Burrell School District officials believe the $1 redevelopment sales agreement of the former Stewart Elementary School property is the most fair and reasonable price for the property, and it will generate hundreds of thousands of dollars in tax revenue for the district moving forward.
The school board Tuesday approved a sales agreement for the 8.44-acre Stewart property, 2800 Leechburg Road, to Lower Burrell-based developer David Ziccarelli.
Ziccarelli plans 46 units of single-family duplex-style condos at the property.
Stewart closed at the end of last school year.
Why a private sale?
Although the sale price for the property is $1, Burrell expects to save money on Stewart’s demolition and anticipates generating at least 1 mill’s worth of real estate taxes once the development is complete.
The vacant Stewart building costs Burrell about $200,000 annually to maintain, Superintendent Shannon Wagner said said. Asbestos abatement was estimated at about $370,000, and demolition was estimated at $900,000.
Under the agreement, Burrell will only be on the hook for $185,000 in asbestos abatement, and Ziccarelli will cover the rest. Ziccarelli will cover the demolition cost.
Ziccarelli must begin demolition within a year of the property’s closing. He must develop at least 40 units with a fair market value of $275,000 each or the school district can take back the property.
In Pennsylvania, school districts can sell unused property through an auction, closed bid or private sale, Wagner said.
“We didn’t feel (a closed bid) is the best development for a community when we’re sitting in a shrinking tax base,” Wagner said. “We think it is better for a planned residential development. It brings revenue into the community and keeps money flowing through the community.”
Ziccarelli was the only developer Burrell approached with the plan, Wagner said.
“This specific developer has done this successfully,” she said.
According to Pennsylvania School Code, Burrell’s private sale must be approved by the Westmoreland County Court of Common Pleas. There, the district must prove the sale price is fair, reasonable and better than what could be obtained at a public auction.
Wagner said the money and growth generated through the development, Stewart’s inability to be currently used and Ziccarelli’s record of prior developments in the area will prove that’s the case.
“The building as it stands is not profitable,” Wagner said. “You can’t do anything with it, it has to be demolished. If we want the property to be profitable, we would need to get rid of the building before we sold the property.”
Why is a residential property the best move at Stewart?
Business Manager Jennifer Callahan said that, at 46 units, the school district would realize $155,000 in tax revenues annually; which is worth about 1 mill of taxes in Burrell. She estimated real estate tax revenue to be about $137,000; earned income tax revenue of just under $17,800; and $63,250 of transfer tax revenue, which is collected when units sell or transfer to another owner.
Callahan told the school board Tuesday that, when reviewing potential options for the Stewart property, officials considered what could generate the most annual tax revenue for the school district and city. The district tried to avoid empty, vacant properties and wanted to bring in something that would contribute to long-term stability to the community, Callahan said.
Nonprofits, while helpful to the community, typically are tax-exempt, Callahan said. Commercial properties generate real estate and local service tax revenues and jobs; and residential properties generate real estate, earned income and transfer taxes, and increase residents and student enrollment, Callahan said.
The Hillcrest Shopping Center, at 19.8 acres, generates close to $63,000 in total real estate tax revenue for the district, Callahan said. U-Haul, at 6.33 acres, generates $21,000; Schaedler Yesco, at 6.18 acres, generates $20,000 and Dollar Tree at 4.17 acres generates $11,200.
“We’re not getting a huge amount of extra real estate tax revenue from those properties,” Callahan said.
Residential properties researched by Callahan, however, generated more real estate tax revenue to the district, including four condo developments — Gladeview, Puckety Church, Rabbits Foot and Edgecliff — which are all Ziccarelli developments.
Gladeview — a former Burrell school — has 28 units and generates more than $77,000 in total real estate tax revenue; Puckety Church, with 73 units, generates almost $190,000; Rabbits Foot, with 66 units, generates close to $184,000; and the 38-unit Edgecliff development generates almost $118,300 to the district.
“That’s something I saw as a revenue generator,” Callahan said.
In city taxes, 40 homes with a fair market value of $275,000 each would come out to $54,450 annually in real estate tax revenue, said City Manager Greg Primm.
What are the next steps?
Wagner anticipates the court hearing to consider the sale to occur in 60 days.
Lower Burrell’s Planning Commission on Wednesday will consider a lot line request to get the parcels together, Wagner said.
The property will also need to be rezoned, she said. That will also go through the city’s planning commission in the future, Wagner said. A majority of Lower Burrell council members who attended Tuesday’s meeting signaled support for the plan.
“It will take some time, but it will all get done,” Wagner said. “I would hope within five, six years it would be done.
“(Tuesday) night was the first step.”
The property includes a veterans memorial along Leechburg Road and pickleball courts near Lower Burrell City Hall. Both will be relocated.