Friday, August 24, 2007
Manhattan may have the priciest real estate in the nation, but Ohio has some pretty expensive parcels, and it seems like the state’s universities have something of a knack for finding them and buying them.
Just the other day, the University of Akron got approval from the state Controlling Board to purchase the Quaker Square hotel complex for $22.7 million. That’s the largest single purchase approved by the board in a quarter century, and it came days after The Columbus Dispatch did a story about the penchant universities seem to have for high-end deals.
The Dispatch questioned whether Akron was getting a good buy, noting that Summit County had placed the value at $9.8 million.
The university’s lawyer told the controlling board that the newspaper was wrong; that $9.8 million was the tax valuation, which would mean the hotel complex was really worth about three times that amount. Instantly, a questionable deal became a bargain, and armed with that information and three independent property appraisals that placed the value between $22.7 million and $29.8 million, the Controlling Board approved the sale.
Oops, but never mind
It turns out that the Dispatch had the Summit County figures correct. The university’s lawyer has apologized to the Controlling Board for his mischaracterization, but it appears board members are comfortable enough with the three appraisals that they won’t be revisiting the issue.
That’s not surprising. The Controlling Board doesn’t seem to be in the business of second guessing university land deals. And some of those deals are doozies.
While Akron’s purchase of Quaker Square is the highest dollar figure, it doesn’t even come close to the highest price paid per acre.
The winner in that category was Ohio University, which bought a 0.09-acre parcel in 2004 for future expansion at a price that worked out to $6.5 million per acre. That’s a parcel about 40 feet wide by 100 feet deep that sold for about $600,000.
Other purchases of small parcels in the top 10 ranged from $4.7 million to $1.9 million per acre.
Once in a lifetime
The Dispatch story quoted Marc Half, a state real-estate appraiser who has been evaluating universities' property deals for the Controlling Board for 25 years, as saying he has seen the panel turn down only one proposal: a request from Youngstown State University in the 1990s.
A check of Vindicator files for the decade didn’t show a story that matched Half’s recollection. But there was a story reporting the Controlling Board’s rejection of a YSU request for $25,000 to have an architect review plans for roof repairs on two buildings. That was in June 1994.
And in August 1997, one legislator on the board questioned YSU’s purchase of 0.11 acres to enhance its new $14.1 million College of Education building. Rep. Kerry Metzger, R-New Philadelphia, a new member of the board at the time, noted that the $106,000 price for the parcel worked out to more than $1 million an acre. He eventually voted with the other board members to approve the purchase, but said the university should be more prudent in making future deals.
Apparently Metzger’s suggestion that $1 million-per-acre was the level at which universities and the Controlling Board should draw a line died somewhere between 1997 and 2002. The latter year is when Ohio and Miami universities both bought parcels of about a quarter acre at prices that worked out to more than $2 million per acre.
Obviously, colleges and universities face a need to expand. Close to home, YSU is one of the Mahoning Valley’s greatest assets, and we have supported its efforts to improve its campus and create a link with downtown.
But the Controlling Board has a responsibility to assure that every university in the state system is doing everything it can to acquire the land it needs at the best possible price.
Otherwise, there’s not much control in Controlling Board.