New Life for Old Schools

EXECUTIVE SUMMARY

1EXECUTIVE SUMMARY

9

Across the country, urban school districts have closed and continue to close significant percentages of their public schools. As a part of this trend, Philadelphia has gone through two rounds of mass-closings in the last two school years. On top of schools closed in previous years that remain unused, this will leave the School District of Philadelphia (SDP) with 32 vacant buildings at the end of the 2013 school year. While the closures have generated animosity between communities and the SDP in the short-term, the issue of what to do with the buildings presents its own set of long-term problems that require further attention.

As with other cities, Philadelphia has been forced to close schools due to three main factors: decades of population loss, the rise of charter schools, and fiscal distress. Between 1950 and 2000, Philadelphia’s overall population declined steadily, which eroded the city’s tax base and hampered the SDP’s ability to continue maintaining school facilities at a high level. The citywide population loss also decreased school enrollment, and these negative effects were further compounded when Pennsylvania passed charter school-enabling legislation in 1997, effectively introducing a direct competitor to public schools in Philadelphia. Although the city has experienced slight population growth since 2000, this positive trend has not been great enough to overcome the decline of the past decades. Together, the reduced tax base and reduced enrollment have placed the SDP in a bind financially, with half-empty buildings and an estimated $1.24 billion deficit by 2017.

By shuttering schools, the SDP aims to consolidate its facilities portfolio and plug its deficit hole. But doing so also raises a new set of worries for the neighborhoods experiencing closures. Foremost among these are vacancy and blight issues, which already cost the city millions of dollars annually in services, and significantly reduce

private household wealth. The 2013 round of closings alone will add 65 acres of vacant land to these already extensive citywide problems and compound the associated effects for communities in which closings occur, many of which are in already struggling areas of the city.

While closing schools is intended to help the SDP fill its budget gap, this strategy creates new issues for it as well. Maintaining a closed school can still cost the SDP as much as $5,000 a month. In light of its increased rate of closures, the SDP developed a formal policy in 2011 to dispose of its unused properties. In 2012, the SDP put 12 properties up for sale via brokers and successfully sold six, largely in stronger real estate markets. But with half going unsold, questions remain about what happens at those school sites and in those communities where buildings continue to sit vacant, and what will happen when a large number of newly closed schools comes on line. Again, this problem is not entirely unique to Philadelphia. An analysis of several cities nationwide that have recently closed numerous schools shows that similarly, only about half have been repurposed thus far.

The SDP recognizes that its current approach has only worked for more marketable properties and does not do enough to provide alternative solutions for closed schools in weaker markets or poor condition. Thus, a more nuanced approach is needed, and an opportunity exists for the SDP and the city to step up as leaders in regards to school disposition and reuse.

EXECUTIVE SUMMARY

EXECUTIVE SUMMARYPHILADELPHIA SCHOOL REUSE STUDIOEXECUTIVE SUMMARY

[ 33% ]of Philadelphians live within a half mile of a closed or closing school

[ 75% ]of areas around closed and closing schools lost population

between 1990 and 2010

BACKGROUND

2BACKGROUND

HOW WE GOT HERE.............................. 14 KEY PLAYERS........................................ 22LOCAL CONTEXT.................................... 24NATIONAL CONTEXT.............................. 32

Philadelphia’s closed and closing schools are not concentrated in a single section of the city, but spread across many different neighborhoods and areas. Some regions are affected more than others; North Central Philadelphia, for instance, is facing a particularly high number of closures. Still, school closures are a citywide issue, and the vacancy that will result is a citywide concern.

For some time, Philadelphia has struggled with an over-sized and often-disorganized inventory of vacant land, a good portion of it publicly-owned. The 101 acres occupied by closed and closing schools will only add to a problem that costs the City more than $20 million each year in maintenance and uncollected property taxes, and accounts for $3.6 billion in lost household wealth citywide.15 With local government agencies still reeling from cuts in state and federal aid to Philadelphia, and households across the country struggling to recoup wealth eliminated by the bursting of the mid-2000s real estate bubble, this significant addition to the city’s vacancy problem cannot be ignored.

Even more significant than the additional citywide vacancy costs may be the more localized effects that school closures will have in many of Philadelphia’s low- and moderate-income neighborhoods. Though a whole 33 percent of Philadelphians live within a half-mile of a closed or closing school, these Philadelphians are not entirely representative of the citywide population. As opponents of the closures have repeatedly pointed out, the population clustered around closing schools is less white than Philadelphia’s (71 percent versus 59 percent citywide), earns a lower average income ($26,000/year versus $37,000) and lives in significantly less-valuable housing ($138,000 median home value versus $157,000). Many of these neighborhoods are also struggling to cope with disproportionately high levels of vacancy and blight – already, 24 percent of the city’s existing vacant land lies within a half-mile of one or more of these school sites.16

The collective impact of these school closures not only increases the social, economic, and even mental burdens associated with vacancy and blight, but does so in a way that disproportionately impacts those Philadelphians already bearing the brunt of those costs. This unfortunate coincidence of social ills results not from any particular desire on the part of the SDP to injure the socioeconomic opportunities of low- and moderate-income Philadelphians, but rather from more than a half-century of demographic changes in Philadelphia that have not been reflected in the SDP’s management of its facilities.

Even as Philadelphia’s population began to stabilize after 1990 and finally increased between 2000-2010, many of the neighborhoods impacted by school closures continued to lose population: 24 of 32 school sites saw the population living within a half-mile decrease by as much as 35 percent between 1990-2010.17 This raw population decline had its most severe impact on neighborhood schools, causing a further drain on enrollment above and beyond the lure of charters and other alternative schooling options. With the SDP determined to minimize the number of “empty seats” in its buildings, these neighborhoods, many of their schools with capacity to spare since the late 60s-early 70s school-building boom, were unfortunately the natural targets for closures.

LOCAL CONTEXT

PHILADELPHIA SCHOOL REUSE STUDIO

[ 32 ]total closed and closingschools in Philadelphia HOW WERE CLOSURES DECIDED?

The Boston Consulting Group (BCG) was hired by the SDP to provide it with a process for evaluating school buildings for closure. BCG’s recommendations took the form of a two-tiered system, which allows for an initial survey of buildings based on 1) Academic Performance, 2) Current Building Condition, and 3) Building Utilization (with school academic performance weighted most heavily). A second round of analysis allows for a more nuanced study of each school which considers additional factors, including academic performance trends, safety of the school, neighborhood demographic trends, and the feasibility of student reassignment, among others. The ultimate goal of this analysis was to identify strong academic programs and place them in well-maintained buildings so that students receive a quality education in a safe school building.

POLICY

POLICY

CURRENT POLICY................................... 36BEST PRACTICES................................... 38 POLICY PROPOSAL................................. 40

3


PROPOSED POLICY: OrganizationFragmented local and state control over closed and closing school buildings - owned by the SDP under the SRC’s management, with the SRC’s members in turn appointed by the governor and mayor - will be of no help in moving these buildings to market and back into productive use. The agency most directly concerned with school reuse, the SDP, has minimal real estate expertise; on the other hand, more experienced agencies under mayoral or gubernatorial control have no immediate stake in the school reuse process, and would likely be reluctant to take on such a large and challenging project. As this report has argued, however, school reuse is, and should be, viewed as a citywide issue, affecting city agencies and their missions as much as local communities and their residents.

While the SDP has weathered its ongoing financial crisis, Mayor Nutter has showed an admirable willingness to stand behind the SDP in difficult times, providing a financial backstop that has at least kept the crisis from escalating even further. He has acknowledged that the SDP’s problems are inseparable from the City’s, a statement that most certainly applies to school closures.

Alone, the SDP simply lacks the necessary resources to successfully move all 32 closed and closing schools back into productive use. We therefore propose that Mayor Nutter create a Mayoral School Reuse Task Force, to be convened in the summer of 2013 and to continue its operations until all closed schools have been removed permanently from the SDP’s books.

Leadership of the Task Force would be shared by three co-chairs, all of whom would bring essential skills to bear on the challenge of school reuse. The Deputy Mayor for Planning and Economic Development’s citywide purview and cross-departmental mission, the Chief Education Officer’s high-level access to both the Mayor and SRC members, and the SDP’s intimate knowledge of all closed and closing school buildings will collectively guide and inform a holistic but flexible process, which moves each school through an analytic system and into the hands of an eventual buyer.

The Task Force’s size should be kept in check to ensure that it remains nimble, while ensuring that its membership includes actors with the skills, vision, and expertise necessary to ensure that all schools can be reused in some fashion. Between them, the Task Force’s members should possess sufficient knowledge - of local real estate markets and dynamics, project development financing (including public financing), regulatory compliance and real estate/land use law, and economic development - skill - in community and civic outreach, architecture and design, strategic visioning, and demographic and statistical analysis - and experience - building strong relationships with local communities and other stakeholders in Philadelphia’s education system, understanding the challenges associated with the sale of public properties such as school buildings, and working in Philadelphia neighborhoods of varying contexts and with different levels of capacity - to achieve their collective mission.

Everyday operations of the Task Force will be managed by not more than two or three appointed staff members, meaning that many Task Force members will be expected to contribute staff time to the school reuse project. The level of commitment required of different agencies will vary widely as schools move through the process, with different actors called upon at different times, depending on their respective skill sets.

Philadelphia City Planning Commission (PCPC) staff, for instance, may be seconded to the task force during site analysis and community engagement phases of the school reuse process because of their existing expertise in those Task Force functions. PRA and Philadelphia Industrial Development Corporation (PIDC) staff, on the other hand, would likely be more effective in outlining the challenges associated with the sale of public assets, and in managing that sales process once closed schools hit the market.

“Whether you’re a mayor who is in charge

of public schools or not, eventually, good

or bad, it’s going to end up at your door.”

Mayor Michael A NutterCEOs for Cities “Talent Dividend” Meeting,

Philadelphia, April 2013

[ ]


PROPOSED POLICY: FrameworkOur proposed policy framework sets clear guidelines and expectations, moving all closed and closing school buildings through an articulated process from closure, to sale, and eventual reuse. The policy flowchart on pages 46-47 presents a clear and complete picture of this process, from start to finish; a higher-level analysis follows below:

PHASE ONE:Decisions about school reuse should be informed by more than basic market factors. The work of the Task Force begins with collecting, collating and comparing qualitative and quantitative data about the 32 closed and closing schools, the neighborhoods which surround them, and the real estate markets in which they are embedded. This baseline knowledge will shape the treatment of each property as it moves forward through the disposition process.

PHASE TWO:Just as we recognize that real estate markets alone should not determine school reuse options, we acknowledge the importance of incorporating community input “upstream” in the disposition process, before any decisions have been made about a single one of the 32 sites. A program of structured community engagement, informed by the research performed in phase one, should not weigh specific land uses or design considerations against each other, but instead should seek to get at the deeply-held values which underlie and determine community opinion. These universal values can be incorporated into any RFPs which may later be issued to potential developers of reused school sites.

PHASE THREE:As this report has made clear, vacant schools are never identical and, in many cases, not even particularly similar. School buildings’ marketability will vary dramatically depending on location, building type and condition, and a plethora of other factors working with and against each other to shape the hyper-local real estate markets in which these schools are embedded.

To simplify an incredibly complex data set, closed and closing schools can be “bucketed” into strong, medium, and weak markets, based on information obtained during the first two phases of the disposition process.

Schools in strong markets are likely to be in good physical condition, and located near high-traffic transit nodes or major institutions or employers.

Schools in middle markets are likely to be more difficult to sell, suffering from a more remote location, a difficult building typology or condition, or some other mitigating factor.

Finally, schools in weak markets are likely to be located in low-income or low-capacity neighborhoods, which may be struggling already to cope with significant vacancy and blight.

Each of these “buckets” will require a different approach and level of intervention from the Task Force and other actors, shaping the work which will occur during the next disposition phase. This will significantly complicate the SDP’s current process, but we feel that such complication can be easily justified: while it works for the “hottest” properties or those with a single keen buyer, the current one-size-fits-all system is not sufficiently effective when it comes to schools in middling and weaker markets. At such sites, a new approach will be necessary.

ANALYZE

CATEGORIZE

ENGAGE

45POLICY

POLICY

PHASE FOUR:Once “bucketed,” the 32 schools would move forward along three distinct but articulated pathways, all terminating at the same point: successful and productive reuse.

Strong market sites would be marketed using a modified version of the SDP’s existing broker-sale process, incorporating market research and community input from the first two disposition phases into a more targeted RFP than has been issued in the past. The SDP has successfully disposed of some of its more marketable properties using this process, and its tight budget will benefit from the proceeds generated by any sales.

Middle and weak market sites would embark on a very different journey indeed. These sites would be handled by the Task Force – in other words, by the SDP acting in concert with other public agencies to marshal all the City’s resources behind their sale and reuse. First, title to these properties would be transferred from the SDP to the City, under a cost- and revenue-sharing agreement that would ensure the buildings are secured and maintained throughout the process. Next, the Task Force would perform a more detailed visioning exercise for each site, framing how each school proceeds through the rest of this phase.

Middle market sites are not impossible sales: in fact, with some public incentives attached, these buildings may attract significant buyer interest. The Task Force’s primary role at these sites would be to create bundled public financing packages designed to advance the vision set for each closed school; PRA, PIDC, or another agency (as appropriate) would

then move these properties through a modified version of their conventional RFQ/RFP process, with those creative public financing packages attached to the schools and available to any qualified bidder.

Weak market sites, on the other hand, may not attract any private developer attention, however creatively-financed the attached incentive packages may be. Barring significant changes to local real estate market dynamics, these sites’ only logical reuse is likely to be in the provision of civic or social services. A public developer, such as the Philadelphia Housing Authority, could incorporate one or more of the sites into its development plans if the sites were conveniently located; alternatively, a non-profit organization may be interested in purchasing the sites via dollar-sales, repurposing them into community-serving venues. This approach has already been pursued successfully at some existing closed school sites, with the former Roberto Clemente School in North Philadelphia most recently sold to the multi-service organization Esperanza for $1.

Other weak market sites, however, may simply be unusable in their present form. Building condition, site contamination, or other factors may render these facilities unviable for even non-market uses, requiring demolition and site-grading or even remediation. Though difficult to face, this situation may well be the reality at some or even many of these sites, and decisions regarding demolition are better made sooner rather than later, sparing neighboring communities the psychological and socioeconomic effects of long-term vacancy and the potential trauma associated with a fire, building collapse, or other tragedy. Demolition decisions should not be made lightly, nor should “demolition” always mark the end of the road for these properties. Some school sites are located in neighborhoods significantly lacking in open space, a deficiency which numerous Philadelphia planning documents have attempted to address. Demolition at these sites should be coupled

REUSE

49POLICY

POLICYwith redevelopment as community-serving park or recreation space, with stormwater management infrastructure and other “green” interventions incorporated when and where possible. Thus, even after the buildings themselves are long gone, these school sites can continue to serve and enrich the communities in which they have long been located.

Proceeds from the sale of middle and weak market sites would not revert wholly to the SDP, as some percentage of the eventual revenue from sales would be diverted to compensate the City and Task Force agencies for carrying costs associated with the additional attention these buildings received. In fact, maintenance costs, as many readers may have noted, will actually be a huge and heretofore unaddressed factor in Task Force operations. As implied above, these costs will not be new or in any way introduced by the more progressive approach to school disposition we are recommending; without the implementation of such an approach, in fact, the SDP is likely to shoulder these costs alone and over a much longer period of time, as many schools remain unsold and demolition difficult or even impossible to finance. Task Force operations, including even a small staff and of course any large-scale public engagement process, will also need to be budgeted for, a difficult ask from a school district already seeking significant financial assistance from City government.

Less obvious but potentially even more costly is the price that the City, SDP, and the neighbors of these closed and closing buildings - roughly one-third of all Philadelphians - would be forced to pay were even a fraction of these 32 buildings to remain vacant. Vacancy and blight already cost the City $20 million annually in maintenance costs, a major drain on tax revenues at a time when every penny counts. Paying for the costs associated with school closures is not optional; the only choice is between paying for school vacancy, and paying for a process that moves school buildings back into productive and often tax-paying reuse.

We propose that the City of Philadelphia conduct a dedicated bond issue - modeled on, but significantly smaller than, the Mayor John Street administration’s Neighborhood Transformation Initiative bond issue - to cover the cost of this approach to school disposition. A bond issue would not represent more debt for debt’s sake, but rather an investment in Philadelphia’s future, and a solid promise to

Philadelphians that their City is going to put its all into not just moving closed school sites to market, but moving them back into productive and community-serving, job-creating, quality-of-life-enriching uses.

No matter how much time and money is directed at the problem, however, some school sites may simply disappoint, failing to generate bids through either the strong or middle market processes. In such cases, Task Force members must acknowledge that neither their market research nor any “gut feeling” they may have about the building has been borne out by the market; properties which are not disposed of via either of the top two tiers of the proposed disposition process can and should move steadily through the lower tiers. In other words, properties which cannot be moved through traditional broker sale should migrate downwards into the Task Force sale process, and properties which cannot be sold with financial incentives attached should be considered weak market properties requiring public intervention, public redevelopment, or publicly-funded demolition. It is not necessarily important that the Task Force correctly bucket every school on its first try; what is important is that each school is followed all the way through the process, ensuring that none of the 32 are abandoned and allowed to serve as a large and lasting negative influence on nearby neighbors’ quality-of-life.

We recognize that these recommendations are ambitious, but ambition will be necessary if many of these properties are to become anything other than blighting influence on their surroundings. Philadelphia is faced with a huge challenge, but also with an opportunity to become a national leader in the area of closed school disposition and reuse, and to turn around a problem that could depress future investment in large swathes of the city’s neediest regions. Transforming this challenge into an opportunity is both an economic and a moral imperative, and we believe that the City of Philadelphia possesses the talent, forethought and capacity to emerge from the current school closure crisis stronger, more united, and more prosperous.

SITE REUSE

SITE REUSE

INTRODUCTION..................................... 52STRONG MARKET/BROKER................... 58FAIRHILL............................................... 60GERMANTOWN + FULTON..................... 66SHERIDAN WEST.................................. 72VAUX + REYNOLDS............................... 78WEAK MARKET/CIVIC USE................... 84

4

55SITE REUSE

SITE REUSE

38% OF SITES ARE IN TRANSITIONAL NEIGHBORHOODS

6% OF SITES ARE NEAR ANCHOR INSTITUTIONS OR UNIVERSITIES

10% SITES ARE REMOTE AND/OR DIFFICULT TO ACCESS

25% OF SITES ARE LOCATED ALONG COMMERCIAL CORRIDORS

19% OF SITES ARE LOCATED IN HIGH- VACANCY OR DISINVESTMENT ZONES

INITIAL FINDINGS:

In practice, a quantiative analysis tool akin to the model would be utilized during the initial site analysis phase to “bucket” properties according to their general marketability (at the points where the

icon appears in the policy framework on pages 46-47). At this point, sites would generally be identified as being marketable via the SDP’s broker sales process, or requiring further attention from the Task Force, in order to inform discussions during the community engagement process. The model would be utilized again, after sites were assigned to the Task Force, in order to distinguish those sites in middle market areas that could be marketed through PRA’s or PIDC’s RFP process, from those in the weakest markets that would be given to a non-profit or public entity for a non market-driven use.

In attempting to imagine what possibilities existed for some of the SDP’s most challenging assets, we ran several schools through a (significantly condensed) simulation of the Task Force site analysis and disposition process. Our model offered us a starting point for

“bucketing” the school sites, which we followed up with site visits. We visited the closed or closing schools over the course of several weeks, exploring their surroundings, and acquiring a more nuanced sense of each site’s neighborhood characteristics. Looking at sites in further detail enabled us to get a sense of those assets from which a school could draw in order to be positioned appropriately within the market. Assets could include strong community organizational capacity, proximity to a transit stop, and proximity to open space.

These visits provided an important check against an over-reliance on a well-constructed, but still-fallible model, to test its recommendations with reality and put them into a larger context.

CASE STUDY SELECTION FROM MODEL RESULTSIn order to maximize the value of this report to the City and SDP officials, as well as to community members and community groups hoping to stimulate the productive reuse of schools in their area, we focused our site case studies (detailed in the following pages) on schools from both the middle and weak market buckets, and from a wide variety of different neighborhood types. These site case studies should be considered illustrative rather than prescriptive or in any way restrictive: it is our deeply-held conviction that all closed schools should be reused in such a way as to balance market- and community-driven concerns while advancing citywide goals - not to serve the particular agenda of any group or lobby.

The important lesson of these case studies is not that these particular reuse strategies are possible, but that a very wide variety of reuses can and should be considered and pursued. Closed schools need not and should not sit vacant, acting as blighting influences on any of Philadelphia’s neighborhoods; reuse is possible, whatever the market, and should be pursued actively.

71

such as an arts based or educationally based community group may redevelop the Industrial Arts Building as part of their organizational mission. The Industrial Arts Building would be a space from which they could operate, while the remaining components could be rented and become a revenue stream for the organization. The redevelopment of Fulton ES as market rate apartments would serve a similar function of serving as a revenue stream for the organization. It is estimated to cost about $100 per square foot to renovate the Fulton apartments and $50 per square foot for the Industrial Arts Building. Funding could come from Market rate loans, TRF subsidized commercial loans, equity contribution and various grants for the arts. More details can be found in the appendix.

The adaptive reuse of Germantown HS and Fulton ES offers a unique opportunity to preserve two historic buildings, meet demonstrated community needs, and catalyze investment along a struggling commercial corridor. This proposal, while complicated, offers a unique combination of uses, and financing to create a new node of economic and residential activity along an historic corridor in Philadelphia.

By modifying the interiors of Germantown HS and Fulton ES their historic facades will remain a part of the historic nature of the Germantown neighborhood. Their proposed uses are a context specific opportunity which allow the schools to remain a focal point of the local community and serve those in the neighborhood for another century. Instead of sitting vacant and increasing blight along Germantown Avenue, their transformation into a residential and educational center will bring new residents to the corridor and increase the demand for locally serving services and retail.

By providing educational opportunities for local residents and seniors, the buildings will continue their mission of educating residents of Germantown; creating a well educated workforce who can be competitive in the 21st Century. And while lofty, the introduction of local art space will foster the growth of a creative class of residents who can bring new economic benefits to the community.

CONCLUSION

DEVELOPMENT STRUCTURE + FUNDING

Germantown HS and Fulton ES are in good condition, but due to the size of the existing buildings and associated renovation costs to convert classrooms into new uses, renovations would cost a fair amount. Further complicating the issue is the unique programing designed for the schools. For this program to work, it would take multiple developers with various skill sets and required financial returns to be successful.

The developers would have to create an ownership structure, such as an agreement of understanding and a master lease, which stated uniform development guidelines for the entire site and how the smaller components would be developed in conjunction with an over arching vision. This agreement would also stipulate the phasing of construction, and shared financial and management contributions for shared space. Lastly, due to the high cost of renovation and a relatively weak market, complex financing including public incentives and grants will be necessary for this redevelopment to occur.

Based on ballpark estimates, and a quote from a local developer, the Assisted Living Facility would cost $125 per square foot to renovate. This could be paid for mostly through a HUD Section 232 Loan, which is designed for the construction and renovation of nursing homes and assisted living facilities. Other funding would come from seeking historic tax credits for the main Germantown HS building and a necessary equity contribution.

The affordable senior center and the gym could be financed together as one project. The independent senior living section has an estimated renovation cost of $150 per square foot. This cost is higher due to poorer condition of the annex which has been closed for several years. The gym, in better shape and requiring less invasive remodeling could be renovated for $45 per square foot. Both of these components would be financed through 4% LIHTC and the necessary tax-exempt loan or bond. Gap funding could come from the Affordable Housing Program award from a Federal Home Loan Bank as well as through a deferred developers fee.

While it is conceivable that one developer would undertake the renovation of the prior senior related components, a separate entity,

SITE REUSE

SITE REUSE

NEXT STEPS

NEXT STEPS


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A SPECIAL THANKS TO OUR INSTRUCTOR, HARRIS STEINBERG, FOR HIS GUIDANCE, SUPPORT AND KNOWLEDGE OF PHILADELPHIA.

WE WOULD LIKE TO EXTEND A SINCERE THANKS TO THE FOLLOWING PEOPLE:

PAUL AYLESWORTH, Women’s Community Revitalization ProjectEMILY DOWDALL, The Pew Charitable Trusts

DAVID FECTEAU, Philadelphia City Planning CommissionSUSAN FETTERMAN, The School District of Philadelphia

DANIELLE FLOYD, The School District of PhiladelphiaKYLE FLOOD, Philadelphia Housing Authority BILL FOX, The School District of Philadelphia

LIZ GABOR, Philadelphia Industrial Development Corporation EVAN LITVIN, Bohlin Cywinski Jackson Architects

WARREN McMICHAEL, Brewerytown Sharswood Community Civic AssociationANDY SNOVER, First United Methodist Church of Germantown

SARAH THORP, The Philadelphia Water DepartmentMINDY WATTS, Interface Studio

SPECIAL THANKS TO THE FOLLOWING PEOPLE FOR IMAGE CONTRIBUTIONS:MATTHEW CHRISTOPHER

EMMA LEEBRADLEY MAULE

KATRINA OHSTROM

APPENDIX

APPENDIX

FAIRHILL CASE STUDY - EXHIBITS

Building Size (SF) 74,725 Building Size (SF) 17,280

Leasable space 59,780 Leasable space 13,824

Senior housing 39,245 Office Space 6,912

Recreation center 20,535 Front desk & waiting area 1,382

Development Costs Exam rooms 5,530

Acquisition Cost (1) $150,000 Development Costs

Construction Cost $9,714,250 Acquisition Cost (1) $50,000

Construction cost (per SF) (2) $130 Renovation cost $2,246,400

Parking Cost $76,500 Renovation cost (per SF) (2) $130

Parking Cost per space (3) $1,500 Parking Cost per space N/A

Number of spaces 51 Total soft costs $786,240

Total Soft Costs $3,452,488 Soft Costs (3) 35%

Soft Costs(4) 35% Start‐up costs $50,000

Total Development Cost $13,393,238 Total Development Cost $3,132,640

Suggested Development Financing Suggested Development Financing

Section 232 Loan (5) $12,053,914 Standard Bank Loan $2,192,848

Developer Equity $1,000,000 Developer Equity $939,792

Project Equity ‐ LIHTC (6) $9,375,266 Total $3,132,640

Total $22,429,180 Annual Operating Costs

Annual Operating Costs Staff personnel costs ($709,171)

Annual Maintenance Costs ($60,858) Staff: Patient Visits (4) 1:1,000

Interest Payments @ 4% ($482,157) Personnel costs for 1 staff member (5) ($76,000)

Total Operating Costs ($543,015) Total staff 31

Annual Revenue Paid staff 9

Rental Revenue @ 90% Avg. Occupancy $173,880 Students 22

Room rent (monthly) (7) $350 Equipment (6) ($88,335)

Number of units 46 Supplies (7) ($186,624)

Annual LIHTC Subsidy $937,527 Annual maintenance cost ($31,326)

Recreation rental revenue $41,070 Interest Payments @ 4% ($65,785)

Rent (annual) (8) $2 Total Operating Costs ($1,081,242)

Total Revenue $1,152,477 Annual Revenue

Net Operating Income $609,462 Patient Revenue $2,021,760

Visit cost per patient (8) $65

Number of patient visits (annually) 31,104

Student Tuition Revenue $21,773

Student tuition (1 credit) (9) $1,000

Number of tuition‐paying students 22

Total Revenue $2,043,533

Net Operating Income $962,290

Senior Housing Senior Medical Clinic

PRO-FORMAS FOR PROPOSED SITE USES


97


APPENDIX

APPENDIX


Use Type Commercial Development Size (SF) 78,229Building Size (SF) 35,000 Retention Basin 52,560Development Cost Structure Groundfloor of Senior Housing Development 25,669Acquisition Cost (1) $1.00 Development Cost StructureConstruction cost $4,900,000 Acquisition Cost $1

Cost per SF (2) $140 Basin Renovation Cost (total) $72,000Parking Cost per space N/A Cost per SF (1) $4.50Total Soft Costs $1,715,000 SF of retention wall to be demolished 16,000

Soft Costs(3) 35% Sports Field Capital Costs (2) $425,000Total Development Cost $6,615,001 Site grading $100,000Suggested Development Financing Stormwater management infrastructure $300,000LISC Construction Loan (4) $2,646,000 Equipment costs $25,000Standard Bank Loan $2,969,001 Total Soft Costs $173,950Capital Development Grant (5) $1,000,000 Soft costs (3) 35%Total $6,615,001 Landscape Costs $1,170,000Annual Operating Costs Cost per SF (4) $13Annual Training Costs (6) ($500,000) Total Development Cost $670,951Annual Maintenance Costs (7) ($49,000) Suggested Development FinancingInterest Payments @ 6% (4) ($158,760) Stormwater Management Incentive Program Grant $120,661Total Operating Costs ($707,760) US Soccer Foundation ‐ Field Installation (6) $200,000Annual Revenue DCNR (7) $300,000Adult Reintegration of Ex‐Offender Program (RExO)), annual allotment (8) $430,769 Capital Development Grant (8) $50,290Program Grant (private funding) (9) $276,991 Total Financing Allocation $670,951Total Revenue $707,760 Annual Operating CostsNet Operating Income $1,415,520 Rental Costs ($51,338)

Rent (Annual) (9) $2Field maintenance & operation (annual) (10) ($10,000)Total Operating Costs ($61,338)Annual Rental RevenueAmenity Usage Fee $12,000US Soccer Foundation ‐ Program Grant (6) $50,000Vendor Space Rental Fee $5,000Total Revenue $67,000Net Operating Income $5,662

Recreation FacilitiesWorkforce Training Center

99


APPENDIX

APPENDIX

Senior Housing

(8) Loopnet, Fairhill neighborhood, Retail and Office asking rents.Senior Housing Clinic

Workforce Training Center

(2) Costworks, Vocational School, 2 stories, decorative concrete block/bearing walls(3) Gross estimation

(5) Possible to finance with grant from foundations such as William Penn Foundation

Recreation Facilities

(6) Developer has option to pursue 9% Low Income Housing Tax Credits (LIHTC), which could cover anywhere between 70‐90% of the development costs.

(1) Based on sales of previously sold buildings in eastern North Philadelphia, http://planphilly.com/articles/2012/02/15/district‐sets‐65‐million‐sale‐(2) CostWorks estimate for assisted living building development

(3) Litman, Todd. Victoria Transport Policy Institute Parking Calculator. January 2012.(4) Gross estimation(5) Covers up to 90% of construction and/or renovation costs. Department of Housing and Urban Development, http://portal.hud.gov/hudportal/documents/huddoc?id=FR5465F02FHA23277FR55120.pdf.

(7) Based on 40% AMI LIHTC target

(1) Based on sales of previously sold buildings in eastern North Philadelphia, http://planphilly.com/articles/2012/02/15/district‐sets‐65‐million‐sale‐(2) Gross estimation

(4) Based on existing clinics with ratios of 1,500 patient visits per 1.5 staff. Chenoweth, David H. and Judy Garrett. "Cost‐Effectiveness Analysis of a Worksite Clinic." AAOHN Journal. 2006: 54, 2. (5) Includes one full‐time occupational health nurse, one administrative assistant, and one part‐time clinician. Chenoweth, David H. and Judy Garrett. "Cost‐Effectiveness Analysis of a Worksite Clinic." AAOHN Journal. 2006: 54, 2.

(8) Based on average patient cost at a community clinic. Chenoweth, David H. and Judy Garrett. "Cost‐Effectiveness Analysis of a Worksite Clinic." AAOHN Journal. 2006: 54, 2. (9) Gross estimation

(3) Gross estimation

(1) Due to the publicly‐serving nature of the proposed facility, and the likelihood that a non‐profit will operate the site, it is proposed that the School District sell the underlying land for nominal value.

(4) Construction loan up to $3M at 6% fixed. Local Initiatives Support Corporation. Construction Loan Financing. http://www.lisc.org/docs/brochures/financial/2013_lending_term_sheet.pdf.

(6) Includes equipment leasing, office furniture leasing, and depreciation costs. Chenoweth, David H. and Judy Garrett. "Cost‐Effectiveness Analysis of a Worksite Clinic." AAOHN Journal. 2006: 54, 2.

(10) Includes one‐time rentals of auditorium, fields, and indoor recreation space. Montgomery County, Maryland. "A Review of Benefits and Issues Associated with Natural Grass and Artificial Turf Rectangular Stadium Fields." September 15, 2011.

(9) Loopnet, Fairhill neighborhood, Retail and Office asking rents.

Sources for Pro Forma Inputs

(3) Gross estimation(4) Gross estimation(5) Philadelphia Water Department and the Philadelphia Industrial Development Corporation give $100,000 per acre for Stormwater Management Incentive Program Grants. http://www.phillywatersheds.org/what_were_doing/SMIP_Grant.(6) US Soccer Foundation. "US Soccer Foundation Guide to Grants." http://www.ussoccerfoundation.org/our‐grants/.

(7) Pennsylvania Department of Conservation and Natural Resources.http://www.dcnr.state.pa.us/brc/grants/index.aspx.(8) Charitable donation from foundation or fundraising campaign

(6) NFTE domestic programs estimate $500,000 as the average annual operating cost for domestic programs. Network for Teaching Entrepeneurship (NFTE), http://www.nfte.com/get‐involved/start/become‐a‐partner.(7) Maintenance per SF: http://www.fmlink.com/article.cgi?type=Benchmarking&title=Benchmarking%20Your%20Maintenance%20Costs&pub=Facility%20Issues&id=40555&m

(8) Department of Labor funding award 2013, http://www.dol.gov/dol/grants/SGA‐DFA‐PY‐12‐06.pdf(9) Potential sources of funding include venture capitalist funding (following the model of the existing prisoner re‐entry entrepreneurship program, Defy

(1) Commonwealth of Virginia, Department of Transportation, 2012. http://www.vdot.virginia.gov/projects/resources/noisewalls/Accounting_for_demolition_cost_to_barrier_reasonable_calculation_.pdf.

(2) University of California, Davis. "Campus Rec puts in first artificial turf." August 17, 2012. http://dateline.ucdavis.edu/dl_detail.lasso?id=14135.

(7) Supplies include those needed for vaccines, allergy, and immunization shots. Chenoweth, David H. and Judy Garrett. "Cost‐Effectiveness Analysis of a Worksite Clinic." AAOHN Journal. 2006: 54, 2.

SOURCES AND ASSUMPTIONS IN PRO-FORMA MODELS

GERMANTOWN + FULTON CASE STUDY - EXHIBITS



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APPENDIX

APPENDIX




MARKET ANALYSIS


GERMANTOWN AVE. DEMOGRAPHICS

Source: ESRI, Business Analyst Online,U.S. Census 2012



MARKET ANALYSIS


GERMANTOWN DEMOGRAPHICS - SENIOR POPULATION

SENIOR HOUSING - GAP ANALYSIS

Source: ESRI, Business Analyst Online,U.S. Census 2012

Source: ESRI, Business Analyst Online,U.S. Census 2012 & (Dept. of Health and Human Services, Administration on Aging)

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APPENDIX

APPENDIX

OCCUPANCY OF SENIOR FACILITIES WITHIN 6 MILES OF GERMANTOWN HIGH SCHOOL

Source: Genworth Financial, Cost of Long Term Care Across the Nation< https://www.genworth.com/corporate/about-genworth/industry-expertise/cost-of-care.html>

SHERIDAN WEST CASE STUDY - EXHIBITS



Approximate Costs / Sq Ft500,000$ Acquisition

Program of Uses 325$ per sf hard costs‐ Food / Kitchen42000 Total sf Existing Building 300$ per sf hard costs‐ Aquaponics10500 Food / Kitchen Use 150$ per sf hard costs‐ Office/ Other7600 Aquaponics 150$ per sf hard costs‐ New Addition

22700 Office / Other 50$ per sf Landscaping + Green Roof1200 New Addition‐ Scullery + Elevator

10000 Landscaping + Green Roof500,000$ Hard Costs acquisition

3,412,500$ Hard Costs Food/ KitchenUses per sf 2,280,000$ Hard Costs AquaponicsHard Costs 10,277,500$ 244.70$ 3,405,000$ Hard Costs Office / OtherA/E 822,200$ 20$ 180,000$ Hard Costs New AdditionOrg/Prof 840,000$ 20$ 500,000$ Hard Costs LandscapingFinancing/settleme 1,470,000$ 35$ 10,277,500$ Hard Costs TotalCarrying 210,000$ 5$ 30% HC Soft costsDev Fees 0 ‐$ 10% HC 5% SC ContingencyContingency 1,184,360$ 28$

14,804,060$ 352.48$ Annual Operating CostsAnnual Energy and Water Costs (600,000)$ Annual Maintenance Costs (97,775)$

Sources per sf Interest Payments @ 6% (281,074)$ Federal Historic 1,455,600$ 34.66$ State Historic 1,819,500$ 43.32$ Total Operating Costs (978,849)$ NMTC 1,644,400$ 39.15$ Annual RevenueTRF / LISC 2,500,000$ 59.52$ Rent: Café + Education 150,000$ RACP 200,000$ 4.76$ Rent: Aquaponics 228,000$ PWD / PIDC 500,000$ 11.90$ Rent: Kombucha 105,000$ Pennsylvania DCED 1,000,000$ 23.81$ Rent: Distillery 135,000$ Other Grants 1,000,000$ 23.81$ Rent: Kitchen 500,000$ Gap (Equity) 4,684,560$ 111.54$ Rent: Offices 120,000$

14,804,060$ Total Revenue 1,238,000$ Net Operating Income (NOI) 259,151$ Value (NOI/Cap @ 10%) 2,591,514$

VAUX + REYNOLDS CASE STUDY - EXHIBITS



DEVELOPMENT PHASE I DEVELOPMENT PHASE II (Rental)

Building Size (SF) 79,100 Building Size (SF) 133,450

Retail Space 6,750 Retail Space 0

Residential Units 49 Residential Units 86

Outdoor Recreation Space 16,000 Outdoor Recreation Space 24,250

Development Costs Development Costs

Acquisition Cost (1) $1 Acquisition Cost (1) $1

Construction Cost $12,466,000 Construction Cost $16,256,250

Rehab / Construction cost (per SF) $160 / $140 Rehab / Construction cost (per SF) $50 / $130

Parking / Site Improvement Cost $832,500 Parking / Site Improvement Cost $1,008,250

Parking Cost per space N/A Parking Cost per space $3,150

Number of spaces 0 Number of spaces 30

Total Soft Costs $1,869,900 Total Soft Costs $2,438,438

Soft Costs 15% Soft Costs 15%

Total Development Cost $15,168,401 Total Development Cost $19,702,939

Suggested Development Financing Suggested Development Financing

Conventional Loan, City Funding (CDBG, HOME) $3,819,095 Conventional Loan $3,860,362

Developer Equity + Misc Grants $1,096,000 Developer Equity, Grants, City Funding, PHA $2,415,095

Project Equity -‐ LIHTC $10,253,880.81 Project Equity -‐ LIHTC $13,428,057.06

Total $15,168,401 Total $19,702,939

Annual Operating Costs Annual Operating Costs

Annual Maintenance Costs ($157,437) Annual Maintenance Costs ($460,782)

Interest Payments @ 4% ($100,000) Interest Payments @ 4% ($100,000)

Total Operating Costs ($257,437) Total Operating Costs ($560,782)

Annual Revenue Annual Revenue

Rental Revenue @ 90% Avg. Occupancy $449,820 Rental Revenue @ 90% Avg. Occupancy $1,316,520

Residential Rental Income (Monthly/Unit) $850 Residential Rental Income (Monthly/Unit) $1,150

Number of units 49 Number of units 106

Annual LIHTC Subsidy $1,025,388 Annual LIHTC Subsidy $1,342,806

Retail Revenue $16,875 Retail Revenue $0

Total Revenue $1,492,083 Total Revenue $2,659,326

Net Operating Income $1,234,646 Net Operating Income $2,098,544

END NOTES

END NOTES

END NOTES


EXECUTIVE SUMMARY

Photo credits: Hidden City, Philadelphia Public School Notebook. Other photos and/or graphics by Studio members.

BACKGROUND

1: Bloomberg News (22 Oct 2012). “Philadelphia Schools Lure Buyers as Budget Erodes.”2: McKee, Guian (2008). The Problem of Jobs: Liberalism, Race & Deindustrialization in Philadelphia. Chicago: UChigago Press.3: Ibid.4: School District of Philadelphia (1967). Proposed Capital Program: 1967-1972. Philadelphia: Board of Education.5: Ibid.6: Philadelphia School District & Boston Consulting Group (2012). “Facilities Master Plan.”7: Committee of Seventy (1981). “No School Today.”8: Mezzacappa, Dale (13 Aug 2000). “A Superintendent Who Stood By Principles David Hornbeck’s Tenure At The Helm Of Philadelphia’s School System Was Not Short On Controversy. As He Prepares To Leave, Critics And Fans Agree: He Fought Hard.” Philadelphia Inquirer. 9: Snyder, Susan & Schogal, Mark (2001 Dec 22). “City Agrees to School Takeover Schweiker, Street ready for a full partnership.” Philadelphia Inquirer.10: Pennsylvania School Boards Association (2009). “Pennsylvania Charter Schools: A Look at School & Student Performance.”11: Graham, Kristen & Graham, Troy (30 April 2013). “Philadelphia School District to seek $60 million.” Philadelphia Inquirer.12: Herold, Benjamin (2 Nov 2011). “District Recommends Just 9 Schools Be Closed.” Philadelphia Public School Notebook.13: Philadelphia School District & Boston Consulting Group (2012). “Facilities Master Plan.”14. Ibid.15: Econsult Corporation (Nov 2010). “Vacant Land Management in Philadelphia: The Costs of the Current System & the Benefits of Reform.”16: Independent research using ESRI ArcGIS software and Shapefiles provided by PCPC, PRA & PASDA.17: US Census Bureau, 1990-2010.18: Personal interviews with the SDP Department of Real Property Management; Pew Charitable Trusts (11 Feb 2013). “Shuttered

Public Schools: The Struggle to Bring Old Buildings New Life.”19: Pew Charitable Trusts (11 Feb 2013). “Shuttered Public Schools: The Struggle to Bring Old Buildings New Life.”20: Ibid.

Photo credits: Philadelphia Public School Notebook, Philadelphia Inquirer, DeWitt Mall, SWD Architects, Results Gym. Other photos and/or graphics by Studio members.

POLICY:1: School District of Philadelphia (2011). “Adaptive Sale & Reuse Policy.”2: Ibid.3: Personal interviews with the Philadelphia Industrial Development Corporation; Defense Base Closure & Realignment Commission (2013). Available online at www.brac.gov.4: Kansas City Public Schools (2012). “KCPS Repurposing Initiative.”5: School Redevelopment Initiative (2012). “Closing Schools, Opening Opportunities.” Philadelphia: Fels Institute of Government, University of Pennsylvania.

Photo credits: Philadelphia Public School Notebook, PlanPhilly, Robert AM Stern Architects, Pew Charitable Trusts, Fels Institute of Government, PMC Property Group, Hawthorne Lofts. Other photos and/or graphics by Studio members.

REUSE:

FAIRHILL:1: 2009 Fall Studio Team. “Leveraging a Community’s Historic Assets to Meet its Contemporary Needs: A Preservation Plan for Fairhill.” University of Pennsylvania. 2009. http://www.design.upenn.edu/historic-preservation/2009-west-fairhill-neighborhood-philadelphia. 2: Ibid.3: Ibid.4: Ibid.5: Ibid. 6: Ibid.7: U.S. Census, 2010.8: Ibid.9: Ibid.

113

10: Ibid.11: Ibid.12: Ibid.13: Ibid.14:Office for Community Development. “Lehigh Viaduct: New Success.” May 19, 2011. http://www.officeforcommunitydevelopment.org/news.php?news=Lehigh-Viaduct%3A-New-Success&news_id=4.15: U.S. Census, 2010.16: Interface Studio LLC on behalf of the Philadelphia City Planning Commission, Philadelphia Department of Commerce, and Community Partners. “The Economic Development Strategic Plan for Germantown and Lehigh.” July 2012.17: Ibid. 18: Mosaic Development Partners. http://www.mosaicdp.com/projects.html. 19: Reis, Inc. “Property Report: Submarket, North/Frankford, Apartment.” February 2013. 20: Chenoweth, David H. and Judy Garrett. “Cost-Effectiveness Analysis of a Worksite Clinic.” AAOHN Journal. 2006: 54, 2. At p 86.21: Cnaan, Ram A and Beverly D. Frazier. “Assessing Philadelphia’s Social Service Capacity for Ex-Prisoner Re-Entry.” University of Pennsylvania School of Social Policy and Practice. November 1, 2007.22: Charleston, Cortney. “The Seedlings of Second Changes.” University of Pennsylvania, undergraduate thesis paper.23: Conversation with Sarah Thorp, Philadelphia Water Department on April 4, 2013.24: PlanPhilly. “Green2015.” http://planphilly.com/green2015.25: Philadelphia Water Department. http://www.phillywatersheds.org/what_were_doing/documents_and_data/cso_long_term_control_plan.

Photo credits: Photos and/or graphics by Studio members.

SHERIDAN WEST:1: Sources consulted include…Cassidy, Arly & Pattenson, Bowen (2008). “The Planner’s Guide to the Urban Food System.” Los Angeles: University of Southern California, Center for Sustainable Cities.Kromer, John (2009). Fixing Broken Cities: The Implementation of Urban Development Strategies. New York: Routledge.2: Precedent studies include…“The Plant,” Chicago, IL.

END NOTES“Brooklyn Spirits,” New York, NY.“Middle West Spirits,” Columbus, OH.“Culinary Enterprise Center,” Philadelphia, PA.…and others. Thank you to all who spoke with us and responded to our initial inquiries.

Photo credits: Middle West Spirits, The Enterprise Center, The Plant. Other photos and/or graphics by studio members.

VAUX/REYNOLDS:1: Sources consulted include…Kromer, John (2009). Fixing Broken Cities: The Implementation of Urban Development Strategies. New York: Routledge.Philadelphia City Planning Commission (Apr 2008). “Sharswood: A Report on the AICP Community Planning Workshop for the Sharswood Neighborhood of Philadlephia.”Ryan, Brent D (2012). Design After Decline: How America Rebuilds Shrinking Cities. Philadelphia: University of Pennsylvania Press.

Photo credits: Photos and/or graphics by Studio members.

NEXT STEPS:

Photo credits: Philadelphia Public School Notebook, Philadelphia Inquirer, Hidden City. Other photos and/or graphics by Studio members.

END NOTES

New Life for Old Schools

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