Sell off closed schools to help keep other Philadelphia schools open.
In essence, that's the idea being pushed by City Council President Darrell Clarke.
Philadelphia public schools are expected to open on time, despite continuing squabbles over funding. But City Hall politicians are still battling over how to pull together the $50 million in city aid they promised Superintendent William Hite would be there in time for schools to open on Sept. 9.
In one corner is Clarke, who points out that the Philadelphia School District has a lot of empty real estate on its hands, thanks to the closing of 29 schools.
Council President Clarke said he wants the city government to pay the schools $50 million upfront for the real estate, then broker the individual building sales itself. The councilman cited an estimate that the school properties could be worth $200 million, combined. In the other corner is Mayor Michael Nutter, who now supports extending the sales tax and borrowing $50 million against the future proceeds as the most timely, doable idea for providing funds immediately. Clarke argued that his plan is a lot better than Mayor Nutter's preferred option: borrowing against future revenue from a city sales tax increase.
"Bottom line? You have $200 million in assets that you're interested in getting rid of," Clarke said. "Why would you go out and borrow $50 million if you have the ability to sell a significant portion if not all of that $200 million in assets? It's just simple math and simple real estate sense."
Mayor Nutter countered that Clarke's plan is far riskier than the council president thinks.
"It is not appropriate for us—the city government—and its taxpayers to take on these properties," he said, arguing that the $200 million valuation that Clarke cited is inflated. "We know virtually nothing about these buildings. We don't know their value, don't know what condition they're in, don't know who's interested in them, don't have them on our books and our inventory."
Clarke countered that he already knows of interested buyers for at least eight schools, including one he's been working on in his district and four in Councilwoman Jannie Blackwell's district.
Clarke said three of the interested buyers are ready to work out a deal and fork over a check.
"But in every case," he said, "they pretty much respond that they have had a challenge as it relates to their ability to get a response from the school district with the hard number or a process that will allow them to purchase the schools."
Nutter said his administration has been working with the school district for months to streamline the process of selling school buildings. He said he worries Clarke's idea would be like putting a big “Fire Sale! Must Sell Now!” sign on the buildings.
"We do not want to appear to be desperate sellers," Nutter said. "If anyone around here has ever bought real estate, if you've got a desperate seller, you wait until the last possible moment and squeeze the hell out of them for every dime that you can get."
To fund the ailing schools, Nutter originally proposed raising money for schools through a $2 tax on packs of cigarettes. Council passed the levy, but the Pennsylvania General Assembly did not provide enabling legislation needed to make it a reality.
The idea of making permanent the city's "temporary" 8 percent sales tax—2 percentage points higher than in the suburbs—emerged from Harrisburg negotiations over school funding in June. But Nutter now supports it as the most timely, doable idea for providing funds immediately so that Superintendent Hite feels comfortable opening schools on Sept. 9.
Nutter added that, compared to Clarke's idea, his sales tax plan would provide long-term funding for the schools as opposed to a quick, once-and-done shot of money. Nutter also notes that the district's current budget already includes some building sales revenue, so Clarke's approach would have to match that amount then add another $50 million.
Clarke said he stands by the $200 million figure—which came from the city's Office of Property Assessment. In response to Nutter's "desperate seller" remark, Clarke said the city could bring in the $50 million by selling the most attractive properties quickly, then selling off the rest more slowly.
So, how much of a market is there for old school buildings? Economist Kevin Gillen is a senior research consultant with the University of Pennsylvania's Fels Institute of Government. He said, "currently commercial real estate in Philadelphia and elsewhere is recovering. ... It's not a strong resurgence but it is happening."
Gillen says educational institutions in general have found a fairly limited number of possible reuses once the school has closed: "In particular the Pew study that came out recently where they examined what happened to for school buildings in other cities like Chicago, found that actually the most common re-use was as another educational institution. So they became vocational training center, job training centers, satellite campuses for local universities, things like that."
In some cases, a buyer might be more interested in the land than the building and plan to tear down the old school, which affects the sales price.
Meanwhile, people who live in neighborhoods near the shuttered hulks wait and worry.
That includes Pennsport, a neighborhood bordering the Delaware River just south of Center City. The area has seen an influx of new residents and businesses but is still reeling from the recent closing of its public school, Abigail Vare, near Second and Tasker streets.
Dr. James Moylan, the president of the Pennsport Civic Association, said he believes Vare can be re-purposed quickly. Moylan said he's met with a couple of builders and developers who have expressed interest in the now-shuttered school.
Moylan said he supports Clarke's plan because "by allowing it to stay within council and within their specific districts, it enables the local community groups to have a better say in it because we have the relationships with our council people."
"We don't have a relationship with the mayor," he continued. "We don't have a relationship with the school district, we have a relationship with our council people. And that's where we can say: We want to be intimately involved in the next step here."
Moylan said he's heard possible re-use ideas including a charter school or condos. He says there's also been talk of turning Vare into an assisted living facility, to help some of the area's older residents who feel squeezed out by rising property tax bills.
Because of incorrect information provided to NewsWorks, an earlier version of this story misstated the number of shuttered schools.
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