Alberta government student loan

A school district leases retrofitted facilities to house new academic programs

Adversity creates opportunity. Amid increasing student enrollments, calls for more personalized education and higher student achievement and political and economic realities that put a strain on education finances, some school organizations are finding new cost-effective ways to provide unique school facilities--and to do so without capital funding.

A shortage of capital and education facilities appropriate for some unique programs prompted the Edmonton Public School District in Edmonton, Alberta, to explore creative solutions to answer space and finance challenges but also for "outside the box" facility planning.

During the summer of 1994, I received several calls from private and charter school operators requesting appointments to see a vacant office building I was marketing for lease. Each school official who toured it was interested in leasing the building, which had been converted to classroom space, and each had great ideas for using the space. None had funding.

One call came from the office of Gary Reynolds. He was directing facility requirements for Continuing Education Services at Edmonton Public Schools. Reynolds saw the 15,000-square-foot building as a potential home for part of the English as a Second Language program for adults, which at that time was housed in a cramped central facility.

While Reynolds had access to operating funds, he did not have any capital funds. I structured a transaction whereby the landlord would provide all the funding for the school and its improvements and the school system would lease the building, after renovations, for a sum that fit its operating budget.

While the landlord and tenant could not find a common ground and the plans to house the ESL program in the building fell apart, this experience established a solid, trusting relationship between me and my real estate firm and the Edmonton district, setting the stage for future projects.

That landlord in time saw the light. He eventually leased the building to the school district to house the Woodside Home alternative high school program on terms very like those we had explored earlier.

The superintendent and the board of trustees felt comfortable giving Reynolds latitude to explore alternatives to traditional buildings and supported me and Colliers International as a valued resource in that process.

This relationship paid dividends over the next several years. We have completed seven assignments for Edmonton Public Schools, including Centre High at the Boardwalk, the Continuing Education Centre on 9th and the Amiskwaciy Academy.

Centre High

In 1996, administrators at Edmonton Public Schools were interested in establishing a new high school to serve Edmonton public school students who were not able to finish their schooling in the usual three years. This included students who were struggling academically, students who excelled but needed a course or two to graduate and students who had drifted in and out of the system.

These students would be required to attend this new school for their 4th and/or 5th year of high school. There would be no sports, no social clubs, no extracurricular activities--just academic course work under focused guidance of teachers and administrators.

Although many details of the project were tentative, Reynolds, then director of continuing education services, asked us to explore the possibility of leasing premises. He was uncertain how many students would be enrolled. It might be more than 500 in the first year or perhaps less.

This project faced administrative, political and financial obstacles as well. Officials were under pressure to accommodate the program in existing surplus school district space, timing was uncertain and there was a possibility of no funding at all for leasing or buying a building. Therefore, we needed to plan discreetly.

We developed a two-stage planning process. First, we reviewed all existing obsolete and surplus facilities in the district's inventory and all potential private-sector facilities, considering size parameters (25,000 to 75,000 square feet in one, two or three sites), location and transportation.

Public transit, major transportation arteries and parking needed to be considered, as students would come from all over Edmonton, a metropolitan area with a population of nearly 1 million. We were looking for a location that would be an appropriate environment for learning. Industrial and commercial areas were considered possibilities if the neighborhood was a suitable environment for learning and if neighboring businesses were supportive.

As I toured sites during the vetting process and learned more from my client, it became easier to eliminate inappropriate sites. For example, checking out proximity to bars, nightclubs and shopping malls became as important as investigating zoning, ambient noise and ease of access and egress.

We reviewed student statistics to determine where most of the target students lived, as we preferred to secure a single facility that was centrally located. Nonetheless, we surveyed the entire market and considered every viable location.

Several potential sites fit our criteria. Most were located in the central downtown area among high-rise office buildings, high-end shopping stores and municipal services.

Our second step involved site review, negotiation and planning. The district gave us the go-ahead to at least negotiate for a site with the understanding the program still might be housed in an existing school, nullifying any deal we might tentatively strike.

The planning team grew to include newly hired Principal Susan Burghardt-MacNeill, Eric Lumley, an architect and the school facilities manager, and staff from the school system's monitoring and planning department, who helped us predict enrollment and the needed facility size.

We all agreed that the environment in which students learn is itself one of the instructional tools. This important consensus contributed to our energy and enthusiasm for finding just the right facility. While difficult to define with a specification, we agreed that the fit and feel of the place had to excite us or it would never excite the students.

A Discreet Search

Until we knew the school was a go and that existing school district facilities were not going to be used, it was important that we conduct the site search and negotiation discreetly. Therefore, we went to market "on behalf of an undisclosed tenant."

Our facilities search produced 57 potential sites. After touring those that met our criteria, Reynolds and I narrowed the field to six ranked sites and began the negotiating process.

To our disappointment, the landlords of our first two sites, upon learning our particular plans for the facility, declined to negotiate, believing the daily presence of hundreds of teen-agers in and around their downtown office and shopping complexes was a recipe for trouble.

Our third choice turned out to be our best. An old warehouse had been converted to an office building, connected to an adjacent office building and then renovated to create a retail market and office development. That concept had failed; the property had recently been sold because of insolvency. The new owners had just lost a large tenant so our space requirement could be accommodated. They were willing to hear our proposal.

Acting on Reynolds' authority during lease negotiations, I worked with the landlord and the landlord's leasing agent. Negotiations were completed in about four weeks. In the end, we successfully negotiated for the landlord to fund all major base building items (e.g., bringing electrical, HVAC, stairs, washrooms and life safety systems up to public high school standard), signage and all tenant construction improvements; share the cost of requested mechanical upgrades; finance a loan to cover mechanical upgrades and cost overruns; and sign a long-term lease (15 years plus 20 years of options) at well below market rates.

Now that we had a facility, we could begin the design phase, which included several planning workshops involving school district staff and several teachers who had been hired. We also elicited student input regarding the design and were able to develop a functional and exciting plan for using the space. The building owners' interior designer and space planner, working for both the landlord and tenant, directed the design process, permit approvals, tendering and construction.

The final result was Centre High. Opened in September 1997, this 73,000 square-foot school served a peak enrollment of 2,200 full-time and part-time students in 1999-2000.