The Philadelphia School District says it has four potential buyers for six of its recently shuttered buildings.
Three of the buyers intend to use the properties, at least in part, for K-12 educational purposes.
The total price tag for the potential sales would be about $35 million. After “fees and defeasance of bonds related to these schools,” the district will net about $25 million – money that it’s already been counting on in its current budget.
“They’re really good ballpark estimates,” said Fran Burns, the district’s chief operating officer. “There could be some subtle variations through the negotiations.”
In an agreement that allowed schools to open on time this year, the city promised to cover $50 million in district real-estate sales. The district itself had bugeted to net another $11 million in real estate sales in its FY ’14 budget. The anticipated $25 million net proceeds from this deal, covers the district’s obligation first, and cuts the city’s obligation by $14 million. If the district doesn’t sell property worth at least another $36 million by June 30, the city will be on the hook.
That plan was originally trumpeted by City Council President Darrell Clarke. Mayor Michael Nutter expressed concern that the district would come off as “desperate sellers” in its rush to sell property.
Burns insists the district is getting a good deal.
“They’re absolutely fair prices,” she said. “One thing we saw through this was a very competitive market. And the market’s going to drive the price, and the market drove the price.”
Burns said the district hired an outside consultant to vet the financial capability of each bidder and gauge its capacity to finalize any potential deal by the end of June. The Philadelphia Industrial Development Corporation also analyzed the bids and interviewed the finalists individually.
“We had a very thoughtful process,” Burns said.
In October, the real estate investment firm Municipal Acquisitions made an unsolicited $100 million offer for all 28 schools in of the district’s vacancy portfolio. The district didn’t bite.
Council President Clarke, who couldn’t be reached for comment, has repeatedly questioned the district’s ability to sell property efficiently. He’s suggested allowing real-estate professionals to take over the job.
The mayor’s office emailed to say it was “satisfied” that the sales process is under way. And stressed that the net proceeds of the sales are “vitally necessary” to the district’s budget.
The four sites in question contain six buildings: University City High School, Charles Drew Elementary, The Walnut Center (all in University City), Anna Shaw Middle School and Alexander Wilson (in Southwest Philadelphia), and Stephen Douglas High School (Port Richmond).
They were among the district’s seven properties listed for expedited sale. In total, the district received 20 bids on these seven sites. The district says it’s also currently considering a sale of the former William Harrison Elementary School in North Philadelphia.
For each site, the top three bidding finalists had similar usage plans.
Three of the proposals that the district favors were the top bidders on each of the respective sites. (The other favored bid was short by $1.) The district will not disclose the bid amounts on the individual properties, nor will it disclose results of its internal real-estate appraisals.
If the proposed sales are approved by the School Reform Commission, Drexel University Development, LLC will purchase the shuttered University City High School property, plus the adjacent Charles Drew Elementary and the Walnut Center building. Drexel’s project is a joint ventrue with Wexford Science & Technology, LLC.
In addition to utilizing the property for residential, retail, and lab/office space, Drexel has said it would like to build a new facility to expand nearby Powel elementary on a portion of that site.
Powel parent Robin Dominick is happy that Drexel is the prospective buyer, but feels the community has been shut out of the selling process. The district’s announcement came hours before a public meeting on the future of University City High was supposed to take place.
“I’m very discouraged by the lack of transparency that the district has provided to the public,” said Dominick. “Our community input is being neglected.”
“I don’t know what the other options were or if there were any,” she continued, “but … I’m optimistic because Drexel has reached out to the public and has been working with the neighborhood and with the school for the past two or three years.”
Even if Drexel ultimately secures the University City site, Burns said there’s still a long way to go before a Powel expansion could become a reality.
“That’s currently a proposal and an aspiration. It’s got a lot of details to be worked out,” she said. “There’s a lot to happen between now and the development.”
Mastery Charter Schools is slated to buy the former Anna Shaw Middle School in Southwest Philadelphia, a building Mastery’s already been renting and using as Hardy Williams High School since the beginning of this school year.
Stephen Douglas High School in Port Richmond is slated to go to Maritime Academy Charter, which also has already been renting the property for classes.
Alexander Wilson in Southwest Philly would go to Orens Bros. Real Estate Inc., a developer that envisions repurposing the property for mixed residential and retail use.
Burns said there was “a very low bid” on the Alexander Wilson building that would have kept the property as a school, “but the bid was off in a range of over $3 million.”
The SRC will review the proposals and vote to accept or deny them at a meeting on March 20. Sales would be finalized in June.
A previous version of this story errantly stated that the city promised to cover $61 million in real-estate sales.