THE CITY HAS STRUGGLED for years to redevelop the once-glorious Divine Lorraine hotel, a vacant, graffitti-covered, modern-day ruin viewed as the pivotal obstacle in the rebirth of North Broad Street

Now, developer Eric Blumenfeld is feverishly working with a local artist to turn the land behind the hotel - and the Divine herself - into a centerpiece that would reimagine both art and public education in the area just north of Center City.

Of course, the somewhat revolutionary idea - to cluster the Masterman School, Franklin Learning Center, Benjamin Franklin High and Parkway Center City High onto one campus on the land behind the hotel with a shared gymnasium, cafeteria with food from Marc Vetri and state-of-the-art science lab - faces major hurdles.

Blumenfeld has met with the schools' principals and district officials to lay out his vision of how the schools might work together.

But to come to fruition, each school's principal and parent groups must agree. The School Reform Commission must also approve.

"We are excited about having a conversation and exploring the possibilities of supporting high-quality schools," said Danielle Floyd, the district's deputy for strategic initiatives.

But Floyd noted that "discussions have been preliminary in nature, and we've made no commitments to do anything at this point."

Blumenfeld is also working with Caryn Kunkle, director of the Philadelphia Salon arts collective, to convert the hotel into a contemporary-art museum that would also provide arts education to students at a combined high-school campus.

A National Historic Landmark, the Divine opened in 1894 at Broad and Fairmount as the luxury Lorraine Apartments. A charismatic minister known as Father Divine bought it and converted it into a hotel in 1948.

Political pressure has been building to finally restore the Divine Lorraine, which has been targeted by squatters and vandals since 1999, when the hotel closed.

Last month, Mayor Nutter told business leaders that he's ready to do something about the decaying landmark. The current owners defaulted on construction loans and owe more than $700,000 in city taxes.

Michael Treacy Jr., one of the owners, told the Inquirer last month that there was an investor with an option to buy the hotel. He didn't return calls to the Daily News, and neither did Keith Pilkington, a spokesman for his lender, Amalgamated Bank.

Blumenfeld would not say whether he's in talks to buy the hotel, but said he plans to purchase the 4-acre lot behind it for the school. He would seek state and federal tax breaks to build the school, and lease it back to the district.

At least one principal, Masterman's Marjorie Neff, has voiced general support for the idea. The other three either declined to comment or didn't return calls.

Masterman, built in 1933, looks like an architectural gem. But parents say the school, on Spring Garden Street near 17th, is overcrowded and "falling apart."

"We've shoehorned 1,200 kids into a building designed for 800," Neff said of the fifth- to 12th-grade school. "We've had classes in the cafeteria, and the library can't be used as a library all day long because we've had classes there."

A group of Masterman parents working on a committee to look into renovation, expansion or new construction approached Blumenfeld, after Alan Greenberger, the city's deputy mayor, reportedly suggested they talk with him.

"All of us understand there are some pretty big things to work out to move in that direction, but ultimately, if we can create a situation that's a win for everybody, it could be a very exciting thing," Neff said.

Blumenfeld's idea comes while the district is in the process of "rightsizing" itself by consolidating buildings in the wake of declining enrollments.

The School Reform Commission is to vote March 29 on whether to close nine schools at the end of the year, and more closures are likely in the future as the district seeks to deal with 40,000 empty seats in underused buildings.

Ben Franklin, with only 600 students in a building designed for 1,800, had been listed for closure in an early draft of the Facilities Master Plan. It wasn't included in the final version of the plan.

Angelina C. Williams, president of the Masterman Home and School Association, said much more detailed information is needed before parents could fully support a campus-sharing plan.

"What are the amenities that are going to be offered?" she asked. "Would it be better than what we have now? Will we still have overcrowding, and will there be space for both the middle school and the high school there?"

Williams said she thought that sharing space with other students wouldn't be much of a problem because Masterman students already come from "all areas of the city, from all economic levels, from single-parent homes, two-parent families, are children who live with guardians and they still can perform."

But some parents are skeptical, noting that their children have been assaulted by students from nearby schools.

Said one nervous parent: "There is a culture and a dynamism at Masterman that is working. Yes, the building is falling apart and the kids deserve better than that, but the students are high-achieving despite the condition of the building - and perhaps even because of being crammed in together like sardines."

Neff, however, noted that Masterman students and teachers already collaborate with the other schools. She pointed to a shared Saturday SAT prep program at Ben Franklin.

"I have enormous respect for the other principals," Neff said, referring to Ben Franklin's Chris Johnson, FLC's Charles Staniskis and Parkway Center City's Catherine Blunt. "They are forward-thinking people, and we all share that desire to do what is in the best interests of our kids."

Blumenfeld said he has been impressed with the principals because they "have dedicated their lives and souls to public education and kids. They inspire me."

He said making the idea reality "comes down to these four people being able to embrace it and implement it."

"The school district will have to find a way to empower them to do this," he said. "If those things happen, I am convinced this thing can become a reality."

Blumenfeld has redeveloped two old warehouses into apartments in recent years on North Broad Street - they include restaurants from Vetri, Stephen Starr and Joe Volpe - and has made no secret that he'd like to convert both Ben Franklin and FLC into more apartments.

His newly renovated properties are directly across the street from those two schools, and he admits he's interested in bidding for the school buildings if his plan becomes reality.

He said the financially strapped school district - it faces a budget deficit for next school year of between $269- and $400-million - would gain millions from selling the buildings and at the same time "shed itself of obsolete real estate."

Ironically, Blumenfeld was part of the investment group that purchased the Divine Lorraine in 2003 for $5.3 million.

After failing to develop it, the group sold the hotel in 2006 for $10.1 million to Michael Treacy and investors from Michigan and the Netherlands.

Blumenfeld and Kunkle say they don't mind that their "big dreams" to expand the Avenue of the Arts toward Temple and rethink education might lead some to think they're a little crazy.

But they have found a believer in Sister Mary Scullion, founder of Project HOME, which is building 55 units of affordable housing at 15th and Fairmount.

"That would be awesome," she said of the plan. "You have to start dreaming to make things a reality. It's great that people have big dreams in our city. I hope they come true."