Sell Lindeman Property

WHY DOESN'T KSD SELL THE VACANT 13-ACRE LINDEMAN LOT IT HAS OWNED SINCE 1961?

 Background

In 2010, the Kirkwood School District hired the Webster Groves-based real estate appraisal and consultant firm McReynolds Von Trapp to appraise KSD-owned property at 405 Lindeman Road (St. Louis County parcel 23N130280) and 1760 Dougherty Ferry Road (County parcel 23N130262).  On July 6, 2010, McReynolds Von Trapp appraised the property's market value at $2.1 million.  

The parcel --13.07 acres with a 55-year-old house and a garage --was purchased by the Kirkwood School District in 1961.  The appraisal concluded that the house and garage no longer had any value.  

The report noted that the property was exempt from real estate taxes becaus it is owned by a public school district.  If the property had been owned by a taxable entity, the estimated real estate taxes would have been $12,131 in 2010.

The report took into account that "demand for new houses has slowed substantially and therefore, the demand for land suitable for residential subdivisions has declined."  Based on these adjustments, the appraisal firm concluded that the site had a value of $160,000 per acre, or $2,091,200 for the full parcel.  Due to the economic and housing downturn at the time, the firm recommended that KSD "hold it as vacant land until the residential market rebounds."

When looking forward to a time when the real estate market would improve, McReynolds Von Trapp concluded:

You can see from the preceding summary of the comparable sales that prices for well-located tracts of vacant residential land sold for between $245,000 and $280,000 per acre during times of typical housing demand.  Obviously, the recent lack of demand for housing and the resulting decline in demand for vacant land has had a significant downward impact of the value of the subject property.  It is reasonable to expect that the value of the subject property will increase when the market regains equilibrium, but there are no indications that this will occur in the immediate future and it will likely take another two to three years before the market posts significant improvement for properties such as the subject.

Has the Real Estate Market Improved Since 2010?

The McReynolds Von Trapp appraisal was done in the summer of 2010 -- nearly six years ago.  Using the report's appraisal ranges "during times of typical housing demand," one would come up with a value of between $3,202,150 and $3,659,600. 

Has housing demand returned to "typical?"  At the time Channel 4 did a special investigative report on the Lindeman property in October 2015, the National Association of Home Builders/Wells Fargo Housing Market Index (HMI), a measure of home builder confidence, reached a level of 64.  In the press release, the National Association of Home Builders remarked, "This month's reading is a return to HMI levels seen at the end of the housing boom in late 2005."  At the time, KSD Superintendent Tom Williams told Channel 4 viewers that selling the property would "reduce our options." 

 Comparable Property in KSD Since 2010?

There has been at least one comparable sale in the Kirkwood School District since the appraisal was done.  On Feb. 8, 2013, McBride Homes purchased 5.37 acres off Des Peres Road for $1,122,902, or $209,087 per acre.  The street name is now English Walnut Drive.  Of this 5.37 acres, 2.97 acres were sold to individuals with houses built on the properties.  2.4 acres are designated common land at this time. Completed new homes were sold to nine individuals/families in prices ranging from $633,041 to $874,222 (average of $755,813) on lots ranging from 0.29 acres to 0.45 acres (average 0.33 acres). 

Like the KSD-owned properties, these properties are in the KSD.  English Walnut is in the city of Des Peres, which might be more attractive than Kirkwood due to the absence of a city property tax and facilities like the Des Peres Lodge.  On the other hand, the English Walnut Drive property backs up to Highway 270 and probably has some discount due to the noise pollution.  Applying the $209,088 per acre price from this property sale in 2013 to the KSD-owned Lindeman and Dougherty Ferry property would yield a sales price of $2,732,779.

Selling Lindeman Property Will Increase Property Taxes

In addition to the one-time sales windfall, Kirkwood School District (along with the rest of the tax entities in the area such as City of Kirkwood, Kirkwood Public Library, etc.) would benefit from an ongoing property tax stream.  In the case of English Walnut Drive, the KSD received $48,131 in property taxes in 2015. 

Given that the zoning laws of the Lindeman property require residential development to be on at least one-acre lots, we would expect the average house built on the property to exceed the values of those built on an average 0.33 acres on English Walnut Drive.  This chart shows the taxes KSD would receive depending on the average appraised value of 11 one-acre lots on the parcel (the estimated number of lots in the 2010 appraisal).

Avg House Appraised Value

KSD Tax/House

Per Development

700,000

5,503

60,535

800,000

6,289

69,182

900,000

7,075

77,830

1,000,000

7,862

86,478

 

Some critics of the plan to sell the Lindeman property have responded that new homes will bring more students and add to class sizes.  Does this argument hold up with respect to the evidence from English Walnut Drive?  No.  A review of owner names in the St. Louis County real estate records compared to a list of KSD families reveals that only one of nine homes in the neighborhood have children in the KSD.

Is There Interest in the Property?

Having an item that is supposedly worth something on paper isn't the same having people coming to you with interest.  The KSD has at least two developers coming to KSD again and again asking it if there is interest in selling the Lindeman property.  Imagine the interest if they actually publicly entertained the idea of selling the property?  Here are a few samplings of the email interest:

I read the article regarding the tax increase to help fund the schools needs.  Has there been any further consideration of selling some real estate? We remain very interested.  We are still interested in a parcel of property that the school district owns at 1760 Dougherty Ferry Road and 405 Lindeman Road....Any interest in selling this parcel?

In response, Superintendent Williams replied to one developer, "The District is still not interested in selling the Lindeman property.  We may someday, but not in the near future.  Thanks again."

Kirkwood School District parents, teachers, and taxpayers need to tell Dr. Williams and the School Board that the future is here.  We can no longer afford to just sit on a property this valuable.

Bottom Line

The bottom line is that selling the Lindeman property would bring the KSD at least $2.5M in needed funds as well as an ongoing annual tax revenue stream of $70,000-plus.  Yet, the Kirkwood School Board is trying to raise extracurricular fees, which will bring in $40,000.  Is this the best way to respond to a budget deficit or a way to penalize parents/voters for the School Board's loss at the polls?

Sources:

St. Louis County Property Records

https://www.nahb.org/en/news-and-publications/Press-Releases/2015/october/builder-confidence-rises-three-points-in-october.aspx

 McReynolds Von Trapp Appraisal of Lindeman Property, July 6, 2010.

Kirkwood School Emails on the Lindeman Property obtained via a Missouri Sunshine request.

Channel 4 Investigative Report, Oct. 22, 2015 http://www.kmov.com/story/30329939/voters-to-decide-on-kirkwood-school-district-tax-increase-nov-3