Surplus Schools Pose Problems for Districts
Surplus buildings hard to sell, lease
As student enrollment steadily declines in many urban districts, school leaders are struggling to manage a growing inventory of empty and shuttered buildings that are hard to sell, lease, or otherwise repurpose, a study finds.
Chicago school officials last week announced that 129 schools will be considered for shutdown because of underenrollment. In Philadelphia, plans announced in December to shut down 37 buildings—some 15 percent of the city's public schools—by the start of the 2013-14 school year would leave the district to find new uses for more than 40 vacant buildings.
In Kansas City, Mo., district leaders had 26 vacant buildings available for sale or lease at the end of last year after shuttering nearly half their schools in 2010.
And in Detroit—a city that has experienced some of the steepest rates of population decline and loss of public school students—district managers have sold, leased, or found other uses for more than 60 buildings since 2005. Still, 124 remain available for sale or lease.
The Philadelphia-based Pew Charitable Trusts examines those three districts, along with Atlanta, Chicago, Cincinnati, Cleveland, the District of Columbia, Milwaukee, Pittsburgh, St. Louis, and Tulsa, Okla., in a report that says the impact of large-scale public school closures reverberates for years after the buildings themselves are shut down.
District leaders wrestle with how to manage the buildings and must weigh tough fiscal, policy, and political choices when deciding whether to hold on to them indefinitely or to sell them, usually at a lower price than projected.
"There's no question that many of the properties are difficult to dispose of when schools are closed," said Michael D. Casserly, the executive director of the Council of the Great City Schools, which represents 67 urban school districts. "But it's an amazingly localized issue. There are no agreed-upon best practices."
Pew researchers focused on what became of shuttered school building inventories in the 12 districts between 2005 and 2012. They found that in the last seven years, the districts had collectively sold, leased, or reused 267 properties, and still had 327 vacant sites in their real estate portfolios.
And some cities, such as Philadelphia, face stiff competition from a growing inventory of parochial schools that have been closed.
Although there is wide variability in the cities' real estate markets and their local policies around the reuse of school buildings, the districts studied all face common challenges when trying to find new life for surplus buildings, the Pew study found.
Chief among them:
• Size—Most school buildings exceed 50,000 square feet and are not well suited for other types of enterprises.
• Age—The typical building is more than 60 years old, and some are as old as 100 years, making them costly to refurbish and update for modern use.
• Location—Many shuttered buildings are in neighborhoods where the residential population is shrinking and real estate values are already low.
Given those hindrances, sale prices often turn out to be much lower than originally projected by districts, so "it's not surprising that some buildings go empty for more than a decade," said Emily Dowdall, a senior associate with Pew's Philadelphia research initiative and the lead author of the study.
But letting schools sit vacant is still a drain on district budgets because those buildings must be secured, maintained, and insured. And even worse, empty schools "cast a pall over neighborhoods" and can help enable illegal activities, Ms. Dowdall said.
The report also examines the ways that the 12 districts have reused their surplus buildings. Leasing or selling to charter schools, private schools, or a governmental or a nonprofit entity is the most common step. In fact, charters accounted for more than 40 percent of the repurposing projects, according to Pew, in large part because some districts give charters first choice on surplus buildings.
Charter schools also have private funding and access to special financing, such as tax-exempt bonds, to help cover the costs of purchasing or leasing.
But in Chicago, where charters had been overwhelmingly favored as the new occupants for shuttered schools, district leaders are moving in a new policy direction, Ms. Dowdall said.
Facing increasing competition for students from the city's expanding charter sector, the district recently began restricting how buyers of surplus buildings use them.
For its current inventory of properties for sale, Chicago will sell only to buyers who agree to ban any K-12 use of those buildings for 40 years, although the school board can vote to grant an exception to that policy, Ms. Dowdall said.
Nationwide, the shutdown of schools in cities has triggered a loud and growing backlash recently and prompted parent and student groups in several cities to call for a moratorium on closures and to file formal complaints with civil rights officials in the U.S. Department of Education.
Opponents of school closures across many cities share concerns that poor and minority students are disproportionately affected by districts' decisions to shut schools.
The new report continues an interest by Pew in the impact of school closures on districts, students, and communities. In 2011, Pew researchers delved into the more direct effects of closures on students and communities.
Vol. 32, Issue 21, Page 12Published in Print: February 20, 2013, as Study: Cities Face Growing Stock of Shuttered Schools