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Urban Districts Struggle to Sell Shuttered Schools, Report Finds

As student enrollment steadily declines in many urban districts, school leaders across the country are struggling to manage a growing inventory of empty and shuttered buildings that are difficult to sell, lease, or otherwise repurpose, a new study finds.

In Philadelphia, recently-announced plans 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., school district leaders had 26 vacant buildings available for sale or lease at the end of last year. 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 Pew Charitable Trusts examined those three city districts, along with Atlanta, Chicago, Cincinnati, Cleveland, the District of Columbia, Milwaukee, Pittsburgh, St. Louis, and Tulsa, in a report that found that the impact of large-scale public school closures reverberate for years after the buildings are shut down. District leaders wrestle with how to manage the buildings and must weigh difficult fiscal, policy, and political choices when deciding whether to hold onto buildings indefinitely or to sell them, usually at a lower price than projected.

Pew researchers focused on the 12 districts' shuttered school building inventories between 2005 and 2012, and found that in the last seven years, the districts had collectively sold, leased, or reused a total of 267 properties and still have 327 vacant sites in their real estate portfolios. That number will actually increase this year as Chicago, the District of Columbia, and Philadelphia all move forward with new rounds of closures. And some of these cities, such as Philadelphia, face stiff competition from a growing inventory of shuttered parochial schools.

Though there is wide variability among district's real estate markets or local policies around the reuse of school buildings, they all face common challenges when trying to find new life for surplus buildings, the Pew report found. Chief among them:

•Size—School buildings are big. Most of them 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 significantly lower than originally projected, 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 vacant schools sit idle 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 allow for illegal activities to occur, she said. Some districts opt for demolishing long-vacant buildings that have become a blight, but that is also an expensive and often-controversial step, Ms. Dowdall said.

The report also examined the ways that the 12 districts have reused their surplus buildings, and found that leasing or selling to charter schools, private schools, or a governmental or nonprofit entity was most common. 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. Charters also have access to special financing, such as tax-exempt bonds, to help cover the costs of purchasing or leasing. And, most obviously, charter enrollment is growing, raising demand for additional space.

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 will now attempt to restrict how buyers of its surplus buildings can use them. For its current inventory of properties for sale, Chicago will only sell to buyers who agree to ban any K-12 use of those buildings for 40 years, unless the school board grants an exemption.

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.

This new report is not Pew's first look at how school closures impact districts, students, and communities. In 2011, Pew researchers delved into the more direct impacts of closures on students and communities.

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