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Former school buildings a hard sell?

City Council is touting a plan to turn old buildings into cash, but research shows that former schools are not a cash cow.

PENNSPORT resident Anthony Robinson has seen his neighborhood grow, thanks to what he calls an influx of young couples.

But although people have been moving in, schools have been shutting down.

Sacred Heart of Jesus parochial school was closed last year, followed by the school district's announcement in March that Vare Elementary would close. The changes have forced Robinson and others to shift their children like pingpong balls, which he believes will lead some of those new families to flee.

"It's a shame, because I've heard these young couples saying they're not going to stay in this area because they have no schools," the longtime resident said. "It's heartbreaking, because when they come and they move here and see there's a school directly in the neighborhood, it's a plus for them. And now I'm hearing young couples that are starting families [say] they're going to move."

Now the only talk about Vare is whether the building will be sold under City Council's proposal to buy surplus district properties and resell them to recoup $50 million in funding that was approved last month.

Vare is among eight former schools that have received interest from developers, according to Council President Darrell Clarke, who is leading the charge to turn over the buildings. Vare's potential sale draws shrugs from neighbors, who suspect that the building will be converted to apartments, condos or a charter school.

"I have a feeling it's going to wind up being a charter school, because that's what [Philadelphia School District Superintendent William] Hite and them are basically after," longtime resident Eileen Gargano said.

The real question is whether the sales will come close to the anticipated $50 million. A Pew Charitable Trusts report released in February shows that school districts across the country have struggled to dispose of empty buildings. As is the case in Philadelphia, most of the buildings have been shuttered as a result of declining enrollment and charter-school growth.

"No city has come into a windfall from selling buildings," said Emily Dowdall, senior associate for Pew's Philadelphia research initiative and co-author of the report. "It's hard to predict just how much money they can fetch and in what time frame."

Barriers to sales

The Pew report examined 12 cities faced with a glut of properties, including Chicago, Atlanta, Washington and Detroit. It revealed several barriers to finding buyers - namely, the size and condition of the buildings, the location and the rules governing such sales.

Detroit has been hit the hardest by school closures. At the end of last year, Detroit Public Schools had 124 buildings on the market, the report said. The city has had moderate success repurposing buildings, with 63 facilities sold, leased or repurposed between 2005 and 2012. But since 2009, the district said, it has generated roughly $12 million in sales and annual lease revenue.

"Many buildings that were built to accommodate the baby boom in the [1960s] and ['70s] were either built quickly, so they might not have been of the best quality, or they were in open layouts that were popular but don't translate to other uses," Dowdall said, speaking in general of the challenges facing several districts. "Oftentimes, these schools are in neighborhoods that just don't have a lot of real-estate activity."

Cincinnati, another city beset by closures, has sold 27 buildings since 2005 - more than twice as many as Philadelphia - and has experienced similar results to Detroit. Last November, Cincinnati Public Schools auctioned 13 buildings and four land parcels, valued at $27 million. They got an estimated $3.5 million from the sales. In their case, however, state law requires them to auction surplus facilities, but only after they have been offered to charters.

"The auction process that we used truly set the market value of those buildings," said Larry Bergman, president of NAI Bergman, which handles real estate for the Cincinnati schools.

According to Pew, sale prices in the 12 cities typically ranged from $200,000 to $1 million, well below the assessed value. The Philly School District also has struggled to get fair-market value for properties. West Philadelphia High School was assessed at $16.3 million, but was approved for sale last year at $6 million.

Another indication that the district may not fare much better than its counterparts is the age of the buildings. Based on the Pew report, the typical school property for sale in the 12 cities is more than 60 years old. In Philadelphia, the median age of buildings up for sale last year was 91 years.

Clarke and his supporters on Council have cited a dozen school conversions in the city over the years, most of which were turned into senior housing.

"Even in areas that are less desirable, there is value," Councilman Curtis Jones Jr. said at a recent news conference on the plan. "The total value of these eight properties is $106 million. If you discount this by 50 percent, just these eight properties alone would cover the $50 million in question."

The values Council is using for the properties were determined by the Office of Property Assessment as part of the controversial citywide Actual Value Initiative.

Councilwoman Jannie Blackwell, who also supports the idea, said it would be a "win-win" because Council members know the developers and they know what the communities will accept.

Clarke's spokeswoman, Jane Roh, said the Council president would not comment on the Pew report.

Under the plan, the Philadelphia Authority for Industrial Development Corp. (PAID) would manage the sales.

The Nutter administration has expressed doubt that the city would reach $50 million in sales, pointing to the condition and location of many of the buildings. Alan Greenberger, deputy mayor for economic development, also has said that the district already budgeted $28 million from facility sales in its five-year plan.


The most popular use of former school buildings nationally is as charter schools, according to the Pew report. Charters accounted for 42 percent of the properties repurposed between 2005 and 2012. The next most popular uses were government/nonprofit (22 percent) and other educational settings, such as private schools and universities (12 percent).

Selling former district schools to charter operators is a risky proposition for obvious reasons - it can lead to further enrollment declines in district schools. The effect has caused a number of cities to re-evaluate their policies on selling buildings to charters.

In Philadelphia, the School Reform Commission has approved the sale of at least one building to a charter operator - Rudolph Walton in Strawberry Mansion in 2012. But the district's governing body also has taken a hard line on charter expansion, in large part because of the district's financial mess. Yet the district knows that could limit the list of potential buyers.

"The No. 1 reuse might be education, since it's already set up for education," Bill Fox, director of real property management for the district, said in a recent interview. "After that, you sometimes have a developer who wants to come in and say, 'We might be able to do residential here.' We've had people look into senior-citizen housing in the different neighborhoods, but it's a challenge converting a school-district building, especially [because] some of them are old and not in as good a condition as we'd like."

Most of the potential buyers are unknown, but a number of reports indicate that Drexel University is among the parties interested in University City High as a site for a new public school. The building is assessed at $22 million, but it is unclear how much Drexel would offer.

In some neighborhoods where buildings owned by the district have become a source of blight, residents hope the renewed interest in disposing of the buildings will finally lead to redevelopment.

Ada Lewis 'an eyesore'

"It's an eyesore, for one thing, because you have a lot of windows that are open, and people can go in and vandalize it or whatever," said Germantown resident Jonathan Thompson, who lives down the street from Ada Lewis, a former middle school that closed in 2008. "You just had a rapist down the street that was raping girls. Anybody can get mugged or raped behind this building here, and it's not even that old."

Ada Lewis, one of six district properties that has been on the market for at least two years, is marred by graffiti and boarded-up windows. Dozens of heavy-duty trash bags were piled behind the building recently.

Thompson, a youth-basketball coach who once taught at Lewis, said the building would be excellent for recreational purposes. He said his team practices outdoors in the spring and uses a church gym in the winter because area rec centers are full.

"We would love to get our hands over here just for the use of the gym," he said. "They could have leagues over there because all the rec centers are filled, and a lot of the coaches can't get gyms."

Last month, the school district announced it would partner with the city to implement a revised Adaptive Sale and Reuse policy, which would allow for early community input and information about potential building uses. As part of the policy, the district and the city would identify highly marketable properties for expedited sale and do a comprehensive assessment of each site and an analysis of the neighborhood. The district also said a comprehensive website would be created to inform the community and potential buyers on the process.

"The School District of Philadelphia recognizes the importance of moving quickly to ensure appropriate reuse of the buildings that have become vacant as a result of the Facilities Master Plan," Hite said in a statement. "We are committed to engaging communities in this process."