New appraisals expected for Millikin

The former Millikin Elementary School.

On March 13, the Cleveland Heights board of education announced it is requesting a new appraisal of the Millikin school property, to be based on “the best use of the land under current zoning code.” The board discussed the potential sale of the property during a closed executive session on March 12.

According to Stephen Shergalis, director of administrative services for the CH-UH City School District, a request for proposal has been made to David E. Walter & Associates—the same firm that completed the earlier September 2005 appraisal. On March 19 Shergalis commented, “We will know this week how long the appraisal will take. Once the appraisal is reviewed by the board, the district will announce next steps."

Alan Rapoport is an attorney representing Mosdos Ohr Hatorah, the Orthodox Jewish school that is seeking to purchase the Millikin property. He calls the announcement from the board “a very positive development.”

Mosdos Ohr Hatorah’s most recent offer of $550,000 for Millikin was made in mid-December. Shergalis stated, “Mosdos Ohr Hatorah’s interest in the Millikin property prompted the board of education to reassess the building’s value. Property values have declined in recent years, and the board wanted to assess whether Mosdos’s offer was a fair price for the facility.”

“Mosdos has commissioned its own, independent appraisal,” Rapoport said, “and hopes at some point to be able to negotiate a reasonable purchase price. It has to be fair, one that both parties agree to, and it must be perceived as fair by the public. We’d like it to be a win-win.”

The Millikin property consists of two parcels. In the 2005 appraisal, Parcel #1 is described as 2.67 mostly wooded acres that include a 4,500-sq.-foot storage stable (from the Severance estate). Parcel #2 comprises 8.27 acres and a 37,000-sq.-foot school building. Together the two parcels make up the 10.93-acre Parcel #3.

The Millikin property is zoned (A) Single Family, and the school was designated a "conditionally permitted use." The 2005 appraisal envisioned rezoning the entire property to “medium density housing,” and stated of Parcel #1, “Based on discussions with Cleveland Heights City Planning officials, re-zoning this parcel to medium density residential use, either S-1 or MF-3, is likely.” The widely cited $2.4 million valuation of the entire property was based in part on Parcel #1 being thus rezoned, with a sales comparison value of $545,700. The estimated sales comparison value of $1,852,600 for Parcel #2 was based on “continuing to use the school building until market demand warrants re-zoning and re-development.”

The 2005 appraisal also included a less-cited valuation of the property “as currently zoned,” i.e., (A) Single Family. Calculated using that zoning designation, in 2005 the value of Parcel #3 was estimated at $874,400, with Parcel #1 at $213,600 and Parcel #2 at $661,600. [It is worth noting that the real estate market is generally believed to have peaked in 2005-06. Clear Capital, a California-based real estate valuation company, cites 2006 as the start of the downturn (http://www.clearcapital.com/company/MarketReport.cfm?month=May&year=2011).]

According to Shergalis, Millikin was built in 1954, and opened as an elementary school that same year. It closed in June 2006. Since then, it has been used as storage space for excess district furniture and equipment. It has never been leased.

Rapoport points out that “the 2005 appraisal doesn’t look at current conditions. The building has had seven more years to deteriorate.” With the new estimate, Rapoport said, “The board is doing what we’re doing—trying to make sure the property sells at a price that makes sense today. The school board is acting prudently by getting a new appraisal.”

Shergalis said, “The district is required by law to put district property up for public auction before it can negotiate a sale privately.” He added, “If the board elects to sell the building, then the sale would be open to any entity that wished to purchase the building, including Mosdos.”