GARY — The IRS has approved a settlement agreement with the Gary Community School Corp. wiping clean more than $8 million the school district owed the federal government.
Gary Emergency Manager Peggy Hinckley said she received a letter Monday from the IRS saying it was willing to settle the debt for $320,000, and the district has made the payment. Hinckley reported the deal at the Gary School Board meeting Tuesday.
She said the settlement means the agency has removed liens on all properties owned by the Gary school district, and it can move forward to try and sell some of the vacant properties.
Last month, the Indiana Distressed Unit Appeals Board authorized Hinckley, along with the district's emergency management firm, Gary Schools Recovery LLC, to spend up to $320,000 to settle the debt.
Hinckley said she thinks the government realized the school district does not have a lot of assets.
"Many of the buildings have negative values," she said. "They looked at the art collection in Chicago and it's worth several hundred thousand dollars but I think when they looked at all of the assets, there was just no point."
Hinckley said it would have taken the district "forever" to pay the money back and, it was best for all parties to reach a settlement.
"We've got the notification that all properties have been released and we're done with it. I'm very grateful," she said.
However, Hinckley said if the school corporation makes any mistakes in the future or defaults on its tax bill, the agreement will be null and void and the money will be due. "It is pretty important that we make sure we stay on track and keep our taxes paid regularly in the future," she said.
Hinckley said the next step is for school district attorney Tracy Coleman to begin researching the law to find out the proper steps regarding advertising to sell the buildings, publishing notices and accepting sealed bids. Hinckley said she is sure the buildings also will have to be appraised.
Hinckley said she will also meet with Mayor Karen Freeman-Wilson to talk about each of the properties. The mayor could not be reached for comment.
"We've had people who have shown an interest in some of the buildings but no one made an offer because we told them there were liens on the building, and we couldn't accept any offers," Hinckley said.
"Generally, when people are talking about development, they will go to the city, not the school corporation," she said. "We also have to get a sense of which properties are more likely to sell and be marketed. Not all of the properties are marketable.
"We also will try and figure out what resources are available if it's determined that we can demolish a building. Some of the properties are in areas that are not going to be developed. They are an eyesore in the neighborhood. Many of the buildings also have asbestos. We're going to look for federal grants and resources that we may be able to secure that will allow us to bring those buildings down."