The Elmwood Village Charter School's failure to do its homework resulted in it overpaying for its new building on Hertel Avenue, according to the state Comptroller's Office.
Acquest Development bought the property at 665 Hertel Ave. in January 2016 for $1.1 million and resold it to the charter school six months later for $3.1 million.
The school paid $650,000 more than the building's appraised value, the Comptroller's Office pointed out in an audit.
The audit, released Tuesday, focused on the charter school's acquisition of the former Cardinal Dougherty High School in June 2016, as a second location to its school at Days Park.
School officials told the Comptroller's Office they toured six potential locations before buying the property. But auditors questioned the search as well as documentation of the process, which made it difficult to determine whether Elmwood Village could have a acquired a comparable building at a lower price.
Based solely on square footage, though, the school could have bought other comparable buildings for $12 to $37 per square foot less than the $51 per square foot it paid for the Hertel building, according to the audit.
And as a result, the audit said, the charter school's board of trustees did not obtain the Hertel Avenue building at a reasonable price.
Constructed in 1958, the 61,000-square-foot building has been used recently by the Cantalician Center. Acquest bought the building – located on Hertel, between Elmwood and Military avenues – from the Catholic Diocese of Buffalo to use as warehouse and office space.
But, the audit noted, Acquest sold the building six months later to Elmwood Village for $3.1 million – an increase of $2 million.
"We also found that the appraised value of the building 'as is,' at the time the school purchased it was $2.45 million, which is $650,000 lower than the purchase price," the audit reads.
Based on comparable sales, the school could have paid anywhere from $300,000 to $1.8 million less for the Hertel building, according to the audit.
Elmwood Village Charter School Hertel, as it is known, opened in September and is currently home to 150 students in kindergarten through second grades. The Hertel location will grow into a kinddergarten through 8 school for 450 students.
School officials did not immediately return a call from The Buffalo News seeking comment. Officials, however, told the Comptroller's Office that the building was not up for sale when they approached the developer, but the board was able to convince the owner to sell it.
Board members also said they were aware of the $2.45 million appraised value of the building, but based on list prices and renovation costs, believed the total cost was comparable to or lower than the other buildings reviewed.
"We do not believe we would have been able to purchase and renovate another suitable building at a lesser cost," Mimi Barnes-Coppola, chair of the school's board of trustees wrote in a letter to the Comptroller's Office.
In fact, one of the biggest complaints among charters is being able to find suitable space to locate. Most buildings aren't configured to hold a school and properties in highest demand are often scooped up by private developers.
"With the accelerating real estate market, and the buildings that were available to purchase in the time frame between approval and opening, we feel certain that our other options were not suitable, and did not meet our need for green space, parking and bus traffic," Barnes-Coppola wrote.