Municipalities and school districts are then left with huge assets in an anemic real estate market, unable to draw property taxes or any other revenue while forced to spend money to prevent those empty buildings from falling into disrepair.
So, some have taken action: district-wide initiatives in Kansas City, Mo., and Tulsa, Okla., have aimed to turn these abandoned school sites into financial opportunities that will simultaneously improve the surrounding neighborhoods. Kansas City has closed nearly 40 schools in recent years, and city officials estimate those properties could be worth up to $15 million. Tulsa shuttered 14 schools last year and district leaders also see those buildings as assets potentially worth millions. An entry into the National Invitational Public Policy Challenge (in which Governing was a sponsor) produced a plan to repurpose closed schools in Philadelphia (the city plans to vacate 64 in the next few years) and bring in up to $20 million.
There are sometimes administrative hurdles to clear before local authorities can act: according to the National Clearinghouse of Educational Facilities (NCEF), laws in some states (such as North Carolina) require the state to have a “first-look” option on a building to be sold, while others (such as Wisconsin) call for a review of historical significance before a facility is sold or demolished.
After those considerations are cleared, cities and districts must decide what to do with the unoccupied schools. They could lease or sell to another educational body, such as a charter or private school; lease or sell to a private company or government agency for purposes unrelated to education; or even demolish the building and simply sell the land.
Each scenario presents its own challenges, from a practical and political perspective. Before the recession, many districts would try to retain empty properties with the hopes of re-filling them later, Judy Marks, NCEF’s director, told Governing. But the economic downturn, and the accompanying fiscal strains, made that less feasible. Still, officials must be sensitive to neighborhood concerns when deciding to shutter a school and what to do next.
“Closing a school building in a community is always a traumatic affair,” Marks said.
The Kansas City Public Schools (KCPS) Repurposing Initiative and Tulsa’s Project Schoolhouse represent one path forward for localities confronting this problem. After consolidating student bodies and vacating school buildings in recent years, these cities are putting those schools on the market, searching for potential buyers who will reuse the properties for projects that will benefit the community.
KCPS has closed 39 schools. Eight have been held for future use, and one has been refurbished to serve as a professional development center for the city’s teachers. That leaves 30 schools to be sold as part of the Repurposing Initiative. 1.8 million square feet. 130 acres. Up to $15 million in real estate value.
Shannon Jaax, the initiative’s director, came from the city planning office to lead the effort in January 2011. Over the next six months, she and her staff held neighborhood meetings to familiarize residents with their plans and gather input about what kind of uses they should target in potential sellers.
"We integrated community participation in every level of decision-making," Jaax said. "We hope that will lead to ultimately better results for the long-term use at the sites."
The school district then solicited proposals for three buildings that were deemed ready to be sold; all three have been sold as of May 2012. Two were purchased by charter schools, and the other will be renovated as affordable senior housing. Final sales figures are not yet public for two schools, but one, Longan Elementary School, sold for $1 million. About $250,000 will pay off the leftover bonds on the property, and the remaining $750,000 will go straight into the school district’s coffers.
KCPS plans to put another 15 schools on the market by the end of the year, Jaax said. Ten more proposals have been received, including more conversions to charter schools and senior housing. For those sites that have garnered no immediate interest, the district is offering their facilities to community clubs and youth programs to use in the interim for a small fee. In the next six to nine months, Jaax said KCPS will evaluate the state of those properties and to decide whether to retain (or “mothball”) them for future use or demolish the structures and start over.
Tulsa’s Project Schoolhouse aims to address a similar need with a similar plan. Tulsa Public Schools closed 14 buildings last year. Much like the KCPS Repurposing Initiative, the district sought community buy-in before shopping newly vacant schools to potential buyers, said Chris Payne, a district spokesperson. One of the primary concerns heard from constituents, he said, was that they didn’t want an empty building in their neighborhoods. Studies conducted for Philadelphia have estimated that vacant lots drive down surrounding property values by as much as 20 percent.
A school district acting as a property manager has some challenges: school officials must be acutely aware of the local real estate market to ensure they get the most out of their assets. “This is not a fire sale,” Payne said. “We’re not giving them away.”
Tulsa has already sold two buildings to local private schools, including the Town & Country School, which serves special needs students. The University of Tulsa has expressed interest in Woodrow Wilson Elementary School, located near its campus. A professional development program for district teachers is moving from Fulton Learning Academy (which was sold to Town & County) to Roosevelt Elementary School. Tulsa Public Schools started out with a goal of saving $5 million by closing schools, Payne said, and while it hasn’t reached that goal, it has made progress: $2.7 million saved through reduced maintenance and the revenue from sales.
The need for repurposing has already caught the attention of future policymakers: one of the entries in the National Invitational Public Policy Challenge, presented by a group of graduate students from the Fels Institute of Government at the University of Pennsylvania, offered a similar solution for Philadelphia, which is planning to close more than 60 school buildings in the next few years. The team of four looked at several existing programs, including the KCPS Repurposing Initiative, when developing their plan.
Their model is intended to be more efficient and financially self-sustaining. Authority to sell would be transferred from the school district to the city’s redevelopment authority. More promising properties would be sold first and those funds are used to update less appealing assets -- a “portfolio” approach that ensures all assets are eventually sold, said grad students Sarah Besnoff and Aaron Tjoa, to Governing.
“It could work anywhere,” Besnoff said, “and it makes sense for any vacant public buildings.” The team has held meetings with city officials and state legislators to put its plan (or some version of it) into action.
They estimate the two-year selling and renovating process would earn up to $20 million in additional revenue than simply marketing easy-to-sell properties and then maintaining or demolishing the others. With the Philadelphia School District facing a $186 million shortfall next year, according to the Philadelphia Inquirer, that additional income would be welcome.
Those financial incentives, and the reality that holding onto vacated buildings is fiscally untenable, have led more districts to consider these repurposing initiatives, said Reggie Felton, assistant executive director at the National School Boards Association. Acting as a real estate agent isn’t a natural role for school districts, he said, but it’s one they’re willing to play for now.
“Districts generally don’t want to get into the business of being a landlord,” Felton said. “But it is a growing issue right now, and they’re certainly going to take advantage of that opportunity.”
