Monday, August 23, 2010

Charter Schools and Real Estate

Charter Schools and Real Estate

Should a school district turn down a $3,75 million offer for a building they
cannot legally use for their intended purpose?

This month's Maple Grove Critical Thinking Discussion Group featured Greg
Friess, a board member of the newly approved Charter School, the Parnassus
Preparatory School

Charter Schools are public schools. When you enroll your child in a charter
school most of the per student dollars that would stay with your home
district goes to the charter school. Since charter schools are public
schools they cannot deny entry to a student when they have the space. And
they cannot promote a particular religion (which is the issue with the
ACLU's lawsuit against the TIZA academy which the ACLU believes promotes the
Muslim religion. The ACLU was a past speaker of the Critical Thinking

Since the whole mess with TIZA its become even more difficult to get
approval for a new charter school. You have to demonstrate that your program
is not available in the home district amongst many other things. In the
Parnassus case this is ISD 279 Osseo area schools.

It took Parnassus over a year to get approved, and they were one of the very
small group that did. Their Charter is based on rigorous academics with a
Classical education. An administrator from ISD 279, a regular at the
Critical Thinking Club, attended the meeting. The district is against
charter schools because it takes money away from the district. The
administrator and Greg completely agree on the goals of high academics and
closing the achievement gap with minority students. They don't agree on how
to get there.

Also at the meeting was the Principal from a parochial school. Someone
raised the question on how the Charter School would handle discipline The
principal said in her many years of education she has learned that if you
focus on academics you have very few discipline problems.

Thoughts have power. As shown by this story my meditation teacher told us
about his 14 year old son.

His summer school experiment replicated one that was done in Japan. He
took cooked white rice and put it in 2 sealed bottles. Didn't refrigerate
either. Labeled one "bad thoughts". . For one week he sent bad thoughts to
the "bad thoughts" rice. On the other he lovingly repeated his meditation
mantra. At the end of the week only the "bad thoughts" rice turned black!
Neither Greg nor the ISD administrator talked about the elephant in the
room, as its very politically sensitive: the real estate. A charter school
is provided $1,200 per student per year for real estate. About 2 years ago,
given a $16 million budget deficit, ISD 279 determined that Osseo Elementary
School, an older building with 335 students, was too expensive to operate
and closed the school.
Anger cannot even being to describe the reaction to the school closing by
the citizens of Osseo, who took great pride in their neighborhood elementary
school that children can walk to. Even though it was 60 years old, the
school is zoned residential and operated on a conditional use permit. The
Osseo City Council revoked the Conditional Use Permit when the school was
Parnassus approached District 279 a year ago and asked to rent the school.
District 279 said "no". On July 13th, 2010, the City of Osseo sent a
purchase agreement to District 279 to purchase the school for $3.75 million.
The City had run the numbers. The rent from Parnassus would cover the bond
payments. Plus, with the District whining about money, they could use the
revenue from the school sale to make improvements to other schools.
The day after receiving the offer the District 279 Superintendent sent
back the earnest money and said they have no interest in selling Osseo
Elementary. They now want to use the school to shift a program being run in
rented space. A program for 125 troubled teenagers. To this, another parent
commented "either they were lying then when they couldn't afford to operate
Osseo Elementary for 335 kids. Or they are lying now that they CAN afford to
operate it for 125. Plus the cost to renovate the bathrooms to accommodate
high school kids versus the little kid toilets that are there now."
The one 279 board member that wanted to accept the offer, Dean Henke, said
"I know a lot of board members have been using the phrase 'fiscally
responsible" about leases where we are talking about $350,000..{for the
troubled teen program} .It was the $16 million deficit which is resulted in
the need for the lease."
The City of Osseo has no intention of granting a Conditional Use Permit
for the troubled teen program at the vacant Osseo Elementary. This one may
land in court.
Lost in this real estate battle is how to best provide public education
for the children.

Friday, August 20, 2010

Lakeshore development options

Options for Lakeshore Ownership

If you have 1,389 feet of lakeshore, how many lots can you get?

If the lakeshore is in the City of Victoria, Carver County?


If the lakeshore is in Laketown Township, Carver County?


When you invest in township land on the edge of development you typically
see the largest return on your investment by annexing the land in the City
and getting municipal water and sewer and higher density. This case proved
an exception.

The City of Victoria is an upper end suburb just past the U-M Arboretum on
Highway 5. Well regarded Chaska Schools as well as private schools. Victoria
has a new grocery story, Fresh Season Market. And regional bike trail access
to Carver Park Reserve with the bike trail connecting to downtown

From the City's website: "Victoria is A City of Lakes and Parks! Located on
the western edge of the Minneapolis-St Paul Metro Area, this city of 6,330
residents is home to nine lakes, as well as Smithtown Bay of Lake
Minnetonka. " When a developer wants to plat a lakefront subdivision the
City of Victoria requires the developer to dedicate ALL of the lakeshore to
the City for a trail. There are no lakefront lots and no private docks.

Fish Lake in Maple Grove illustrates 4 ways to deal with lakeshore:

1) Three Rivers Park owns 150 acres in Fish Lake Regional Park which
includes trails and a public beach and boat launch.

2) +/-75% of the lake is fee ownership by the homeowners. They can have
docks and there is no public access from their lots.

3) On part of the lake, adjacent to Three Rivers Park, The City of Maple
Grove owns the right of way for a trail. Homes back the trail, have lakeview
and no docks. While this lakefront trail provides a wonderful amenity for
the community, it significantly decreases property values because there is
no dock access. This trail was developed about 30 years ago.

4) Five lots were platted prior to the trail being built. So the City of
Maple Grove acquired an EASEMENT for the trail. These 5 homes have private
docks. As a frequent trail user, these 5 docks do not in anyway decrease the
utility or enjoyment of the trail around the lake. There are no beaches -
the natural wetland vegetation is the same as the rest of the trail

Impact on property values? Three years ago one of these five lots sold as a
tear down for $500,000. The home was in the Parade of Homes at $1,390,000 in
2008. The land would have sold for significantly less if there was no dock
access. And there is no way the home value would exceed $1,000,000 without
the dock. Just a couple homes down on the trail an older lakeview home sold
for $339,900 and was not torn down.

This accidental situation, with the trail easement and dock rights, I
believe is the best way for a city to achieve both public trail access to
the lake AND higher property values. As to boat traffic from the docks,
there is public access on the lake anyway at the Three Rivers Park.

Getting back to Victoria. The developer has about 70 acres on Lake Wasserman
in Laketown Township, in the orderly annexation area of Victoria. He had 2
building rights, one lakefront, one not. Keeping the lakeshore in Laketown
Township, Carver County permitted the developer to shift the building rights
to have around 40 acres with no lakefront and no building permit for future
annexation to Victoria. Then he created one 25 acre lot with 1,157' feet of
lakeshore and one 5 acre lot with 232 feet of lakeshore. The lots are on the
paved and well maintained yet low traffic County Road 43, as to opposed to
many acreage lots on poorly maintained township roads. A long paved private
drive was built by the developer insuring privacy as well as the lakeshore.

I have these lakefront beautiful lots listed for sale. Lakefront lots in
Victoria are rare. For more info email at or call Laurie at

Tuesday, August 10, 2010

Three bad bills that didn't pass in Minnesota

Three Bad Bills that Didn't Pass in Minnesota

1) Imagine you are selling your condo in downtown Minneapolis on the 23rd
floor. You have a closing date of November 1st, If Representative Newton and
Senator Foley, both , DFL from Coon Rapids, had their way, you would need a
wetland delineation before your condo sale could close. Really.

Their proposed bill required that before transferring an type of property
sellers need to disclose the location of all wetlands on the property as
certified by the county. Problems with this bill included:

*Wetland delineations can cost thousands and also require a surveyor.

*The Counties aren't typically involved in approving wetland delineations,
its often the city and/or the watershed district. Counties aren't set up to
do this-yet another unfunded mandate.

*Wetland delineations must be done during "the growing season", typically
from late April till October 1st, thus few closings could happen in the
winter. Just think how this would effect employment needs and cash flow to
title companies, banks, sellers, etc.

2) Another bill that didn't pass was proposed by Representative Obermueller,
DFL, Eagen. This bill proposed to require the seller to provide a written
disclosure whether the property is or has been a nuisance property during
the seller's ownership. Not only is this redundant to current disclosure
laws, but a nuisance caused by the current property owner typically ceases
when they no longer own the property.

3) A bill proposed by Senator Higgens and Representataive Mullery, both, DFL
Minneapolis wanted to expand the governments power of eminent domain. They
wanted the definition of abandoned property to include "substantially
unoccupied or unused for six months for any commercial or residential
property; taxes past due for one year; and has not been maintained. This
includes any home listed for sale where the seller has moved out of the

This bill passed the Senate but was not taken up for debate on the house

We owe our thanks to the Christine Berger and Heather Mavencamp of the
Minnesota Association of Realtors for their lobbying to stop these bills
that could have hurt all property owners.

Thursday, August 5, 2010

Written vs Spoken Data

Written vs Spoken data

I had the privilege of attending a Yoga Teacher training by by a 91 year old
retired history professor from Bombay. He has practiced yoga daily for 60
years and he walks 5 miles every day. And his mind is as sharp as his body.

Professor Sanghavi spoke of the oral tradition of communicating sacred Hindu
texts that are about 3,000 years old and were only first put into print
about 200 years ago by a German. Hindus believed is was sacrilegious to
print them. That by writing them you can make mistakes and mis-communicate
the intent.

Our modern society tends to believe the written word over the spoken one. Is
that always correct? I recently attended an appraiser meeting at the
Realtors Association. As typical, the appraisers whine about the Realtors.
How the data on the MLS sometimes appears to be wrong.

"Why don't you just call or email the agent and ask them?" I questioned an

"I don't have time to do that" she huffed. And everyone else looked at me
like I was nuts.

In appraisal class last week the teacher emphasized the importance of
verifying the written data. Only one appraiser beside myself, a woman from
Fargo (where the market is seeing increasing values), said that verifying
data was her typical practice.

It is the bias in our society to believe data in writing, to accept those
appraisal reports as accurate, to assume the written data is more correct
than a conversation. When the opposite may be true.

Say you're appraising a townhouse in Maple Grove. There are 10 sales of
identical floor plans within a one mile radius with a clear data pattern
that were all listed on the MLS. Verifying each sale is probably

When appraising land, custom homes, income property, where there are so few
sales and the property characteristics are unique - - its critical to
understand the story behind the sale. Real estate transactions are
significant events and most people remember the circumstances of the sale in
amazing detail. If you ask them.