Two new Millikin appraisals offer two different estimates of the property's value
A new appraisal of the Millikin School property requested by the Cleveland Heights-University Heights City School District estimates the value of the former school building and adjacent "excess land" to be $770,000.
Mosdos Ohr Hatorah, the Orthodox Jewish school that has offered to purchase the Millikin property, commissioned its own appraisal, which estimates the total "as is" value of the property to be $600,000.
Commenting on the district's new appraisal in a May 9 statement, Karen Jones, CH-UH school board president, said, "We are considering the appraisal carefully and plan on meeting in executive session in the very near future to discuss all options. This particular appraisal is based on the value of the current property as is, and under current zoning. That is significantly different than the conditions that were placed on the appraisal in 2005. We are determined to find a solution that benefits the immediate neighborhood and the community as a whole."
At the May 14 joint meeting of the school board and the city councils of Cleveland Heights and University Heights, Jones indicated that the board would meet in executive session on Tuesday, May 15, and that the board "hopes to make a decision and come out of the meeting with some type of action." During the May 14 meeting, Nancy Peppler, school board member, stated, "If we move forward with selling the property, it will be via public auction."
Charles M. Ritley Associates conducted the district's appraisal, requested in March. The appraisal, released by the district on May 8, sets forth the estimated market value of the property "as of April 24, 2012," according to the accompanying cover letter, dated April 30. The approximately 46,555 square-foot school building, on 8.2672 acres, is estimated at $740,000, and the adjacent 2.6651 acres, containing a storage barn, is estimated at $34,000. (The appraisal notes, "the value conclusion for the entire property is slightly below the sum of its component parts due to rounding.")
The Ritley appraisal, based on a sales comparison approach, cited the challenges of finding comparable properties. In the case of the "subject property" (the school building and 8.27 acres), the appraisal notes that properties of this type are "infrequently transferred," and that the market for the property is believed to be "thin" due to its design, size and location. The appraisal based the sales comparison value of the subject property on five institutional buildings in Greater Cleveland that sold between August 2007 and August 2011. The appraisal's adjusted sale prices for the comparable properties ranged from $15.89 to $44.42 per s.f., and estimated the subject property at $16 per s.f. The resulting value of $744,800 for the Millikin school building and acreage was adjusted to an estimated $740,000.
In the case of the "excess land component" of the Millikin property—the adjacent 2.67 acres and storage building—the appraisal cited the "dearth of comparable residential land transfers of this size." The appraisal identified three comparable properties in Greater Cleveland that sold between April 2006 and December 2011, at prices ranging from $8,054 to $24,790 per acre. The appraisal estimated the value of Millikin's "excess land" at $20,000 per acre. From the resulting value of $53,302, the appraisal deducted $19,500 for the estimated demolition cost of the storage barn (6,500 s.f. at $3 per s.f.) to arrive at a value of $33,802, adjusted to an estimated $34,000.
Alan Rapoport, an attorney representing Mosdos Ohr Hatorah, said, "We have shared Mosdos's appraisal with the school board, and are freely distributing it, now that the school board is distributing it's appraisal. We didn't want to prejudice the process by distributing ours before theirs." Noting that Mosdos's appraisal is lower than the district's, Rapoport emphasized that "appraisals are only opinions, and opinions can vary. I think we got the two best appraisers who could have been used for this situation."
Emily Braman of Charles P. Braman & Co. conducted Mosdos's appraisal, which estimates the value of the property as of March 7, 2012. That appraisal also utilized a sales comparison approach, but calculated the value of the total 10.93-acre parcel as a whole. Unlike the Ritley appraisal, it does not provide separate valuations for the two parcels.
One of the comparable properties cited in the Braman appraisal, but not used as a comparable in the Ritley estimate, is the former Fuchs Mizrachi School in University Heights, which the University Heights City Council voted to acquire on April 16. The purchase price of $600,000 is listed as $567,000 in the Braman appraisal, based on a calculation of the "net present value of purchase financed at 0% over two years." The estimate lists the Fuchs Mizrachi School property as comprising 6.15 acres and a 47,088 square-foot school building.
Braman's appraisal value of $600,000 for Millikin is based on the property's "highest and best use as improved," and cites that use to be as an educational facility. The appraisal also estimated a land valuation of $215,000, based on "highest and best use as if vacant," and cites that use to be a "residential development when the economy improves." According to Rapoport, the land valuation factors in the cost of demolishing the school and costs of other processes required for development of the property.
An earlier 2005 appraisal included a widely cited valuation of $2.4 million dollars. That valuation was based on rezoning the property to medium density housing. The current zoning is (A) Single Family, with the school designated a "conditionally permitted use." The 2005 appraisal also included a less-cited valuation of the property "as currently zoned," i.e., (A) Single Family, which estimated the total value of the property at $874,400. Both the Ritley and Braman appraisals are based on the current zoning.
Rapoport said, "It's very important that the public understands that the property is not worth $2.4 million. It is to the public's benefit that any sale is not only fair, but also appears fair. The appraisal is part of that process. It's an opinion." Rapoport said that he has sent the district's appraisal to Emily Braman, and believed that the district would probably share Mosdos's appraisal with Ritley Associates.
Prior to the release of the district's appraisal, Angee Shaker, director of communications for the district, stated in an e-mail, "We anticipate the board will schedule an executive session to discuss the appraisal." She also confirmed that the Millikin property would be one of three topics that will be discussed "for certain" at the May 14 meeting of the CH-UH Board of Education and the city councils of Cleveland Heights and University Heights. That meeting is scheduled for 7:30 p.m. at the Cleveland Heights Community Center at 1 Monticello Blvd., and is open to the public.
Kim Sergio Inglis
Kim Sergio Inglis is editor-in-chief of the Heights Observer. She lives in the newly designated Shaker Farm Historic District in Cleveland Heights.