Indianapolis Public Schools sold the former Harriet Beecher Stowe Elementary School 64 for $20,000 in June after the school board designated it as surplus property.
The buyers, who own an adjacent machine shop, told the school district they planned to use the school on 2.2 acres near South Keystone Avenue and East Raymond Street as storage space, offices and a training facility for their employees.
Instead, new owners Ron Merrill and Bill Thomas have decided to offer the 47,000-square-foot former school for sale to potential "church, daycare and manufacturing" users. They began marketing the property about two months after they bought it from IPS.
Their asking price: $395,000.
If someone pays that much, Merrill and Thomas would earn a profit of $375,000, or a nearly 2,000-percent return, in a matter of months. Even if they only get half their offering price, the pair stands to collect a profit of almost $180,000.
"Yeah, it's tough to take," acknowledged Sandra Hubbard, the purchasing agent for IPS who coordinated the sale. "But once a property is sold, it is sold."
School 64 was one of three former schools the district deemed surplus this year. School 81 sold at an auction conducted by Christys of Indiana, for about $469,000. But the district had to host a second auction for schools 64 and 92 after bids came in below 90 percent of appraised values.
The Muskegon Bible Institute wound up buying School 92 for $100,000. And the owners of Euclid Machine Co. paid $20,000 for School 64, which sits at 2710 Bethel Ave. They also acquired a vacant lot next door for $100. The school board voted on June 16 to accept the offer.
Locally based appraiser Traynor & Associates Inc. had pegged the fair-market value of School 64 as $420,400.
The school district gets the best price it can for surplus properties and does not track future sales of its former buildings, Hubbard said. The sales do not include deed restrictions or any provisions for how the buyers can use the properties, in part to encourage higher bids.
She said it's up to the buyers whether and when they resell the buildings.
"I think offering for sale and selling are two different things, particularly in today's market," she noted.
Merrill and Thomas did not return phone messages left at their office on Friday afternoon and Tuesday morning.
The broker listing the property, Fritz A. Kauffman in the local office of Cassidy Turley, said he did not know much about the deal between IPS and the property owners he represents.
He said the owners figured they might eventually want to use the school for an expansion of their business, but for now their priority is either selling or leasing it to another user.
The deal sounds like fodder for a reality show on property flipping, which is not exactly comforting from a taxpayer perspective, said Julia Vaughn, policy director for Common Cause Indiana.
"You hate to see taxpayers or the district itself, which is so desperately in need of funds, to be getting rid of a piece of property for such a dirt-cheap price," Vaughn said. "Maybe it's the market, maybe it's something outside their control, but this deal certainly certainly looks like the buyer ended up with a much better deal. Hopefully this is an isolated case."