Central-Office Real Estate

Can you upgrade your headquarters without looking self-serving? by Priscilla Pardini
When he outlined his goals for the Harford County, Md., Public Schools in 1970, incoming superintendent A. A. Roberty declared that replacing the district’s 90-year-old administration building was his No. 1 priority. More than 30 years and three superintendents later, with the building pretty much falling down around them, school officials are still trying to get the job done.

Meanwhile, in Charleston, S.C., school officials were able to upgrade their administrative headquarters 10 years ago, moving from a Civil War-era fort infested with rodents to a new, three-story, $12 million building downtown. In addition to providing employees with a decent place to work, the decision also saved the district money. Nevertheless, the move proved controversial, and the new building was quickly dubbed the “Taj Mahal.”

The situation in the Green Bay, Wis., Public Schools is admittedly less extreme. Its central-office building is only 70 years old. Yet the debate over moving ahead with a short and modest list of improvements—repairing the elevator and replacing a sound system and set of decrepit chairs in the boardroom—droned on for more than a year.

Saddled with aging schools, overcrowded classrooms, squeezed budgets and mounting pressure to meet academic standards, school officials in districts across the country say replacing or upgrading central-office facilities—never a high priority—has become increasingly difficult. “Administrators have become tainted,” says Phil Geiger, president of the Eastridge Companies, a Phoenix-based real estate development company that works with school districts and colleges. “They’re viewed as an unnecessary evil, something we want fewer of, and none at all if we can help it.”

Geiger, a former superintendent in New Jersey, also points out that even though more and more states are funding school construction, most won’t fund or reimburse districts for non-instructional buildings such as central administrative headquarters. That puts the burden for funding such projects on local taxpayers, a scenario school officials most often choose not to pursue.

Politically Unpopular
David Jennings, chief executive officer of the Minneapolis Public Schools, can’t even remember the last time the subject came up in his district—despite the fact that its central offices are located in a square brick building that formerly housed a light bulb factory where employees still trudge up and down clanky metal industrial staircases. “I’m certain, given the age of many of the facilities in urban settings that there are some horror stories out there,” says Jennings. “But ours is not at the point where it’s dangerous. Ours is more like amusing. We kind of chuckle about it.”

Jennings, a former state legislator who came to public school administration after working in the food service industry and as CEO of the Greater Minneapolis Chamber of Commerce, says school officials view the issue of administrative office space differently than those in the corporate sector. “In the business world, a company’s headquarters can make an important statement about the company,” says Jennings. “But given the resources available in the public schools, where I’m sure people would like to have a nice space to work in, the fact is, it’s not a high priority and often never gets done.”

In Green Bay, Superintendent Daniel Nerad says board members had “extensive discussions” before making any improvements to the central-office building, which once housed a vocational-technical school. “No one thinks twice when corporations spend millions to renovate their facilities,” says Nerad, whose district serves more than 20,000 students. “But when you’re using taxpayer money, you think long and hard about how you’re spending it.”

In the end, Green Bay’s board members opted for only those improvements deemed absolutely necessary. “We have these long lists of school projects that need to be done, and that’s where we’ve focused,” he says.

Indeed, most districts do exactly what Minneapolis and Green Bay have done—allocate virtually all capital spending directly to schools. Since 1990, Minneapolis has spent $236 million to build 18 new schools and $92 million on major renovations at 26 others. Another $280 million was spent on deferred maintenance projects, such as roof replacements and sprinkler system upgrades throughout the district. By comparison, only $3 million was spent on the former light bulb factory, officially known as the Educational Service Center, all of which was earmarked to improve handicapped accessibility or meet building code requirements.

That comes as no surprise to Michael Hall, chief marketing officer for Fanning/Howey Associates, an architectural, engineering and planning firm in Celina, Ohio, that works exclusively on school projects. “Everyone is very sensitive to voter and taxpayer backlash,” says Hall. “And with the [U.S. Government Accounting Office] talking about the need for $112 billion to fix schools in this country, spending money on administrative facilities is politically a very bad move.”

Joe Agron, editor-in-chief of American School & University, a trade magazine that tracks educational facilities, offers another reason why central offices are usually at the bottom of most capital projects lists. “People who enter education have a special drive,” he says, “and for the good of the kids are willing to put up with a lot.”

Quality Space
There is no denying the critical need that exists in many communities to upgrade administrative office space. Some central-office buildings don’t meet municipal health and safety codes or comply with the Americans with Disabilities Act. Many older buildings lack the infrastructure necessary to support modern technology. And in districts with increasing enrollment, lack of space has forced officials to house administrators in scattered locations, a move that can be both professionally and economically inefficient.

Central-office facilities that are clearly outdated or in disrepair also can send the wrong message, says Agron. “It leads potential job candidates to ask, ‘How dedicated is this district to the community if it is allowing its leaders to work in a facility that is so decrepit?’”

Judy Marks, associate director of the federally funded National Clearinghouse for Educational Facilities, points out that school administrators are professionals doing important work that contributes to the welfare of children. “They have needs for appropriate work space just like anyone else,” she says. “Why should they have to put up with leaking roofs, inadequate bathroom facilities, outdated furniture, no air conditioning and wiring that doesn’t accommodate technology?”

Geiger, a leading advocate of privatizing school services during his superintendent days, has seen the problems caused by inefficient business administration. “If there’s no storage or poor storage, things get lost, mistakes are made, records become incorrect,” he says. “That’s how you end up with miscalculations in the budget. If you don’t order stuff on time, it doesn’t come in time, and kids end up spending a month in school without books. Because you don’t pay them on time, vendors refuse to fix the plumbing. All these things affect children.”

Creative Solutions
Upgraded facilities, say these experts, can improve employee productivity, which can have an impact on both a district’s business and educational operations. Improved working conditions also can boost staff morale and help attract top candidates for administrative jobs.

Such projects don’t have to be extravagant, and in Geiger’s experience, very few are. “Because of the political environment, people are very sensitive to the physical environment they create,” he says. Hall notes that most of the architectural projects he works on involve reconfiguring vacated classrooms as administrative offices or designating one wing of a new school building as office space.

Geiger says incorporating administrative space into a school building appeals to the public because it makes the project “more school-oriented.” In such cases, he says, “If you turn down the project because of the central office, you turn down the school.” But the move does carry a risk. “People can say, ‘You’re holding us hostage,’ and that can create hostility,” Geiger adds.

By making their case with the public and finding creative ways to fund projects, often without using tax dollars, officials in some districts have been able to successfully upgrade their central-office space. Some examples:

* Albuquerque Public Schools officials expect to save between $600,000 and $1 million in yearly operations costs once most of its administrative offices are consolidated in 2005 at City Centre, an office building purchased by the district for $12.5 million in 2001. The 85,200-student district will realize additional savings by eliminating the need for repairs and renovations at five sites that previously housed administrators.

The move was controversial—and cited in the local press as one reason voters defeated a referendum in February 2002 that would have raised $192.4 million for school construction and maintenance projects and technology upgrades. School officials defended the purchase of City Centre because, a spokesman says, “It makes economic sense.”

* In the 5,200-student Ferndale, Wash., School District, officials used the interest earned on a $17 million bond issue for school renovation projects to improve the district’s nearly 30-year-old central office. Over four years, the interest amounted to $1.13 million. “That’s all we had, but we made a strategic decision not to go to the voters for more money,” says Roger Lehnert, Ferndale superintendent.

* In Desert Sands, Calif., municipal redevelopment money enabled school district officials to move from an old, condemned elementary school built in the 1920s into a new administrative facility in 1997. The move came only after completion of a $150 million building program that resulted in five new schools and renovations to 10 others.

“After all our schools were up to snuff we said, ‘Now we can do something with our district offices,’” says Peggy Reyes, the district’s director of facilities services. “And we didn’t use any tax money, any state money.” The district, which serves 25,100 students in five cities in the Coachella Valley, was able to secure the funds under the state’s redevelopment law by entering into agreements with the municipalities it serves.

* In Colorado’s Johnstown-Milliken School District, a consolidated central-office staff took occupancy of the second floor of their new $2.3 million building last summer. Moving in downstairs: Knowledge Quest Academy, a new charter school serving 138 students in kindergarten through 7th grade. Superintendent Jack Pendar says the school signed a five-year lease with the district for the space. “By then, we’ll probably have grown and will take it over,” he says. In the interim, the lease payments make the project more financially feasible.

Also helping reduce the district’s costs: an agreement with the building’s developer under which the district received land and a $900,000 payment for relocating on a site of the developer’s choosing. Prior to moving into the new building, five of the district’s 11 central-office staffers worked out of a small ranch house, with the remainder scattered at other sites throughout the district.

Converted Homes
In other districts, such as Minneapolis, officials have maintained the status quo, saying they long ago found creative ways to provide employees with adequate space. That’s the case in the School District of the Chathams in northwestern New Jersey, where district officials for years have successfully shared a building with local police and other municipal employees. The 3,000-student school district contributes about $25,000 a year to the municipal coffers to cover its share of utilities and maintenance in the building, which was once a school.

Superintendent Joe Schneider says that although officials went to the voters in 1998 seeking money for school construction, they never considered expanding or upgrading the central office. “These are very adequate accommodations, and we never really looked at additional office space,” he says. “Quite frankly, it’s tough enough to get a referendum passed to build schools, let alone administrative space.”

Working out of a municipal building, though perhaps not ideal, may look good to school officials in small, rural school districts, many of whom work out of converted houses. “I’m sitting in a house right now,” says Bruce Burpee, director of curriculum, instruction and assessment for the 1,500-student Meridian School District north of Seattle. (Burpee once worked in what once was a bedroom, which he shared with a secretary. “Be careful how you put that,” he cautions.)

Burpee says working out of a former kitchen or dining room is not all that uncommon in his part of the country. “You do what you can to find adequate space, and I think rural systems have a bigger challenge in that regard,” he says. A bond issue for administrative purposes “is not necessarily the easiest thing to sell.”

No Extravagance
Officials in Charleston, S.C., had to overcome significant opposition before getting their new headquarters, says Jerry Hartley, executive director of business services for the Charleston County School District. “There were letters to the editor, phone calls to talk radio. People were more concerned about providing classroom space, which is a valid argument. But with asbestos problems and litigation looming, this was the best thing to do at the time.”

The new building, which was occupied in 1992, is a three-story concrete and stucco structure located downtown next door to the Charleston Municipal Auditorium. It replaced not only the old Citadel building but also a second administrative site that, according to Hartley, was in even worse condition.

“That building was riddled with asbestos. It was falling off the ceiling,” he says. As for the new building, Hartley says it isn’t extravagant. “It’s made of concrete and dryboard, not marble. It’s certainly no Taj Mahal.”

Officials financed the construction of the building under provisions of a now-defunct state law that allowed the district to form a corporation with school board members serving as directors. The board raised $12 million by selling certificates of participation in the corporation and used the money for the new headquarters. For the last 11 years the district has been leasing the building from the corporation. It will own the building, free and clear, in 2008.

Meanwhile, the City of Charleston rents the third floor of the building from the district, a move that brings in $300,000 a year. The city also built a parking garage adjacent to the building that provides the district with 160 parking places free of charge. Says Hartley, “These days, you have to look for creative ways to get these kinds of projects done.”

Priscilla Pardini is a free-lance education writer in Shorewood, Wis. E-mail: pardini@execpc.com