Dave Reid

A Small MPS Reform Could Save Money, Add to the Tax Base, and Enhance Competition

By - Jun 2nd, 2010 10:54 am
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People have been looking for a magic bullet to fix Milwaukee’s education system, and although what I proposed here isn’t the broad sweeping change many are looking for, I do believe in making incremental changes, when possible, to improve individual processes.  Currently, the Milwaukee Public Schools system (“MPS”) has at least 15 vacant school buildings, many that have sat unsold for years, and a broken process to handle these sales.  Certainly, the decision to close and designate a facility as surplus should be considered carefully, but once the decision is made the goal needs to be putting the property back in to active use as quickly as possible.

The current land sale process doesn’t allow a potential competitor, a private school that participates in the parental choice program, to purchase the existing school building.  The sale restriction reminds one of a Walmart style clause that forbids a potential competitor to occupy a vacant Walmart store, this has lead to a string of empty big-box stores littering suburban America.  Just like the Walmart clause this was implemented for the same reason, to limit competition, and just like Walmart this clause has had the same impact of reducing tax base and increasing vacant buildings.  As this restriction limits MPS’s ability to sell vacant properties it should be removed, though combined with a PILOTS requirement if purchased by a non-profit or exempt institution, to allow for redevelopment to move forward.

The other significant issue with the land sale process involves MPS hiring of an outside brokerage firm and legal aide to facilitate the land sale.  This costs taxpayers additional funds and lengthens the land sale process.  Further, the City of Milwaukee has a department, the Department of City Development, which has extensive land sale and redevelopment experience that could be better utilized to quicken the process.  It’s small, but it’s a duplication of resources that can be eliminated, and one that would likely lead to MPS properties getting on the tax roles in a shorter time frame.

This reform won’t significantly impact MPS’s performance or solve the education problem, but it would shorten the land sale process, save money, add to the tax base, and enhance competition.

Categories: Education

18 thoughts on “A Small MPS Reform Could Save Money, Add to the Tax Base, and Enhance Competition”

  1. Jesse Hagen says:

    If you lift the ban on sales to choice schools, how does that increase the tax base? They’re non-profits and would be exempt from property taxes.

    Either way, I agree the focus needs to be on returning these properties to the tax rolls, a vacant building doesn’t add anything to its immediate neighborhood either. I would assume that the power to change this process rests in the school board… and they’re as dysfunctional as the county.

  2. Dave Reid says:

    @Jesse First, thanks. Here’s how they can add to the taxbase. Many non-profits and exempt institutions pay PILOTS (UWM for example pays PILOTS on its new dorms), which essentially adds to the tax base. But I should have made that clear, so I added a little tiny bit in the article about paying PILOTS to help clarify that.

  3. Jeff Jordan says:

    Thanks Dave. I like I’m sure a lot of Milwaukee citizens was not aware that this surplus is sitting there and so hampered in it’s sale. One thing is ofr sure if you want to ruin a building you leave it empty for a long period of time and, like a car battery in the winter, it’s flaws will show up quicker.

  4. Dave Reid says:

    @Jeff Yup, vacant buildings really do begin to breakdown quickly so I think MPS shells out funds to keep them properly heated and such… Either way it’s a cost.

  5. Eric Schierer says:

    In case anyone in unsure, PILOT means Payment In Lieu Of Taxes.

  6. Dave Reid says:

    @Eric Yup thanks I should of made that clearer as well.

  7. Jerry Siegmann says:

    Does MPS make PILOT payments to cover police, fire, road services, etc? If UWM does, why not MPS? Why would private non-profits be expected to make such a payment when public non-profits are not? They are both in the business of educating our children. The city tax base and MPS’ sources of revenue are two vastly different matters. Let’s be fair to Milwaukee taxpayers. Tax-paying entities make more sensible property acquisition and retention decisions, a point proven by MPS’ inventory of vacant and declining properties.

  8. Dave Reid says:

    @Jerry Certainly if a for-profit entity wants to purchase the properties that would be great, and I think DCD managing the land sales process could make this more of a possibility than today’s system.

  9. Jeff G says:

    These aren’t bad ideas, Dave. But I don’t think these are things the people in charge haven’t thought a lot about. From what I’ve heard, the biggest problem is that there just isn’t any demand in the real estate market for inflexible, outdated, 100+ year old school buildings – especially in today’s climate. The only recent example I can think of is the sale of the former Jackie Robinson School building to a developer of low income senior housing. But I doubt MPS made much money on that, or that it’s adding much, if anything, to the tax base.

    As far as lifting a non-compete clause re: voucher schools: even if they pay PILOTs, I think that ends up a wash since part of our tax dollars there are going towards underwriting the profit margins for out-of-state corporations running schools that recent studies ( http://bit.ly/94hpXt )show perform no better than public schools.

  10. Dave Reid says:

    @Jeff I’m not convinced much thought has gone into the process, though I’ll be the first to admit this is really a small tweak in the grand scheme of things.

    I was watching a City Plan Meeting when I discovered how MPS handled land sales and they were hiring this law firm and this real easte company so I believe just by having DCD handle the sales that by itself would save time and money.

    And I don’t know if the private schools are better or worse, but my guess is, as is clearly MPS’s guess is they would logically want a school building (hence the no-compete), and if they were made to pay PILOTS in former MPS buildings then we could add a bit.. If nothing else MPS wouldn’t have to pay for as many vacant buildings upkeep.

    Certainly, it’s not a big deal, but I think we should be looking for small changes when we can…

  11. Jeff G says:

    Dave, yeah to clarify i do agree with your broader point that more efficiency could be brought to the process, and we should always be looking to eliminate those efficiencies .

    As far as small changes, I guess I get frustrated when listening to the school board meetings that really that’s all they ever do is spend hours debating small and trivial matters, so I don’t think a lack of thinking small is really the issue (rather, a lack of big-picture thinking is). I think in the scheme of things, it really boils down to the fact that we have a school board that doesn’t have much power mandated to it. Really all it seems they have the power to do is approve/disapprove and provide oversight on Superintendent proposals & policies. Which is why I think the ire is often way too heavily focused on the board, when it should instead be aimed at the Superintendent’s administration, which we almost never hear about, because that’s where the real policy-making power is in the school system.

  12. Jeff G says:

    What I meant is we should always be looking to eliminate those INefficiencies, of course!

  13. Dave Reid says:

    @Jeff G Oh yeah there’s a lot that needs to be done with MPS, I just wasn’t commenting on the big picture as well I haven’t a well formulated big picture idea for MPS yet:) some thoughts but…

  14. Dan Knauss says:

    Does MPS still have the Holton State Bank building on Center and Holton that has been vacant for years? It was used by Head Start and Maures Development was going to buy it, but I think that fell through. To the west is the vacant Malcolm X school, which takes up at least a full block.

    Clearly no planning at all is happening over there.

    Adjacent to the east of the old bank is a former Tim Brophy building (roof had fallen in) that’s been rehabbed and is for sale at a very good price — all good bones, historic structures on this corner. There is a stalled bar/restaurant/apartment project on the NW corner and to the north of it is a “barber” that reopened immediately after being boarded up. There is a stop-and-go carry-out kind of business there as well as the adjoining dirt lot. You can watch that action and also see a lot of people resembling college students biking and walking west of Holton, which used to be much more of a divider. The area’s recent history of dead students seems not to be deterring this movement, which can be good but needs some tending to or there will be further predictable “tragedies.”

    The one new development on this stretch of Center is a gas station nobody wanted that was approved by BOZA without an alderman available–since he was in prison. The construction just started this year, with a lapsed permit, but BOZA said fine–over against the alderwoman and residents. Every major intersection along Holton will now have a gas station–at least this one is a little west of the intersection.

    Note that this area is a quick walk or bike ride to Commerce, Water, and Brady. The complete lack of attention to the potential here boggles the mind.

  15. Jeramey Jannene says:

    @Dan – I took it as an encouraging sign for Holton that WHEDA-funded housing (45 units) was approved for Holton and Brown for the lot that currently contains the unoccupied funeral home. Haven’t seen any designs for the project, but that should be decent housing for a lot of different groups of people at below-market prices that won’t add any extreme gentrification pressure.

  16. Dan Knauss says:

    Who is worried about gentrification pressure there? This is the Brewers Hill side just above the downtown overlook, and the Riverwest side is just as posh. As you go north along Holton it gets more run down, but a block east or west there is some amazing stuff.

    IIRC the original Olson plan there on Brown (apartments, condos, commercial) was only complained about as “gentrification” by McGee, who was trying to shake down the developers, and a few Riverwest gadabouts who live nowhere near there. The proximate neighbor concern was increased traffic, but I don’t recall it being a huge concern.

    So did Olson default or sell? Who is building there, and are there plans available?

  17. JZ says:

    Mr. Reid,

    Do you know of where we can find a link to the list of closed shcools?


  18. Dave Reid says:

    @JZ Good question… I’d suggest starting here: http://mpsportal.milwaukee.k12.wi.us/portal/server.pt I didn’t see anything in my short search but you might have better luck. But how’s this for a simple request of MPS, make a web page of properties for sale!

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