School-building leases fall short

When Barbara Nelson walks through her old high school, the Queen Anne High School class of 1958 graduate is wistful about her "magical time" there.

Nelson's alma mater is now the Queen Anne High School Apartments, which opened in 1987, six years after the Seattle School Board closed the school, citing declining enrollment and the building's deteriorating condition.

The five-story building offers renters sweeping views of the city, 48 floor plans and original stairwells so airy and ample you can imagine students clattering down them.

Once again, Seattle Public Schools administrators are weighing the short- and long-term consequences of shutting schools, just one potential cost-cutting option to help close the gap between rising expenses and revenues.

The Queen Anne building's viability shows that closing a school doesn't always mean the destruction of a beloved landmark. But it also demonstrates that short of selling district property — which board members say is off the table — leasing former schools has been far from lucrative for the district.

Monthly rents in the stately old building range from about $900 to $2,600. The building's property-management firm, Lorig Associates LLC, has a 50-year lease from the district with two 20-year renewal options.

The district, which gives the developer rent credits for building renovations, expects to receive $87,000 this year, or an average $626 per unit.

Through the mid-1980s, the school district gave developers long-term leases on closed-school sites like the Lake City Professional Center (Lake City School), Oak Tree Shopping Plaza (Oak Lake School) and Jefferson Square (Jefferson School).

The lease terms of these three properties range from 50 years to 99 years and together generate less than $500,000 a year.

The biggest cash cow for the district from its properties is Memorial Stadium's parking lot, estimated to provide $684,000 this year.

Altogether, long-term property leases bring in only about $1.2 million annually. School Board member Irene Stewart describes the district's long-term lease revenue as "a pittance."

The district is reviewing all its leases, spokeswoman Patti Spencer-Watkins said.

Stewart thinks the district should renegotiate the leases and that "we need to think about using our assets creatively to support our students."

For example, she asks, could the district's central kitchen be leased during its off-hours to private commercial users? Or could a developer be recruited, Superintendent Raj Manhas wonders, to convert some buildings to dormitories for new teachers?

Private schools could be the most obvious potential long-term tenants or buyers of closed public schools, yet the district has been reluctant to provide buildings for its competition. Of the 14 or so Seattle public-school sites sold since the late 1970s, private schools own only two.

In 1968, the district mothballed Summit School on First Hill. Nine years later, the school was sold for $214,000 to a developer, who had plans to turn the building into offices but then resold it for more than $1.4 million. In 1980, Summit reopened its doors — but as the private Northwest School, which has taken pains to maintain and preserve the historic building.

That same year, private Lakeside School paid $1 million more than the appraised value for the closed Haller Lake School and its five-acre campus. In 1999, Lakeside cleared the site and constructed a new building.

Private schools won't get any buildings or leases from the current Seattle School Board, according to board member Dick Lilly.

Other potential tenants — commercial developers and nonprofits — tend to seek discounted long-term leases, partly because of the cost of converting a school building.

The Queen Anne High building, which is on the National Register of Historic Places, was a tricky project, said developer Bruce Lorig.

In addition to the school's exterior brick wall, each classroom had interior brick walls, a fireproofing design. Redevelopment took about 14 months and cost $9 million, he said.

Lorig said the lease rates for the old high school were fair in the mid-1980s, but he acknowledges that today a fair rate would be double what the partnership is paying. The rate schedule, which is tied to a percentage of rental income, changes in 2007. The building will be appraised and the lease rate will be tied to a new appraised value, he said. Lorig expects the district to get significantly higher payments.

One of the consequences of the 1981 closures is that Queen Anne and Magnolia residents are without a neighborhood high school.

Yet it's improbable that the district will ever reopen Queen Anne High: Hay Elementary now covers its old athletic field, and the building wouldn't meet today's stricter seismic codes for schools. Lorig expects to keep the lease through 2076.

Nelson, president of the Queen Anne High School Alumni Association, would rather have a high school in the imposing structure but, at the least, she urged, "don't tear these great old buildings down."

Visitors now drive up to a grand circular driveway and fountain where the auditorium once stood.

Classrooms have been transformed into studio, one-bedroom and two-bedroom units. The most popular ones have the original blackboards and hardwood floors.

Sanjay Bhatt: 206-464-3103 or sbhatt@seattletimes.com