CLOSING SCHOOLS,
OPENING OPPORTUNITIES
THE SCHOOL REDEVELOPMENT INITIATIVE
A proposal for the adaptive reuse and
redevelopment of former school buildings
PRESENTED BY
SARAH BESNOFF, M.P.A. ’11, J.D. ‘14
LEA OXENHANDLER, M. Architecture ‘12
EVAN LITVIN, M. Architecture ‘12
AARON TJOA, J.D. ‘13
CONTENTS
EXECUTIVE SUMMARY
WHY A SCHOOL REDEVELOPMENT INITIATIVE?
THE SCHOOL DISTRICT’S CURRENT PLAN
THE SCHOOL REDEVELOPMENT INITIATIVE
PRESERVING HISTORY & ALIGNING WITH CITY GOALS
POLICY PLAN
THE PROBLEM
TWO MAIN REASONS TO ENDORSE THE SRI
FORMING THE INITIATIVE
CAMPAIGN PLAN
BUILDING CORE SUPPORT
IMPLEMENTATION PLAN
OPERATIONAL BUDGET
APPENDIX
THE SRI’S VALUE-ADD FOR THE PSD
COST COMPARISON MODEL: PORTFOLIO vs. NON-PORTFOLIO APPROACH
TIMELINE FOR THE INITIATIVE
THE SCHOOL REDEVELOPMENT FUND
MEASURING IMPACT: A TRIPLE BOTTOM LINE
LOGIC MODEL
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EXECUTIVE SUMMARY
CLOSING SCHOOLS, OPENING OPPORTUNITIES proposes a plan for the Philadelphia
School District’s soon-to-be closed nine school buildings. We propose that the district deed
all of the buildings to the newly created School Redevelopment Initiative (SRI) under the
Philadelphia Redevelopment Authority, allowing the district to return its financial focus back
to its students rather than its real estate. Using an innovative portfolio approach, the SRI will
utilize profits from the sale of the more valuable assets to fund renovations and increase
the attractiveness and value of the less marketable buildings. The SRI proposes a marketbased, community-driven redevelopment process for the buildings, simultaneous with the
management of their maintenance, improvements and repackaging for sale.
This approach takes the former school buildings off of the Philadelphia School District’s
balance sheet, relieving them of over one million dollars in yearly operational costs
associated with their maintenance as they sit vacant, waiting for buyers. Instead, the value
proposition of the SRI saves the district money in the long run and brings measurable
financial benefits. The SRI will oversee the management of the Initiative and the growth and
use of the SRI Fund as outlined below:
THE INITIATIVE
1 ASSESS
The SRI will conduct a market demand analysis for each building to
create a market-based set of suggestions for development.
2 ENGAGE
The SRI will convene School Redevelopment Planning Groups comprised of
community leaders and stakeholders for each school to establish preferences
for programming of the spaces based on recommendations made in the market
analysis report. These community-directed preferences will determine the content
of the Request for Proposals.
3 IMPROVE
The SRI will environmentally remediate (e.g. asbestos and lead paint removal, etc.), retrofit (e.g. replace aging systems with new, energy efficient systems, fix roofs,
update windows, etc.) and renovate (e.g. minor interior improvements, secure
premises with fences, transform school yards into permeable surfaces, etc.) the
properties to increase their value, reduce costs, and ensure their safety and security.
4 SELL
The SRI will develop an RFP process based on the market analysis and community
engagement recommendations. The SRI will also assist buyers in different ways to
increase the speed and attractiveness of sales, including through aid in the process of
rezoning or providing additional funds for greater renovation.
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THE SRI FUND
ATTRACT INVESTMENT
The SRI will establish a School Redevelopment Fund that will fund the remediation,
retrofitting, updates and maintenance of the schools. The Fund will manage the
revenue from sales of schools and will also solicit donations from private investors (e.g. financial institutions, developers, philanthropies) and write grants for federal and state support.
REINVEST
These funds will be reinvested in the renovation and successful stewardship of all the
buildings, ensuring that every neighborhood receives the benefits of investment for
redevelopment.
WHY A SCHOOL REDEVELOPMENT INITIATIVE?
The Philadelphia School District’s (PSD) School Reform Commission (SRC) has proposed
closing seven schools in five council districts next academic year because they are
underutilized and in need of expensive maintenance and repair. These schools are a drain
on the PSD’s limited resources. By consolidating schools, the district is seeking to devote
more funding to educational resources.
The seven new school closures will add to the eight school buildings already sitting vacant.
Under the reality of tight budgets, shifting demographics and competition from charter
schools, it has been speculated that the SRC could recommend closing up to fifty schools
over the next decade.
The vast effects of massive school closings can be seen in cities like Detroit, Chicago and
Washington D.C., where similar widespread school closures have resulted in vacant lots,
abandoned buildings, increased crime and widespread blight. The removal of a school from
a community can have a drastic effect—especially when left vacant and deteriorating over
time.
According to a report by eConsult, citywide vacant land and structures cost Philadelphia
nearly $21 million dollars per year and represents $3.6 billion in lost household wealth,
reducing adjacent property values between 6.5 and 20 percent. Vacant land and buildings
have a negative effect not only on property values but also a depressing emotional effect on
people living nearby. At least six different Philadelphia council districts will have this difficult
issue to face in the coming years.
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Furthermore, the SRI will shield the PSD from potential financial problems. Vacant school
buildings are expensive to maintain. A group of aging, unoccupied buildings can result in
millions of dollars spent on security and maintenance costs before a sale may occur. This is
millions of dollars not spent educating our children.
The SRI recognizes that these former educational buildings can be an invaluable opportunity
to stabilize and revitalize communities through the creative reuse of an existing historical
infrastructure. By facilitating community engagement as a platform for mediation between
communities, public stakeholders, and private investors, and providing a small amount of
initial investments, these spaces can naturally transition from their previous functions as
schools to become vibrant community catalysts. These new hubs will revitalize communities
economically and socially, creating a more livable Philadelphia for all.
THE SCHOOL DISTRICT’S CURRENT PLAN
The School Reform Commission (SRC) has been tasked with handling a difficult and
politically contentious school closure process. To engage the community and ease
discontent with the proposed plan, the SRC has developed an RFP process to solicit offers
for the nine buildings that prioritizes education and community uses over commercial
buyers. The SRC is also responsible for the upkeep and security required to maintain these
properties until they are sold by individual brokers acting as agents for the PSD.
If the buildings do not sell in the long run and the district’s built assets continue to decay,
there is a chance that demolition would become an inevitable option. Demolition has its own
set of consequences. Besides the prohibitively high costs of this endeavor, the removal of
the buildings from the urban fabric and historical context of Philadelphia can be traumatic to
communities. Preservationists and local residents argue for the maintenance and inclusion
of these buildings in future planning efforts to conserve the integrity of Philadelphia’s
historical building stock. Keeping the lights on in these spaces is essential to maintaining the
vibrancy and activity that keeps Philadelphia’s neighborhoods both desirable and safe places
to live.
THE SCHOOL REDEVELOPMENT INITIATIVE
The creation and implementation of THE SCHOOL REDEVELOPMENT INITIATIVE (SRI) will
provide greater long-term value than the optimistic $10 million in revenue that the School
District is expecting to bring in from the sale of the buildings. Recognizing the value of both
these buildings and community involvement, the SRI will acquire the former schools from
the PSD, manage them, and assist with the redevelopment process of each.
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PORTFOLIO MANAGEMENT
Housed under the Philadelphia Redevelopment Authority (PRA), the SRI will manage the
buildings like a distressed-asset real estate portfolio. By taking a portfolio approach, the SRI
will leverage the most valuable assets to make needed repairs in the remaining buildings,
preparing them for marketable use and sale.
INFORMED COMMUNITY INVOLVEMENT IN REDEVELOPMENT
Development of the buildings will take place as a series of community catalyst projects,
which will re-imagine the functions of the school buildings with School Redevelopment
Planning Groups to facilitate a reuse that serves the needs of both communities and the
market. By conducting an initial market demand analysis study of the nine buildings, the
SRI will use the market to determine the actual set of feasible uses for the buildings. By
presenting these options to community, the community will help drive the preference for
buyers.
With the creation of a School Redevelopment Committee for each individual school, the
SRI will actively collaborate with community development corporations, council districts,
community members, and the Community Design Collaborative to choose a proposed use
for the redevelopment of each building.
When the community is regarded as both a partner and ally, their support for a project can
keep it moving forward through Philadelphia’s city planning and zoning committees. This is a
major asset when attracting private development. When the community supports a project,
it is much more likely to be completed, drastically reducing developer risk.
BUILDING IMPROVEMENTS AND FUNDRAISING
As Dr. Leroy Nunery, Superintendent of the Philadelphia School District, has said, “One of
the things we…learn[ed] when we did our homework is, if you’re going to close something,
or change what’s there, you have to offer something better.” The SRI’s key activity will
be the capital improvement of the weaker buildings in the portfolio. First, environmental
remediation will take place, certifying the buildings free of asbestos and lead paint
contamination, as well as other possible environmental contaminants. The additional
completion of low-cost energy efficiency retrofits and roof repairs will massively lower the
operating costs of the older school buildings. These two actions together will make the
buildings significantly more marketable.
To raise money for capital improvements, two of the most valuable properties will be sold
after all buildings undergo the market analysis and community engagement process. The
profits from these schools are expected to fund all remaining expenses of the SRI. To hedge
against a shortage of funds, the SRI will also establish a SRI Fund. The Fund will solicit
grant funding and seek donations from financial institutions, private actors interested in
community development and investors interested in the properties.
REUSE AND REDEVELOPMENT
The SRI seeks to bring economic stabilization and growth to all neighborhoods with closing
schools. The SRI will attract private investors who are interested in commercial, residential,
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hotel, industrial, office and mixed-used assets. The properties have untapped possibilities
for adaptive reuse, renovation and market repositioning.
The SRI’s goal is the eventual sale of the buildings as a whole, or as parcels of the buildings.
In some cases, potential buyers may be unable to occupy the buildings as a whole.
Therefore, the market analysis will help determine if the SRI should exercise the option
of further renovations to the buildings so that they are adapted for use by multiple new
buyers. School buildings offer this possibility because they house a diversity of unique
spaces, ranging in size and scope from classrooms to auditoriums to cafeterias. Once
environmentally remediated, the buildings can be easily adapted and prepared based on
developer needs through soft partitions and parceling of the spaces.
The SRI will market the convenient, central locations of the former school buildings, often
strategically positioned along major transit corridors. Creating major economic growth in
these communities and opening new markets in underserved neighborhoods is a major
opportunity and is certain to attract the attention of buyers.
PRESERVING HISTORY AND ALIGNING WITH CITY GOALS
As outlined in the city’s many existing policy initiatives, such as Green 2015, the City Wide
Vision 2035 and Green Works, this program aligns directly with Philadelphia’s goals of
becoming a more livable and equitable city.
The unique value contribution of the School Redevelopment Initiative to the City of
Philadelphia is the creation of catalytic spaces for its neighborhoods, preventing stagnation,
and improving economic growth for residents.
“There’s no doubt that these [older] buildings have value,” said Denegre, the architect at
Schrader Group who transformed Philadelphia’s former Thomas Durham School into an
Independence Charter School. “They’re magnificently built, they have lots of capacity, and
they have qualities that today we think of as ‘green,’ like access to public transportation, and
natural ventilation, light, and insulation.”
While community needs have changed and Philadelphians may no longer need these strong
and faithful old buildings for schools, many of them are still structurally sound. Though
they have outlasted their original functions, they are often beautiful examples of bygone
architectural styles and construction that have a level of craftsmanship and material use that
is impossible to replicate in the modern era.
As Denegre said, “No longer right for the School District? Perhaps not. But with imagination
and investment, wholly reinventable.”
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POLICY PLAN
THE PROBLEM
The School Reform Commission (SRC) of the Philadelphia School District (PSD) has
proposed to close seven public schools, with projections of as many as fifty schools to
close over the next decade. There are already eight vacant schools in Philadelphia, some
sitting unused since the late 1990’s.
While the exact number of closing schools is still undecided, with over 70,000 empty seats
across the district, school closings and grade consolidations are inevitable and slated to
increase in coming years.
The typical building being put on the auction block was built in the early 20th century, has
asbestos, lead paint, needs roofing repairs and is situated in a neighborhood that has likely
not been a target for recent development or investment. These factors combine to one
inconvenient truth: these buildings are not going to sell in their current state.
TWO MAIN REASONS TO CREATE THE SRI
1 – THE SCHOOL DISTRICT SHOULD NOT BE IN THE BUSINESS OF REAL ESTATE
Each building that does not sell will cost the PSD exorbitant fees in maintenance
and security. Based on conversations with local public and private developers, we
predict that without any redevelopment or reinvestment in these buildings, which
the PSD alone cannot afford, only two of the buildings of the nine proposed
school closures will sell within the next three to five years. In peer cities, Detroit,
Washington D.C., Houston, a Pew Charitable Trust study found that just trying to
sell school properties on the open market without any investment in renovation or
environmental remediation resulted in massive maintenance costs for the school
districts and little success in selling the properties.
The PSD is already facing a budget shortfall of $26 million, and Acting
Superintendent Thomas Knudsen has predicted that this amount could grow
to between $145 million to $400 million in the next fiscal year. The cost of
maintaining these schools is a burden that the PSD cannot afford. Taking these
schools out of the PSD’s already surplus-heavy portfolio would allow for these
maintenance funds to be redirected to other programs that are likely to be
eliminated without additional funds, e.g. instrumental music, gifted programs, and
bilingual counseling associates.
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2 – THE NEIGHBORHOODS SHOULD NOT HAVE TO SUFFER THE BLIGHTING INFLUENCES OF THESE ABANDONED BUILDINGS
Deteriorating quality of life in the city’s neighborhoods makes it more difficult
for city-based businesses to attract customers and employees. Many business
and non-profit employers have enormous capital investments in the city that are
threatened by the spread of blight.
A 2001 Temple University study found that, all things being equal, the presence
of an abandoned house on a block reduced the value of all surrounding property
by an average of $6,720, according to multivariate analysis of the effects of
abandonment on sales prices. Imagine not just one house, but an entire city block
of blight. Some of the schools slated for closure are as large as 23 acres.
It is imperative that the City creates and follows through with a plan that ensures
that these schools will not remain vacant and cause adjacent property values to
plummet.
The SRI brings many stakeholders to the table, engages the community, presents an
efficient, clear-cut process, and allows for these schools to retain their important value as
community anchors through their transformation as hubs of development and investment.
FORMING THE SCHOOL REDEVELOPMENT INITIATIVE
ORGANIZATIONAL CAPACITY BUILDING PHASE
The Philadelphia School District (PSD) will deed all of the newly vacated school properties
to the SRI, a new initiative within the Philadelphia Redevelopment Authority (PRA). The SRI
will manage all of the schools as a portfolio, leveraging the value of the best assets to help
fund the renovation of the less valuable assets. These initial sales will go to a SRI Fund. We
will seek private donations, investments from financial institutions, federal and state grants,
and additional in-kind donations from community organizations for this Fund. The fund
ensures that all neighborhoods in the City receive support and investment in addressing the
problems of vacant schools.
In conversations and meetings with many potential stakeholders—including leadership at
the PSD, the SRC, the PRA, the Philadelphia Industrial Development Corporation, PlanPhilly,
private developers, and other community development corporations—we received support
and enthusiasm for the proposed plan.
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WHY SHOULD THE DISTRICT DEED THE SCHOOLS TO THE PRA?
The SRC should deed the buildings to the PRA, who will manage the buildings under
the School Reform Initiative. This structure will take both the costs of maintenance and
redevelopment off the hands of the School District and will allow these communities to
experience investment and invigoration rather than blight.
The vast majority of the schools will not be sold without environmental remediation (e.g.
removing asbestos, lead paint, etc.) or other improvements, and will be a greater financial
burden to the City without energy efficiency retrofits (e.g. fixing roofs, updating windows,
securing premises with fences, transforming school yards into permeable services etc.).
The first thing that the SRI will do will be to evaluate the market possibilities for these
buildings, and then, if necessary, environmentally remediate and retrofit the buildings. The
School District is not a real estate developer and cannot afford the cost of these savingsgenerating renovations, which often recover their costs in savings in only one to three years.
The School District will lose a lot of money that could instead go to important educational
programming, and the community will suffer the plight of blight. Given that the PSD is
funded by taxes on property values, it is in the long-term best interest of the PSD to ensure
that property values remain high in surrounding areas to these closed schools. While the
SRC has a fiduciary responsibility to maintain their assets with the best interest of the
neighborhood and to receive value from the sale of these assets, we propose that the SRC
will save more money in the long run through a distressed-asset portfolio approach.
We also believe we can structure the property transaction so that the PSD will only
experience the benefits of selling the schools. In particular, we can contract an innovative
payment system for the properties wherein the PSD will gain all final profits from the sale of
the schools. The PSD will not have to cover the costs of managing and selling the properties
because it will initially deed them over with no initial payment to the PRA. Overall, this sets
a floor cost of zero dollars to the PSD, and allows the PSD to benefit if the properties are
ultimately profitable. In essence, the SRI is structured as a hedging instrument for the PSD.
WHY SHOULD THE DISTRICT CHOOSE THE PRA?
The PRA is the best manager for this portfolio of distressed properties. We propose that
the PRA hire two full-time staff members to direct this specific project, one Director of the
School Redevelopment Initiative and one Deputy. These two actors would be responsible
for: raising money towards the fund, writing grants for the fund, leading the community
engagement meetings regarding ideas for the reuse of each school, recording and
evaluating metrics, and writing and reviewing all RFQ and RFP submissions for the use of
the properties.
The PRA is well situated to take on a new, creative project managing the redevelopment
of these schools. The PRA’s work, authorized by Pennsylvania State Charter under the
Urban Redevelopment Law of 1945, focuses on planning and developing balanced mixeduse communities to create thriving, well-served neighborhoods. As the public government
agency charged with the redevelopment of the City of Philadelphia, the PRA provides the
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foundations that enable private investors to revitalize neighborhoods. The PRA has been
deeply involved in the development of the city since the Urban Redevelopment Law passed.
Their charter allows the PRA to take on new opportunities in order to respond to changing
economic conditions. The PRA is willing and able to take on the new and unique challenges
of this portfolio.
While the PRA and the City of Philadelphia are both seeking to limit their property holdings,
we believe that adding these nine properties to the PRA’s purview will ensure that all
neighborhoods are benefitting from redevelopment efforts. In addition, the outcome of the
schools is incredibly important to the City as a whole and the overall work of the PRA. The
PRA seeks to revitalize all neighborhoods of Philadelphia. They have a vested interest in
redeveloping these schools, if not only to encourage the redevelopment of the vacant lots
and houses that they also own in these neighborhoods.
In addition, we believe that every neighborhood deserves the benefit of renovation,
redevelopment, and economic growth. By creating a general fund for every school’s use,
we are ensuring that each school’s neighborhood receives the benefit of this communal
fund.
HOW WILL WE SUPPORT THE SCHOOL REDEVELOPMENT FUND?
The School Redevelopment Initiative creates a portfolio of the school buildings, funding the
redevelopment and eventual sale of the more in-need buildings with the sales of more easily
sold buildings. This process is cyclical and . The fund will be supported by the two full-time
staffers at the PRA who will seek three other main sources of income outside of selling the
schools:
PRIVATE DONATIONS
The Fund will always solicit and encourage donations from private developers. It is in
every developer in the City’s interest that these properties not become vacant. One
empty school in a neighborhood threatens all other development in the area. In
addition, our plan seeks to engage community institutions that can potentially serve
as anchor tenants in the redevelopment of these buildings.
FINANCIAL INSTITUTIONS
The Community Reinvestment Act requires financial institutions to reinvest in lowincome communities in order to stimulate their economic and social growth.
FEDERAL AND STATE GRANTS
Many of these buildings’ environmental retrofitting and remediation efforts will qualify for state and federal grants. We will work to establishing these spaces as historical zones, which will qualify these buildings for additional money.
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INITIATIVE PHASE: ASSESS, ENGAGE, RENOVATE, SELL
Every building will be assessed for its market value and then the School Redevelopment
Initiative will hire specialty contractors, such as Thomas Environmental, to perform
environmental remediation on the buildings. The use of the spaces will be determined
through a community-directed redevelopment planning process. Then the SRI will work
with the Community Design Collaborative, providing pro-bono design work by local
architects, will be engaged to design creative renovations for mixed-use spaces. The School
Redevelopment program will sell the renovated, partitioned spaces to new tenants, funding
further renovations for other buildings. This process is a continuous cycle of reinvestment
and both market-based and community-driven redevelopment.
ASSESS
The first step will be a market analysis, to be commissioned by the William Penn
Foundation, to understand what types of businesses could be income-generating and
what businesses or amenities are in demand in these communities
ENGAGE
The School Redevelopment Initiative staff will convene a School Redevelopment
Planning Group for each school to make recommendations for each building’s
programming according to the needs of each community.
IMPROVE
Concurrent with the School Redevelopment Planning Group’s assessments, the
School Redevelopment Initiative will utilize the Fund to perform environmental
remediation and retrofitting of all qualifying buildings. This will reduce maintenance
costs, increase property values, and ensure the safety and security of every building.
These improvements will encourage and attract developers to invest in these
buildings that otherwise would not have been viable. This process will take six
months on average.
SELL
In the final stage, we will maintain these buildings as careful stewards while awaiting
their sale through the proposed market-based, community-driven, RFP process. The
Fund will help to support the high, ongoing costs of maintenance and security that
would have otherwise burdened the PSD. This process will hopefully only take an
additional three to four months to sell these buildings whole to a single developer for
high value buildings, or a year to two years to sell as parcels to multiple tenants.
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CAMPAIGN PLAN
BUILDING CORE SUPPORT FOR THE INITIATIVE
The School Reform Commission (SRC) and the Philadelphia Redevelopment Authority (PRA)
are the sine qua non for our Initiative. We believe that through one-on-one conversations
with SRC and PRA, we can illustrate that our Initiative will be a huge benefit to Philadelphia.
Our campaign plan will focus separately on each entity. We will appeal to the SRC’s focus on
doing what’s best for Philadelphia’s children and its fiduciary duty to make a sound financial
decision regarding these properties. We will leverage the PRA’s desire to gain a quick win
that doubles as a national best practice, and we will appeal to its institutional role as a
catalyst for building stronger communities through public-private methods.
Moreover, we believe our process can achieve a political win for Philadelphia—attracting
investment, reversing blight, and preventing crime in underserved communities—by
centrally involving the communities as part of our market-driven development process.
OUR PITCH TO THE SRC : AVOIDING FINANCIAL DISASTER, FOR THE CHILDREN
Our campaign plan will focus on individual meetings with the five members of the SRC and
their key advisors. We will also meet with the Acting Superintendent and senior advisers to
the PSD. Through research and conversations with stakeholders, we believe we know how
to appeal to the SRC and PSD’s core interests.
First, the SRC is closing schools because it wants to avoid draining resources that it needs
for its primary goals of education. Saving money means having more money to pay for
teachers, textbooks, afterschool activities, school lunches, and the provision of resources
to better meet the needs of Philadelphia’s children. We believe that ultimately the SRC will
make a decision about how to manage their vacant properties based on what best serves
their financial bottom line.
Furthermore, all public agencies have a legal and public duty to recover value from their
assets. We believe that a distressed-asset portfolio approach will ultimately yield the most
value over the long term when all costs are taken into account. Our messaging with the SRC
will focus on this fiduciary duty. We also believe we can structure the property transaction
so that the PSD will only experience the benefits of selling the schools. In particular, we can
contract an innovative payment system for the properties where the PSD gets all final profits
from the sale of the schools. The PSD will not have to foot the costs of managing and selling
the properties because it will initially deed it over with no upfront payment. Overall, this sets
a floor cost of zero dollars to the PSD, and allows the PSD to benefit if the properties are
ultimately profitable. In essence, we are structuring a hedging instrument for the PSD.
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Second, the vacant buildings will serve as a lightning rod for political debate. We believe
the SRC will buy in to our best practices community driven approach because it will help
mitigate grass-roots political pressure. By shifting the management of selling the buildings
away from the SRC, the SRC will avoid the potential political hazards of holding on to the
buildings.
Third, the SRC also has a desire to offload the management of these buildings to
experienced professionals in the fields of real estate and distressed-asset management.
Through preliminary conversations with SRC member Feather Houston and a review of
public SRC reports, we believe that the SRC understands that the PSD’s expertise is in
educating children, and that selling distressed-assets is not part of their core competency—
nor would it help the PSD by allocating resources towards managing the sale of these
assets. It is a better option for the SRC and PSD to transfer the properties to be managed by
development professionals with the experience, resources, and focus necessary to get the
most value from the buildings.
OUR PITCH TO THE PRA : SOME QUICK WINS AND A DUTY TO OUR NEIGHBORHOODS
We envision the PRA as the best possible manager of the School Redevelopment Initiative,
and therefore their complete buy-in and excitement around the Initiative is paramount for
its creation and implementation. We will need the broad support of the board and executive
leadership at the PRA to create a new initiative within it.
We believe the key message to the PRA is that this Initiative offers low hanging fruit and
quick wins that can help build the reputation of the PRA. A few of the buildings in the
portfolio should sell within a year of acquisition, demonstrating the PRA’s ability to adapt and
sell quickly. Furthermore, a percentage of the proceeds from these initial buildings can be
reinvested into the rest of the buildings to make them marketable and sellable. This portfolio
approach is innovative for school redevelopment, and it could help showcase the PRA as a
best practices model to the nation.
A second appeal to the PRA will be that the fate of these school buildings is closely tied to
the distressed areas in Philadelphia where PRA already owns countless assets. The PRA
manages a significant amount of vacant properties throughout Philadelphia, and many lie
in the shadows of these closing school buildings. While the PRA may be hesitant to take
on more vacant property, by viewing the success of redeveloping these schools buildings
as important to increasing the value of its already existing portfolio, we think the PRA will
be more likely to see the value of the project to its existing work. In reality, successfully
redeveloping these schools will have a much bigger impact on communities than focusing
efforts on redeveloping a single house or smaller building.
Lastly, we believe this project is within the score of the PRA’s mandate. We believe the
PRA has statutory authority to carry out this project. Under the Urban Redevelopment Law,
the PRA is given specific powers to “cooperate with… [the] school district,” “to acquire…
property… from… government,” “improve and manage real property,” “to invest… funds,”
and “to sell… any real property in a redevelopment area.” 35 P.S. § 1709. Powers of an
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Authority. Beyond statutory authority, the PRA’s purview is to “focus on planning and
developing balanced mixed-use communities to create thriving, well-served neighborhoods”
by providing “the foundations that enable private investors to revitalize neighborhoods (from
PRA website).”
BROADER POLITICAL AND COMMUNITY SUPPORT
The sales of these properties and the establishment of the Initiative at the PRA will require
legal or political support by the City Council and community partners. Both will likely have
to provide legislative support (e.g. zoning ordinances) or have significant soft-power or
councilmanic privilege to veto any efforts. To get their complete buy-in, we see a formal
process of collaboration and engagement with the City Council member and any and
all community development organizations in that District, as well as other community
leaders and neighbors. In addition, we look forward to partnering with each School’s state
Representative and state Senator.
Further, political support from Mayor Nutter and Governor Corbett, and his Secretary of
Education Ronald Tomalis, will be extremely helpful in supporting this plan, both for funding
opportunities and in the case that unforeseen legislative or regulatory issues arise. We
envision having individual meetings where we stress the political and economic benefits
of the plan. We will reference existing local development, city development, and state
development goals to emphasize how our Initiative aligns with their existing goals and plans.
To gain community support, we propose organizing School Redevelopment Committees
for each school to review the recommendations of a market analysis and prepare
recommendations for the community and the School Redevelopment Initiative. This
Committee will be composed of up to three PRA representatives elected by the Director
of the School Redevelopment Initiative, one (1) city representative from City or Community
Planning, one (1) representative from the applicable Councilmanic District office, two (2) to
four (4) representatives from community/civic organizations and stakeholders interested in
the area of the Available Property as recommended by the Councilmanic District office and
one (1) representative from the applicable Statewide Representative and/or Senatorial.
CLOSING SCHOOLS, OPENING OPPORTUNITIES
13
IMPLEMENTATION PLAN
KEY ACTIVITIES
PHASE 1: START-UP
A
‘12
‘13
‘14
‘15
‘16
BUILD SUPPORT FOR INITIATIVE
Meet with SRC, City, and State Executive Advisors and PSD to get
buy-in for SRI
Meet with PRA board members and executive staff to secure
support and resources
Meet with the Mayor, Governor, and State Secretary of Education
B
ESTABLISH THE SRI
Design and execute property transaction from PSD to PRA
Establish the SRI within the PRA
Hire Director of SRI and integrate into PRA, hire Deputy of SRI
C
FINANCE THE FUND
Develop Fundraising Pitch
Write community development oriented grants to philanthropies
Apply for state and federal grants, William Penn Foundation
Reach out to local companies, including banks and other sources
of private investment
PHASE 2: OPERATIONS
D
MARKET ANALYSIS
Conduct market analysis to: demonstrate potential uses for
properties, market demand, and estimated value of each;
recommend key refurbishments to assist in bringing assets to
market as a whole or sold in parcels.
E
COMMUNITY ENGAGEMENT
Organize School Redevelopment Planning Groups for each vacant
school to review the recommendations from Market Analysis
phase, and prepare recommendations for the community and SRI.
F
REQUEST FOR PROPOSAL AND SALE
Write an RFQ application to pre-approve interested developers
Write an appropriate RFP based on hierarchy of needs chosen by
School Redevelopment Planning Groups
Prepare Sales Agreements ensuring that properties will be used
for stated purposes.
G
PROPERTY IMPROVEMENTS
Perform renovations, retrofits, and remediation on properties and
move to RFP process once improvements are complete.
CLOSING SCHOOLS, OPENING OPPORTUNITIES
14
OPERATIONAL BUDGET
FINANCIAL SUPPORT FOR THE INITIATIVE
The proceeds from the best assets in the portfolio will used to fund the majority of the
operations. Based on similarly positioned assets, the two best schools could sell for
upwards of six million, without any investments in those two buildings. This should cover
the total of six million for the costs of positioning and selling the other buildings.
To hedge against bad market conditions, we also propose establishing a fund to help
with redevelopment costs. We hope to solicit developers in the area may also be willing
to support the redevelopment of the buildings. We also plan to aggressively apply for
federal funding and for statewide grants, including historical preservation and community
stabilization funds. In these applications, we look forward to support from our state
representatives and Senators.
BUDGET FOR INITIATIVE
Y1
Y2
Y3
Y4
Y5
STAFF & CONSULTANTS
Market Analysis
2 Full Time Staff
$40,000
$130,000
$130,000
$130,000
$130,000
$130,000
$327,026
$408,770
$399,000
$267,600
$508,000
$817,565
$49,054
$102,196
$665,000
$450,000
$1,000,000
$39,900
$83,125
$27,000
$56,250
$60,000
$125,000
$1,465,841
$1,326,795 $1,062,250 $397,600
BUILDING COSTS
Building Maintenance
Environmental Remediation
Energy Efficiency Retrofits
Roofing Repairs
TOTAL
$1,823,000
*Costs based per sq. ft. estimates in publically available industry data and from information
provided by PIDC. Assumptions include: $2/sq.ft. ongoing building maintenance, $5/sq.ft.
environmental remediation, $0.30/sq.ft. energy efficiency retrofit, $5/sq.ft. roofing repairs, and
estimated savings of 30-50% from energy efficiency retrofits. Budget assumes selling of 2
prime buildings up front, and 2 properties sold per year, over 5 years. All building investments
are made in year two.
CLOSING SCHOOLS, OPENING OPPORTUNITIES
15
APPENDIX
CLOSING SCHOOLS, OPENING OPPORTUNITIES
16
CLOSING SCHOOLS, OPENING OPPORTUNITIES
17
$1,300,000
$4,300,000
$6,600,000
1
2
3
4
5
ASSETS
ALL ALL
ASSETS
SOLDSOLD AFTER
AFTER YEAR 1
TWO
HIGH VALUE
1 ASSET
PER YEAR THERE
ASSETS SELL AFTER
YEAR ONE, ONE ASSET
PER YEAR THEREAFTER
TWO HIGH VALUE ASSET
NO ASSETS SELL
NO ASSETS SELL
This projection illustrates that the minimum expense incurred by the Philadelphia School District to operate
these schools is a best-case scenario of over $1.3 million with a worst-case scenario upwards of $7 million if
none of their assets sell within five years.
THE SRI’S VALUE-ADD FOR THE PSD
in millions
of dollars
-20
-15
-10
-5
0
5
10
15
20
2012
2013
2014
2015
2016
The non-portfolio approach gains initial profit, but loses money
on maintaining difficult to sell assets.
2017
2018
2019
2020
2021
NON-PORTFOLIO
APPROACH
PORTFOLIO
APPROACH
Both scenarios sell good assets, but the portfolio approach reinvests in its weaker assets ensuring that all
properties eventually sell. This results in a net profit, allowing the ongoing maintenance and operations costs to
be easily offset with remaining profits going back to the Philadelphia School District. The non-portfolio approach
gains initial profit from the sale of its stronger assets, but loses money on maintaining difficult to sell assets.
Based on our
projections,
after five years—even if the two high-value assets sell—the PSD will incur a net loss
BOTH SCENARIOS
SELL
GOOD ASSETS.
that willapproach
continue re-invests
to increase
until assets,
all properties
aresell.
sold or demolished.
The portfolio
in other
which then
COST COMPARISON MODEL:
SRI PORTFOLIO APPROACH vs. NON-PORTFOLIO APPROACH
CUMULATIVE
PROFIT
CLOSING SCHOOLS, OPENING OPPORTUNITIES
18
CLOSING SCHOOLS, OPENING OPPORTUNITIES
19
(3 months)
IMPROVE
SALE
EXTENSIVE RENOVATION
(12 months)
RFP PROCESS
(3 months)
SELECTION
COMMUNITY STABILIZE
ENGAGEMENT
RETROFIT + REMEDIATE
PROCESS
(6 months)
(3 months)
RFP PROCESS
(3 months)
LEVERAGE
1 YEAR
SALE
RFP PROCESS
(3 months)
(3 months)
SELECTION
*There is also the option to extend the timeline, delaying retrofits and other repairs
while the fund gains traction with private investors and donation funding.
MARKET
ANALYSIS
(2 months)
BUILDING
ACQUISITION
(3 months)
SELECTION
2 YEARS
Our timeline demonstrates the three different tracks for development. The top track, “Leverage,” is a fasttrack process to immediately sell the properties that do not require additional renovation. The middle track,
“Stabilize,” shows the timeline for properties that require some environmental retrofitting and remediation, but
not extensive renovation. The final track, “Improve,” represents the timelines for those buildings that do require
extensive renovations to be sold. All properties will go through a concurrent market analysis and community
engagement process, via the School Redevelopment Planning Group, before RFPs are released.
TIMELINE FOR THE INITIATIVE
SALE
CLOSING SCHOOLS, OPENING OPPORTUNITIES
20
Charles Drew,
Sheridan West
Academy
SELL
PRIVATE
DONATIONS
ENERGY EFFICIENCY RETROFITS
and
ENVIRONMENTAL REMEDIATION
FEDERAL and
STATE GRANTS
FUND
SCHOOL REDEVELOPMENT
ZONING
BOARD of
ADJUSTMENT
EXTENSIVE
RENOVATIONS
This graphic displays the cyclical process of attracting investment and reinvesting in the properties. The green
boxes demonstrate income into the fund, from the sale of properties, private investment, and state and federal
grants. The blue boxes represent our reinvestment in the neighborhood schools, through environmental
remediation, energy efficiency retrofits, and extensive renovations if necessary. Upon completion of all
renovations, the SRI further assists potential tenants in the rezoning process for multi-use prior to sale. This
process then starts anew as the sales of the buildings go back into the SRI fund.
THE SCHOOL REDEVELOPMENT FUND
X
X
X
X
X
X
X
X
INCREASED TRANSIT ORIENTED DEVELOPMENT
UTILIZE SCHOOLYARDS AS GREEN INFRASTRUCTURE
INCREASED ACCESS TO SERVICES AND RESOURCES
X
X
JOB CREATION/ ECONOMIC DEVELOPMENT
X
CREATE A CORRIDOR NETWORK THAT CONNECTS NEIGHBORHOODS
SUPPORT DEVELOPMENT THAT PRESERVES HISTORIC BUILDINGS
REUSE VACANT LAND AND STRUCTURES IN INNOVATIVE WAYS
MANAGE AND REDUCE VACANCY
X
X
X
X
X
INCREASED ACCESS TO PARKS AND RECREATION
X
X
X
X
X
X
X
X
ENVIRONMENTAL REMEDIATION
ENERGY EFFICIENT RETROFIT
X
X
X
X
X
REDUCE CARBON EMISSIONS
ENVIRONMENTAL
BENEFITS
SOCIAL
BENEFITS
ECONOMIC
BENEFITS
The SRI seeks to align with key policy documents for the City of Philadelphia, that seek to advance economic,
social and environmental benefits to its citizens.
MEASURING IMPACT: A TRIPLE BOTTOM LINE
PROMOTE STRONG AND WELL-BALANCED NEIGHBORHOOD CENTERS
CLOSING SCHOOLS, OPENING OPPORTUNITIES
21
CLOSING SCHOOLS, OPENING OPPORTUNITIES
22
RDA creates School
Redevelopment
Initiative, funding 2
full time staffers
School Reform
Commission deeds
buildings to RDA
INPUTS
Form School
Redevelopment
Committees for each
school.
Oversee Market
Analysis Reports.
Fundraise money to
create School
Redevelopment
Fund.
Additional
renovations (general
demolition,
partitioning, etc) if
needed.
Full Energy Efficiency Retrofits
Environmentally
remediate buildings
ACTIVITIES
Engage with private
developers,
community leaders,
and CDCs to create a
market-based,
community driven
RFP process.
Engage with
developers, unions
for labo, CDCs, and
neighborhoods.
PARTICIPATION
OUTPUTS
Based on community
support,
programmatic
themes are
developed for each
building.
Bidders evaluated on
their proposals
regarding projects
impact on the
community and use
of the selected
themes.
RFP process yields
multiple bidders for
properties.
Schools are
repackaged for
mixed-use zoning.
Schools are
environmentall
sound, not liabilities
to communities or
prospective
developers.
SHORT
School
Redevelopment
Committee, Council
people, and RDA
agree on tenant.
Developers, both
public and private
purchase schools for
thematic mixed-use
development.
Energy Efficiency
Retrofit and
Environmental
Remediation results
in increased property value.
MEDIUM
OUTCOMES
Our logic model displays the input, outputs, and short, medium, and long-term outcomes of the School
Redevelopment Initiative.
LOGIC MODEL
Schools become
income-producing
mixed-use spaces for
community’s benefit.
Local neighborhoods
see increased
property values and
increased access to
needed services,
transportation, and
job creation
opportunities.
LONG