Nutter ends fight against Council schools plan

FILE PHOTO After months of debate, Mayor Nutter yesterday signed a bill allowing the school district to sell its unused buildings to help close its $304 million budget deficit.
FILE PHOTO After months of debate, Mayor Nutter yesterday signed a bill allowing the school district to sell its unused buildings to help close its $304 million budget deficit.
Posted: November 01, 2013

AFTER MORE than two months of resisting, Mayor Nutter has given in to a City Council plan to buy and resell $50 million worth of empty school buildings to aid the cash-strapped School District of Philadelphia - sort of.

Nutter yesterday signed a bill, which Council had approved unanimously, that allows the administration to send the district $50 million for the schools, but that transfer won't happen yet. Instead, Nutter also announced an agreement with Council President Darrell Clarke, who championed the buildings plan, in which the city will only buy the schools if the district can't sell them first.

Under the agreement, the city would immediately advance the district a $60 million payment that was already planned for this spring, solving a cash-flow emergency that led Superintendent William Hite to announce in August that a bare minimum of $50 million was needed to open schools regularly.

City agencies will now work with the district to sell the buildings throughout the year. As sales occur, the district pockets the money.

If the sales don't add up to $61 million by the end of the school year - a total that includes the $50 million Nutter and Clarke had pledged in response to Hite's request, plus $11 million that the School Reform Commission had already budgeted for building sales - the city would send the district however much more is needed to reach that total.

With Clarke and nine other members of Council standing behind him, Nutter yesterday called the agreement a compromise. But the new plan involves no elements of the mayor's original proposal and provides no recurring funding for the district and its $304 million structural deficit.

"There's always - with big ideas, big issues - a lot of twists and turns, a lot of complications," said Nutter. "We're here in this moment, and this is the best possible thing that we could be doing."

Clarke said he was ready to get past the dispute.

"I'm glad to reach an agreement so we can proceed, because I think all of us would agree . . . that we had been doing this back and forth for far too long," Clarke said.

Nutter's original plan to find the $50 million asked Council to pass a permanent extension of a temporary sales-tax increase (to 8 percent) and borrow $50 million against its future revenue.

No Council member ever introduced the tax legislation on his behalf. That left Nutter with few options but to go along with some version of the Clarke plan, which the mayor and his deputies have criticized from numerous angles.

Nutter had expressed doubt that the properties would produce a $50 million return, pointing to other cities where reselling old school buildings proved difficult. Asked why he changed his mind, Nutter noted that potential buyers have expressed interest in the buildings, including offers to buy the entire portfolio.

"The landscape has changed to some extent," he said.

Nutter had also feared that ignoring the sales-tax extension, which was orchestrated by Gov. Corbett and authorized by the GOP-controlled General Assembly, would hurt the city's credibility when it asks for other measures in Harrisburg.

He may have been right on that point, said state House Republican spokesman Steve Miskin.

"The mayor was asking us to pass this. We did. Superintendent Hite was asking us to pass this. We did," Miskin said. "And now the city is saying no? . . . Any time Philadelphia comes with their hands out, this is going to be remembered."

It's unclear whether the city will officially acquire any of the school properties before they are sold, as Council had originally proposed. Any buildings sold this year will go right from the district to the buyers. But if those sales don't make the $61 million threshold and the city must pay the district by the end of the school year, officials will have to figure out whether that transaction will also transfer the unsold buildings to the city.

"We're hoping we don't get to that point, but if we do, we'll figure out the logistics at that point," Finance Director Rob Dubow wrote in an email.

School district spokesman Fernando Gallard said the agreement satisfies the district's immediate cash-flow problems.

"We are extremely grateful, because with this announcement, the city, particularly the mayor and City Council, is coming together to move forward with funding for the schools," he said.

On Twitter: @SeanWalshDN

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