September 4, 2013 | No Comments YetTags: philadelphia real estate
Sounds like an ideal plan – sell Philadelphia school buildings and use that money to fund the city’s fledgling school district. However, the real estate may not be worth as much as city officials hope.
Last year, the School District of Philadelphia had a dozen empty buildings to sell.
The city had assessed them for more than $81 million, but private appraisals put their total market value at $11.2 million.
Eventually, offers were made on nine buildings, totaling $11.8 million, including $6 million for the shuttered West Philadelphia High School.
None of the sales have closed.
The question of just how much mothballed schools are worth – and how quickly they can sell – has become key as city leaders debate how to deliver $50 million in desperately needed money to the district.
Council President Darrell L. Clarke wants to give the district the money in exchange for its portfolio of empty schools, which could then be sold over time to repay the city.
He believes the city easily could make back the money – and possibly more – by 2017.
The Nutter administration cites the district’s recent track record of selling property – as well as the experience of the Archdiocese of Philadelphia and other big city school districts – and says selling schools is difficult and uncertain.
“What someone says they might pay for something . . . versus what someone’s willing to write a check for is an entirely different subject,” the mayor said. “In many instances, these buildings, quite frankly, are shot. They’re 65, 70, 80 years old.”
The mayor would rather borrow the $50 million, calling that method the quickest, most assured way to get the money to the district.
But Clarke says the district’s inventory of empty buildings, which includes 24 schools closed this year, contains some choice real estate.
In recent weeks, Council members and community groups have fielded nine inquiries for seven closed schools, including University City High School, a 14-acre site just north of Drexel University’s campus, and William Penn High School, on North Broad Street near Temple University.
Also drawing interest are Abigail Vare Elementary in Pennsport, Alexander Wilson Elementary in West Philadelphia, and Stephen A. Douglas High School in Kensington.
Joseph Leidy Elementary in East Parkside and Anna H. Shaw Middle School in West Philadelphia each have drawn inquiries from two separate developers.
Clarke said that some of the interested parties were ready to buy now, and that the problem with completing sales sometimes lies with the district.
“The school district has been challenged with trying to educate children,” he said recently. “With all due respect to them, the capacity simply isn’t there.”
Clarke’s plan would call for the schools to be turned over to the Philadelphia Authority for Industrial Development and the Philadelphia Industrial Development Corp. to market.
PIDC president John Grady cautioned that moving public property to the private sector “is never a quick or simple process.”
“Some might be expedited, but until they understand the facts on the ground, they won’t know how quickly that could happen,” he said.
Deputy Mayor Alan Greenberger has been working with the district on a strategy for selling buildings, and the School Reform Commission approved a process this week to speed sales of valued property.
“We all want the same thing,” he said. “The question is: How do you get there and what’s it really worth?”
Greenberger acknowledged that University City is “the one property that’s probably worth some real money – it’s not worth $50 million.”
As for William Penn, the other school with a desirable location, he said, “We’ve been taking people around, looking at William Penn for two years . . . it’s a tough property.”
“You get past those and there isn’t a big stack of properties out there that have noticeable value or have good market conditions,” Greenberger said. “Do you get $50 million out of this? I don’t know.”
Former schools in prime locations have fetched big price tags in the past – John Wanamaker Middle School, near Temple, sold for $10.75 million in 2008.
The archdiocese also has had success selling shuttered schools in popular neighborhoods, but others have brought paltry interest. Church officials took All Saints School in Bridesburg off the auction block this summer after it generated one bid of $75,000.
Clarke’s plan, however, is not just about real estate.
His proposal would get the city around a state requirement that bars one-time grants to the schools – a problem yet to be solved if the city borrows the $50 million. His plan also would avoid having to pay $10 million in interest.
“Whether you’re a household or a city government, it is foolish to borrow and incur debt when you have the resources to pay for whatever it is you want,” Jane Roh, Clarke’s spokeswoman, said last week.
Kevin Gillen, an economist at the University of Pennsylvania, said both plans were short-term solutions to a long-term problem of school funding.
“It’s kind of like asking, ‘Do you want poison A or poison B?’ “he said. “Neither one is good for you.”
Contact Troy Graham at 215-854-2730 or email@example.com.
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