Decatur School Board Broke State Law in Purchase of Properties

According to the report of the Indiana State Board of Accounts audit of the books of the Metropolitan School District of Decatur Township - report published 5/29/08 which covered the period from July 1, 2005 to June 30, 2007 - the District broke State law when purchasing 4 properties during that time frame.

Here is the pertinent section of the audit report:

REAL PROPERTY PURCHASES
The School Corporation purchased four real estate properties during the audit period but did not comply with Indiana Code 36-1-10.5-5 or Indiana Code 36-1-10.5-6. The School Corporation purchased the Southwest Pavilion Office Building for $3,345,000, the Transportation Building for $6,475,961, the 7900 Camby Road property for $458,000, and the 4637 Yuma Drive property for $39,643. There were no appraisals presented for the Southwest Pavilion Office Building and the Transportation Building and only one appraisal each presented for the 7900 Camby Road and 4637 Yuma Drive properties. Also, the $458,000 purchase price for the 7900 Camby Road property exceeded the fair market value price of $325,000 according to the single appraisal.

Indiana Code 36-1-10.5-5 states in part: "
(2) The purchasing agent shall appoint two (2) appraisers to appraise the fair market value of land or structure. The appraisers must be professionally engaged in making appraisals. . . .
(3) The appraisers shall return their separate appraisals to the purchasing agent within thirty (30) days after their appointment. The purchasing agent shall keep the appraisals on file . . . for five (5) years after they are given to the purchasing agent.
(4) The purchasing agent shall give a copy of both appraisals to the fiscal body."

What the law says in plain English is that before the School Board voted either for or against the purchase of any property, they should have been supplied with a written copy of two independent appraisals of the value of the property. They can only approve the purchase if the price to be paid is equal to or less than the average of the two appraisals. The Board, at the time composed of Dale Henson, Don Huffman, Larry Taylor, Cathy Wiseman, and Judy Collins, likely took their legal advise from the Superintendent and did not request the appraisals -- but they should have.

So - the School Board purchased the Southwest Pavilion Office Building (aka the Concentra Building) for $3,345,000 with NO appraisal of its true worth -- in violation of State Law.

The School Board purchased the Transportation Building (aka bus barn) for $6,475,961 with NO appraisal of its true worth -- in violation of State Law.

The School Board purchased the property at 4637 Yuma Drive for $39,643 with only ONE appraisal of its true worth -- in violation of State Law.

The School Board purchased the property at 7900 Camby Road for $458,000 with only ONE appraisal that put the true value at $325,000 -- in violation of two aspects of the State Law. It would seem that they overpaid for this property by $133,000 or 41%. Of course the money didn't come out of their pockets. It came out of the wallets and purses of Decatur Township taxpayers.

The purpose of the State Law in the matter of appraisals prior to the purchase or sale of property by governmental units is to protect the taxpayer from over spending on a purchase or being short changed on a sale -- and to keep the governmental unit from padding a purchase price to the advantage of a 'favored' seller.

If the School Board didn't know it needed the appraisals, it should have asked what the laws were regarding purchases of real estate. Unfortunately, the Board prefers to have the Superintendent advise them on legal matters than have an attorney present at Board meetings to give them independent advise like any other governing board would do. We know that this ignoring of State Law cost Decatur taxpayers at least $133,000. But we don't know how much more than that it cost us.