have any athletic fields other than a 40- yard practice area. • For many reasons, including political ones, the new Cass Tech could not move from its historic location. • The only suitable option was to identify a site large enough to build a new school with athletic fields near the old school while keeping the existing school in session during construction of the new building. • The new facility, opened in 2005, totaled 350,000 square feet, less than half the gross square footage of the old complex, and with therefore half the operating costs Course of Action: It is extremely difficult to find affordable, vacant, “clean” land in the center of a very old city. Assembling the 23-acre parcel for the new Cass Tech involved land with businesses on them, and therefore required a series of (six-10) land acquisitions to amass the necessary land for the new school. In addition, when a public entity publicly expresses interest in a piece of land, prices tend to skyrocket. DPS decided to shop the property owners third-party blind to keep the owners from identifying DPS as the buyer and driving the price up. • Many of the parcels had businesses on them (particularly along Grand River), and therefore those buildings needed to be demolished. • The properties across Second Avenue were actively used as parking lots and were expensive to acquire. • Invoking eminent domain to take the property would have been time-consuming and perhaps more expensive in the long run because of the success that attorneys have had in driving jury determination of fair market value. • DPS purchased most, if not all of the properties for the new Cass site after demolition and after all environmental issues had been addressed. Cost Considerations: DPS paid $5.6 million for a clean, 23-acre site with enough room to build a 350,000-square-foot high school and athletic field without having to take land through government power. • The emergency financial manager’s assertion of the “true cash value” of the property does not take into consideration the costs for demolition, cleanup and appraisals.
  2. 2. • DPS had a written and approved policy for how much would be paid, consistent with federal guidelines. • Three closings on the Cass properties took place: The first closing between the original owner and Detroit Property Acquisitions accounted for the property cost and associated business • The second closing, between DPA and ISI, a Washington D.C. brokerage firm, accounted for demolition and environmental testing costs • The third closing, between ISI and DPS, accounted for broker’s fees and appraisals. • DPS worked with the law firm of Floyd E. Allen & Associates on the Cass property acquisitions. • All acquisitions were reviewed by DPS and state auditors. • The acquisition costs were reported by local newspapers. • A certified survey by a civil engineer demonstrated that the new Cass football field met the size requirements for competitive high school play. ###