MUNCIE, Ind. — You might think the 26-acre Northside Middle School campusbordering Ball State University in northwest Muncie would be worth millions of dollars on the market.
But real estate appraisers uncovered reasons why Northside— as well as Mitchell Elementary School, on nine acres also bordering BSU property — is not that attractive to developers.
BSU has agreed to purchase Northside for $1,270,000 and remains interested in buying Mitchell, which Muncie Community Schools closed this year. The university will lease Northside back to the school district for $1 a year forup to 5½ years, giving the district time to decide where to move the school's students. The university also agreed to help pay maintenance costs at Northside ($60,000 a year).
Here's what American United Appraisal Co., a local firm hired by the school district, and Traynor & Associates, an Indianapolis firm hired by Ball State, discovered about the two buildings.
Northside Middle School appraisal
• If Northside were a commercial property, it would have paid $304,254 in property taxes this year. However, it's tax-exempt as a school.
• Northsideis located in a residential zone, where permitted uses include single-family housing, schools, colleges and churches (not businesses). There is little to no demand for new housing in Muncie, whose population continues to shrink. The school district's enrollment also is declining, which is why three elementary schools were closed this year and Northside is up for sale. Three of the top 10 local employers include Walmart and two call centers.
• To redevelop the Northside campus into a housing addition would require demolition of the school. The appraisers said demolition would cost an estimated $800,000 to $1.2 million, depending on the presence of any hazardous materials. Traynor appraised Northside at $2.1 million, minus $830,000 for demolition costs that lowered its value to $1.27 million, the amount Ball State agreed to pay for it. United Appraisal appraised Northside at $1.5 million, minus demolition costs that would make it worth only $870,000.
• The 191,328-square-foot school,built in 1969, is detrimental to the value of the land on the rest of itscampus. The school is becoming obsolete and expensive to maintain.The utility bill last year was $157,044. The HVAC system needs to be repaired or replaced. A new roof will be required in coming years. The swimming pool was closed in 2015 and would require $200,000 to reopen.
• There is insufficient demand in Muncie for a charter school that would need a 200,000-square-foot building with217 paved parking spaces (there is also a tennis court, as well asbaseball, football and track facilities). There are more buyers for smaller schools than for schools the size of Northside.
• Comparable sales: Fresh Thyme Farmers Market purchased 12 acres along McGalliard Road for $1.2 million. An auto dealer bought 37 acres at McGalliard and Nebo roads for $3.1 million. And Campus Crest, a student apartment complex (now doing business as The Haven Apartments) purchased 10 acres at McGalliard and Oakwood Avenue for $2.4 million. The occupancy rate at The Haven last year was 74 percent. The occupancy rate at another student apartment complex, Village Promenade, was 83 percent.
• McGalliard is Muncie's primary retail corridor. Northside fronts Bethel Avenue, which is less appealing to commercial developers even if it were rezoned variety businessby the city. Likely commercial uses on the site would include convenience stores, liquor stores, dollar stores and laundry facilities.
• Ball State could use the Northside site for future expansion.
MORE MUNCIE SCHOOLS COVERAGE:
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Jeff Ward:MCS makes progress, but is it enough?
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Mitchell Elementary appraisal
• Mitchell Elementary is far off the beaten path. The only way to access it is through interior streets in the Halteman Village neighborhood.
• If it were a commercial property, Mitchell would have paid $37,974 in property taxes this year. Mitchell isin a residential zone. Commercial use is incompatible with the residential neighborhood.A community center is unlikely at that location. Mitchell borders Halteman Village, a farm field owned by Ball State, and Ball State's Scheidler Apartments.
• Potential buyers for a school the size of Mitchell, 40,884 square feet, include churches and social service agencies. Demolishing the school for housing might not be feasible financially. Ball State could use Mitchell as a day care center, a charter school, or for storage of student belongings during the summer until a better use was found.
State-appointed emergency managers say a private developer has expressed interest in acquiring Mitchell.
Traynor, hired by BSU,appraised Mitchell at $385,000. United, hired by the school district, appraised Mitchell at $163,500.
Seth Slabaugh is an education reporter at The Star Press who can be reached at (765) 213-5834 or seths@muncie.gannett.com
