Buyers set to purchase several School District properties
By thenotebook on Feb 26, 2014 09:25 PM
by Kevin McCorry for NewsWorks
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 budgeted for $11 million more than that in real estate sales in its fiscal year 2014 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 $36 million more by June 30, the city will be on the hook.
That plan was originally trumpeted by City Council President Darrell Clarke. Mayor 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 the District's vacancy portfolio. The District didn't bite.
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 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 Elementary (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 considering a sale of the former William Harrison Elementary School in North Philadelphia.