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May 17, 2012 | |
Home | Site Map | Contact Us | Advanced Search
May 17, 2012 | |
Who currently owns the land on which the Berman Hebrew Academy resides?
How much money has the Berman Hebrew Academy spent on the renovation of the school?
How does the community benefit from the Berman Hebrew Academy’s presence in Aspen Hill?
Why exercise the option to purchase now?
Why was the price tag for a property occupying 19.5 acres of land set at $1.9 million?
What is the assessed value of the 19.5-acre property?
Can the Berman Hebrew Academy sell the land to a developer and make a profit?
Can the County buy back the property if it ever needs it for a public school?
Will the community be able to continue using the track and field and other facilities?
Why is the Montgomery County Board of Education opposed to the sale?
Should the County be opposed to selling County property as a policy?
Can the County council reject the Berman Hebrew Academy’s exercise of its contractual option?
Q. When did the Melvin J. Berman Hebrew Academy move into the former Robert E. Peary High School, 13300 Arctic Avenue, in the Aspen Hill area of Rockville?
A. In 1996, Montgomery County entered into a lease agreement with the Berman Hebrew Academy, containing an option to buy the property on which stood the former Peary High School. The Berman Hebrew Academy moved into the building in 1998 after extensive renovations to the property in which the Berman Hebrew Academy invested nearly $9 million. The County had decided to close Peary in 1984, and the property had remained vacant for 14 years. During that time, the building became dilapidated, soliciting vandalism and considerable illicit behavior. As the surrounding area grew increasingly dangerous and disreputable, the Aspen Hill community justifiably demanded that the County take action to improve the situation.
The County improved the situation by finding a responsible tenant in the Berman Hebrew Academy, which moved from an existing County school building that it was renting solely because it had the opportunity to own this property.
Q. Who currently owns the land on which the Berman Hebrew Academy resides?
A. Montgomery County now owns the land. In 1994, the previous owner, the Montgomery County Board of Education, determined it had no further need for the property and deeded the land to the County, a typical course of action when the school system no longer needs a school.
Q. How much money has the Berman Hebrew Academy spent on the renovation of the school?
A. The Berman Hebrew Academy raised nearly $9 million from private donors, which was invested into physical improvements of the property. The Berman Hebrew Academy was successful in raising these funds from private donors precisely because of the purchase option in the contract. These donors were not interested in donating money to renovate a building which the school merely rented, but instead wanted to make a lasting contribution to the permanent home of the school.
Q. How does the community benefit from the Berman Hebrew Academy’s presence in Aspen Hill?
A. During the 12 years the Berman Hebrew Academy has called the property home, it has played a key role in the revitalization and growth of the Aspen Hill community. The Academy has beautified the property, attracted many parents of the school to the neighborhood, and maintained excellent relations with neighbors and many members of the Aspen Hill community who make regular use of the facility.
The Aspen Hill Civic Association is in favor of the sale and credits the Academy for being an anchor in helping to revitalize the Aspen Hill community.
Q. Why should the Berman Hebrew Academy be able to exercise its option to purchase the school from the County?
A. The original lease granted the potential tenant a right of purchase. Exercise of that right requires the approval of the County, but – according to the agreement – that approval cannot unreasonably be withheld. Both Berman Hebrew Academy and the County knew that the Academy intended to purchase the property. At the County’s request, the Berman Hebrew Academy deferred raising money for the purchase at the time of the agreement and instead used all of its funds toward renovation, enabling the County to satisfy the community’s need to avoid further blight to the neighborhood. A refusal now to approve the purchase would create the appearance that the County selected the Berman Hebrew Academy as its tenant and induced the Academy to raise the necessary funds to renovate and inhabit the property, all on a false promise that when ready, the Academy could become the owner.
Each year that goes by the purchase price increases. Already, it has increased by over $300,000 since our initial notice in 2001.
The Berman Hebrew Academy would have decided against moving to the Peary site and spending almost $9 million in renovations if it wasn’t given the legal right to buy the property.
Q. Why exercise the option to purchase now?
A. The Berman Hebrew Academy first attempted to exercise its option in 2001 by sending required notice to the County. Since that time, the Berman Hebrew Academy has been rebuffed consistently by requests for additional time to study the issue. In December 2009, Council Member Duchy Trachtenberg asked the County Executive to report on the status of the Berman Hebrew Academy’s exercise of its option.
Over the subsequent five months, the County Executive’s office negotiated with the Berman Hebrew Academy on additional terms, such as requiring that the property remain a school and giving the County a repurchase option – items not required of the Berman Hebrew Academy in the original lease. The County Executive’s office then transmitted the agreement to the County council for approval.
The Berman Hebrew Academy has waited nine years since it first exercised its contractual option, and there is no reason for any additional delay. In addition, we feel strongly that we are honoring our ethical and fiduciary obligations to our donors to both the building campaign and the property campaign. The purchase will secure the financial investment we've made in this property.
Q. Why was the price tag for a property occupying 19.5 acres of land set at $1.9 million?
A. At the time the lease went into effect, the building was valued at nothing because of its rundown condition and due to the fact that both parties agreed that the Berman Hebrew Academy would have to spend significant funds to renovate the building to reach acceptable condition as a usable school facility. The contract provided for three professional appraisals to be performed at that time, based on its highest and best use (which, under zoning rules, is residential), even though it would be used only as a school, and the average of these appraisals was to be used to determine the purchase price, adjusted upward since then for increases in the CPI. One appraiser was selected by the Berman Hebrew Academy, one by the County and the third by the other two appraisers.
Accordingly, today’s property value as set in the original contract is calculated at $1.9 million. This sale price comes in addition to the nearly $9 million that the Berman Hebrew Academy has already invested in the property by renovating the building and athletic fields.
Q. What is the assessed value of the 19.5-acre property?
A. An assessment is done for purposes of determining property tax owed on a parcel. Because the site is County property, no tax is owed. As a result, the assessed value has no real-world consequence. As of January 1, 2010 records, the State Department of Assessments and Taxation estimates the value of the property at $37.2 million, including $14.5 million for land value, but this estimate is merely that, an estimate. In addition, it is based on commercial use, despite the fact that the property is not zoned for commercial use and cannot be used that way under the County’s Master Plan.
The most important point to remember is that the purchase price for the land was established by an arm’s length negotiated contract in 1996. That contract provides for a perpetual covenant restricting use of the property to a school, thereby significantly reducing its market value and limiting the potential for appreciation.
Q. Can the Berman Hebrew Academy sell the land to a developer and make a profit?
A. The Berman Hebrew Academy has agreed that the property can be used only as a school, and this restriction will be recorded so that it binds both the Berman Hebrew Academy and any successor private school. This will ensure that the Berman Hebrew Academy and any successor private school can never financially benefit from this transaction by redeveloping the property for commercial or residential use, and that the use of the property will remain fully consistent with the original agreement and the Master Plan.
Q: Can the County buy back the property if it ever needs it for a public school?
A: Yes. To address the articulated concerns of the Board of Education and others regarding a potential future need for the property, however unlikely, and although not required by the lease, the Berman Hebrew Academy has agreed that, in the event of such need, the County can reclaim the property for the purchase price paid by the Academy, plus CPI, and the lesser of either the appraised value of the building or the amount the Academy paid for improvements to and maintenance of the property. This provision ensures that the County can protect the interests of the public school system, as it always will be able to recover the property for use as a school without any profit to the Berman Hebrew Academy.
Q. Will the community be able to continue using the track and field and other facilities?
A. The Berman Hebrew Academy will continue to maintain the property and the track, which is used regularly and frequently by neighborhood residents free of charge, in good condition and at no cost to the County. The school property will continue to be available without cost to the County. The groups that benefit from the Berman Hebrew Academy’s upkeep of these facilities include Girl Scouts, Girls on the Run, the Peary High School Alumni Association, and local cultural groups.
Q. Why is the Montgomery County Board of Education opposed to the sale?
A. Though Montgomery County Public Schools closed Peary High School in 1984, subsequently let it deteriorate, and deeded it back to the County in 1994, since the Berman Hebrew Academy restored the building and exercised its contractual option to purchase, the board of education has opposed the sale.
The board of education’s opposition is based on a proclaimed concern that the student population in the area is growing and that it may eventually need the building as a school to accommodate those new students. This, notwithstanding data to the contrary. In 1994 and again in 2005, the school system determined that there was no current or projected need for the property. The Rockville Cluster, in which the site is located, has experienced declining student enrollment over the past five years, and Montgomery County Public Schools’ projections through 2025 show no projected need for another high school in the area.
Q. Should the County be opposed to selling County property as a policy?
A. In this case, the County council, in 1994, specifically authorized the lease and potential future sale of this property in order to induce a buyer to come forward and take this problem property off the County’s hands. If a lease agreement was not undertaken, the only remaining option at that time was to spend County money to raze the building and build a park. The Berman Hebrew Academy came forward and renovated the building, creating the catalyst for the revitalization of Aspen Hill.
Whatever the County decides is an appropriate policy on such matters going forward, a public policy argument cannot be used retroactively to annul an agreement contractually agreed upon by the County and the Berman Hebrew Academy.
Q. Can the County council reject the Berman Hebrew Academy’s exercise of its contractual option?
A. The original lease says that when the Berman Hebrew Academy exercises its contractual option to purchase the land, the County council must approve the sale but that such approval shall not be unreasonably withheld. The Berman Hebrew Academy has scrupulously complied with every term of its lease. The price is the price that was contractually agreed. Moreover, in order to allay any concerns that the Berman Hebrew Academy might ever profit from this transaction by selling it to a developer, it has now agreed to a restriction that it will never use this property for anything other than a private school. Finally, in the event the board of education ever needs the property for a public school, the Berman Hebrew Academy also has agreed that the County can repurchase the property. Therefore, there is no reasonable basis for the County council to withhold its approval for the Berman Hebrew Academy’s exercise of its contractual option to purchase the land.
Each year that goes by the purchase price increases. Already, it has increased by over $300,000 since our initial notice in 2001.
