Four Board of Education members leaning toward the purchase of former Allegheny Energy

March 31, 2013|By JULIE E. GREENE |
  • Former Allegheny Energy building on Downsville Pike.
By Ric Dugan/Staff Photographer

Recalling his first tour of the former Allegheny Energy headquarters on Downsville Pike, Washington County Board of Education member Wayne D. Ridenour said he thought of the possibility the office building could house the school system’s administrative offices and possibly a school.

It was around 2005 and Ridenour, who knew the building’s owners at the time, took a tour of the Downsville Pike building with a Realtor and Elizabeth Morgan, who was schools superintendent at the time.

Ridenour said there wasn’t momentum then for the school system to buy the property. The Washington County Commissioners wanted the land to become a technology business park, he recalled.

Fast forward about eight years, through an economic boom and bust, and the property still is available and there’s momentum for the school system to move its administrative offices from an aging Commonwealth Avenue complex.

Four of the seven school board members said last week they were leaning toward voting to buy the Downsville Pike property, which includes about 143,000 square feet in building space and almost 45 acres. Some board members said they still wanted to hear other proposals before solidifying their position or deciding which way to vote.

The board will vote Tuesday whether to buy the former energy company property for $5.5 million, walk away from it or pay $50,000 to extend its option another 33 days.

Board President Justin Hartings told his colleagues last week he was “proud of our courage to be able to face this problem. If we can solve the problem of the Central Office ... whatever the solution is, I think it will have benefits to the school system for 50 or more years down the road.”

“These are never easy decisions for a school board to make because we’re all focused on getting as many resources to kids as we can. ... But at some point, you have to solve these kinds of difficult problems,” Hartings said.

Hartings said if the school board doesn’t solve the problem now, he didn’t know when the next opportunity might arise for a school board to solve it.

Finding a long-term solution

Hartings is the one who, in June 2012, proposed a resolution charging Schools Superintendent Clayton Wilcox with investigating a long-term solution for housing the school system’s administrative offices.

Hartings said Wednesday the process really began in the spring of 2011, when Greater Hagerstown Committee officials approached the school board about wanting to do a study on what an entity the size of the school system would need for a downtown office building. The board agreed to commit staff time to help the group.

That meeting started a conversation that continued when the school board heard reports about deferred maintenance on schools, Hartings said. The annual report typically does not include deferred maintenance on administrative facilities because the state usually doesn’t help pay for administrative buildings.

When Hartings asked what the deferred maintenance was, the board was told there was an estimated $4.8 million in deferred maintenance for administrative facilities, with most of that for the Commonwealth Avenue complex.

“I think we were all a little surprised to see that it was at least $4.5 million or more,” Hartings said.

The complex consists of several different buildings with sections built in 1938, 1946, 1966 and 1969. The 1938 section has been updated, but not completely renovated.

In addition to needed maintenance and handicapped-accessibility deficiencies, the complex is mazelike and requires new employees to walk a labyrinth of corridors to reach the area where they are fingerprinted.

Referring to a December 2012 report on the Commonwealth Avenue complex, Wilcox said in January the deferred maintenance on the complex could reach $10 million.

It was at that January work session that the board, without taking a formal vote, came to a consensus not to renovate the Central Office complex and to meet with various groups to hear ideas about housing the school system’s administrative offices.

The clock’s running

Determining a long-term fix for the administrative offices took on greater urgency Feb. 19, when the board voted unanimously to enter a purchase agreement for the former Allegheny Energy property at 10435 Downsville Pike.

The agreement gave the board a 45- to 78-day window to investigate the property and decide whether to buy it for $5.5 million. The first 45-day window expires Friday.

After touring the former energy company building, Wilcox suggested the board at least consider a letter of agreement stating the board was interested in the property so if the property owners received another offer, they would at least come back to the board before accepting that offer.

The initial asking price of $7 million was negotiated down, and the school system was given time to have professional contractors evaluate the property, Wilcox said.

During a March 20 meeting with The Herald-Mail’s editorial board, Wilcox explained that school system officials had learned of at least one offer on the Downsville Pike property.

Wilcox and the school board have heard pitches from the city, at least one private developer and others regarding options for the administrative offices.

The vote to enter the purchase agreement came about three hours after the school board met with Hagerstown’s mayor and City Council, who are interested in revitalizing downtown.

During that joint meeting, Mayor David S. Gysberts said city officials were “pretty much prepared to roll out the red carpet” to get the school board to move downtown.

City officials talked about helping with land acquisition and demolition costs, building a parking deck, expediting permitting and planning, and offering more affordable utilities.

City officials reiterated their desire to support a downtown move in a March 26 letter, but several school board members said the letter didn’t go far enough because it didn’t provide “hard numbers.”

Hagerstown developer Peter Perini told the board March 5 he was interested in building a downtown office building with the school board as one tenant. Perini and his construction partner are scheduled to meet with the school board behind closed doors Tuesday morning, before the board’s afternoon voting session.

Wilcox has said he met with representatives from the Sora group, which is working with the city of Hagerstown to redevelop downtown, and with Meritus Health President Joseph P. Ross to discuss the future of the school system’s administrative offices.

Sora representatives also will meet with the school board Tuesday morning behind closed doors, school system officials said.

During his meeting with The Herald-Mail’s editorial board, Wilcox said Ross pitched the old Washington County Hospital site. Wilcox said he also talked to the owner of land near the Commonwealth Avenue complex.

Downsville Pike property

After hearing a report last Tuesday concerning work needed at the Downsville Pike property, at least four board members said they were leaning toward voting to buy the almost 45 acres.

The property southwest of Hagerstown, not far from an Interstate 70 exit, was home for decades to Potomac Edison Co. and later became the headquarters for Allegheny Energy.

Before the Fortune 500 power company moved its headquarters to Greensburg, Pa., in 2004, the third floor of the office building was renovated, Wilcox said.

Wilcox said $2 million to $3 million was spent to upgrade the floor, replace modular walls with regular ones, and install fancier doors, lighting and other decor fit for a Fortune 500 company.

In 2005, the power company sold the property to Downsville Office Lot, which sold the property to Vinayaka Missions America University in 2008, according to property records. Vinayaka announced plans to open its first U.S. campus, but the building was put back on the market in 2010.

The property’s current assessed value is $6,115,700, according to online Maryland Department of Assessments and Taxation records.

Vinayaka Missions is six months late in paying its property taxes, which were due Sept. 30, 2012, county Treasurer Todd Hershey said. The company owes $64,826 in base property taxes, and has accumulated $3,890 in interest since Oct. 1, he said. A legal fee of $15 and another month’s worth of interest kick in April 5, Hershey said.

Of the base property tax, $57,977 would go to the county and $6,850 would go to the state, Hershey said.

Vinayaka Missions paid its current personal property taxes, of $711 on furniture and fixtures with an assessed value of $30,000, to the county, Hershey said.

Educational opportunities

Wilcox and some board members have talked about the other benefits the large office building and almost 45-acre site on Downsville Pike could provide that a downtown site could not.

An elementary or middle school could be built on the property one day, contingent upon enrollment needs, where those students live and the school zones such a move would create, Wilcox told board members last week.

The office space is big enough that part of it could be used to help recover instructional space at schools, Wilcox said.

If the school system moved its print shop from Washington County Technical High School to Downsville Pike, that would free up classroom space, Wilcox said. Some programs at Tech High could use more space, including the medical science program that turns down two applicants for every applicant accepted due to limited space, he said.

By creating capacity at Tech High or another high school, the school system might be able to push the need to build a new high school further into the future, Wilcox told the board. A new high school would cost around $70 million to $85 million, he said.

The school system also has Medicaid billing offices and some special education and physical therapy employees at Marshall Street School who could be moved to the Downsville Pike property, Wilcox said. That move would free up instructional space at Marshall Street School.

Wilcox also has talked about creating a teaching training program and bringing prekindergarten students from another site, such as the Funkstown school, to the Downsville Pike building for such a program.

Consolidating operations

The Downsville Pike office building and a storage building with garage bays on the property could be used to consolidate other school system operations as well, school system officials have said.

The facilities and maintenance departments now are at 701 Frederick St. in a building the school system bought in 2008 for $1.1 million, according to property records and Herald-Mail archives.

Wilcox said the school system could move those departments, and the 701 Frederick St. property could be sold to offset costs for the Downsville Pike property.

The school system pays about $19,000 per year in utilities for 701 Frederick St., and $226,000 per year in utilities for the Commonwealth Avenue complex, school system spokesman Richard Wright said.

Under state law, school sites are to be turned back over to the county, but the Frederick Street and Commonwealth Avenue properties weren’t used as schools, so school system and county officials would need to discuss what would happen to those properties, Wright said.

The school system’s transportation department and, possibly, the planetarium would remain at Commonwealth Avenue if the school board decided to purchase the Downsville Pike property, school system officials said.

Wilcox said he had been approached by some people connected to Discovery Station downtown who would like to see the planetarium made available to Discovery Station.

Wilcox said there’s potential the Commonwealth Avenue site could be home to a consolidated fuel or maintenance site with the county. In addition to the large bus lot, there is a new bus wash system and vehicle maintenance facilities off Commonwealth Avenue.

The school system did not yet have a specific estimate for demolition of the Commonwealth Avenue offices.

The school system also could move storage from the former Job Development Center on Federal Lookout Road near Smithsburg and from a facility on Frederick Street to the former Allegheny Energy building, Wilcox said.

If the school system no longer was using the former Job Development Center building, it would revert back to county ownership, Wright said. That building costs the school system about $4,260 per year, mainly for electricity, he said. The former school has $1.4 million in deferred maintenance.

The school system has been leasing 4,887 square feet of storage space at 790 Frederick St. since last fall for $10,000 per year, Wright said. Equipment such as tractor blades and trailers for hauling equipment were moved there from the storage barn that was demolished on the Ruth Ann Monroe Primary School grounds, he said.

Moving forward?

If the board votes to buy the Downsville Pike property, the first phase of renovations could be done in time for a phased-in move to start in December, Wilcox said of what he described as a “fairly aggressive” timeline.

The rough estimate of $6.6 million in renovations needed at the Downsville Pike property includes contingency funds for unexpected costs, Wilcox said. While contractors have been evaluating the property, Wilcox said that doesn’t mean they’ve seen every possible defect.

Of the $6.6 million, $4.5 million is estimated for initial costs, including mechanical, electrical, environmental, life safety and roofing work, and some miscellaneous costs such as painting and window dressings, Wilcox said.

The second phase of the renovation, which could begin in 2014, is estimated to cost $2.1 million.

Wilcox has said the school system’s fund balance, which is $12.5 million, could be used to pay for the purchase and renovation of the Downsville Pike property.

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