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Winona school sales hit bump in the road

August 17, 2018
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Rich Dahman

WINONA — The fine print may be coming back to scuttle the deal to sell two former schools in Winona.

On Monday, the Winona Planning Commission held a public hearing on the proposal to change the zoning for the two schools — Madison and Central elementary schools — from R2, medium-density residential district, to R3, high-density residential district. The commission then denied a request on a 7-2 vote to make the zoning change from R2 to R3 for the schools.

The big difference between R3 and R2 is R2 does not allow dwellings or apartments of five or more units, according to the city’s Unified Development Code.

That vote, said assistant city planner Luke Sims, basically fell in line with the public comments.

“The public did not want to see that become an R3 zone,” he said.

One of the biggest concerns centered around Madison, which has a playground and garden, and is located in a neighborhood full of single-family homes.

Central, Sims said, is another matter. Half that property is already zoned R3.

Ben Schwab, chief financial officer for Building Value Partners, said there is plenty of high-density residential property surrounding Central, including an apartment building with 60 units just south of the school.

If the zoning for the buildings isn’t changed to R3, said Schwab, who has been a developer for 30 years, he can’t envision a way to make money on the old buildings that require millions of dollars of maintenance and are tied up in city restrictions like the zoning ordinance and historical designation by both the National Register of Historic Places and the city’s own Historical Preservation Commission.

Schools Out

For a city that is crying out for workforce housing, Schwab said, he was surprised by the commission’s vote.

After all, the schools cannot be torn down to make way for the kind of development that would fit into an R2 zone. Outside of rezoning to R3, the only possibility would be a rezoning to one of three mixed-use classifications, meaning residential and commercial.

“There’s residential, or mixed-use, but that’s not going to happen,” Schwab said. “If you can’t get R3, you’re not going to get mixed-use approved.”

That, he said, leaves the option of transforming the schools into “16,000-square-foot apartments.”

Winona Area Public Schools Superintendent Rich Dahman said without the zoning change, the district might need to re-examine the sale of the properties if the deal with Building Value Properties falls through.

“We’d prefer that the planning commission and the city look at R3 as an option for zoning,” he said. “But that’s their decision to make.”

Adding to the district’s concerns, two potential buyers — Allen Hillery, who put in bids roughly $350,000 lower than Building Value Partners’ bids, and Andrew Brenner, who made an offer after the bid deadline — have written letters disputing the bid process.

Either way, if buyers cannot develop the properties the school district could quickly be out the $382,000 Schwab’s company offered for the buildings.

“Our goal as a district is to sell those buildings to anyone who will put them to good use for the community,” Dahman said. “The city of Winona, they’re going to do what they think is best for the city of Winona, and the school district respects their doing what they think is best.”

Neighborhood Watch

What is best for the neighborhood, said City Council Member Gerry Krage, would have been if the schools had students in them. But since the school board wants to sell, it should consider how those buildings will be used in a way that meets the current zoning for the buildings.

“I agree with the overwhelming vote of the planning commission, and I’ll vote that way,” said Krage, whose Ward 2 is home to Madison. “Our job is not to bail out the school board.”

Krage said he’s talked with several developers who said they could cash-flow the buildings within the current zoning rules on those properties.

If so, said Schwab, why didn’t those developers bid on the buildings?

Instead, he said, the city should consider, if it has designated those buildings as historically important, why it won’t work with a developer to redevelop them in a manner consistent with the city’s comprehensive plan

“It’s not a matter of bailing out the schools. “You, the city of Winona, chose these buildings as important to Winona,” Schwab said.

Limits and Options

If the properties cannot be rezoned, Schwab said, the only feasible option would be to tear them down and sell the land as single-family dwelling lots or medium-density dwelling lots. However, that would take a vote by the city council to override the historical designation slapped on the buildings two years ago.

Furthermore, it would reduce the number of workforce housing units on the sites from between 50 and 60 to a handful or so at each location, Schwab said.

That, said Krage, is just a developer wanting more density to make more money off the land.

“Yes we need housing, but it’s the right amount of housing in the right spot,” he said. “Our position, on the council, is to do what’s best for that neighborhood.”

Council Member Pam Eyden, whose Ward 3 is home to Central, said she would like to see the two schools handled separately, which wasn’t done by the planning commission.

“That vote the other night surprised me,” Eyden said. “People want to protect their neighborhoods the way they are now. The change to R3 is a threat to that.” She added, there is still some resentment over the schools being sold at all.

Eyden said she is hopeful a deal can still be worked out with the developer. While people who live near Central in her district aren’t thrilled about the changes, she said, the fact it’s already half R3 could make that happen.

Madison, she said, is a tougher deal. “Maybe the developer needs to compromise with that neighborhood,” she said.

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