How will South Bend schools benefit from sale of downtown building? Here's what we know.

SOUTH BEND — School leaders announced plans last month to sell South Bend’s downtown administration building — a move some experts say is wise as the shrinking district looks to “right-size” and reinvest money in classrooms.

As the district works to secure a deal for the building, the focus shifts to how the dollars add up and how the schools can profit.

The district purchased its administration building, at 215 South Dr. Martin Luther King Jr. Blvd., 17 years ago for $600,000 and poured $7.6 million into renovations.

While administrators at the time considered the move cost effective, the district's decision to gut interiors and renovate the façade of the near-vacant office building raised some eyebrows.

Sale proposed: City expresses interest in South Bend administration building

As enrollment declined and several schools closed, selling the administration center grew more likely and eventually became a talking point in the district's 2020 referendum campaign.

“People have viewed it as a symbol of excess and waste,” said South Bend school board president John Anella. “Selling the building would be symbolic, for sure, but it also makes organizational and economic sense.”

The city of South Bend has expressed interest in buying the building from the school district and moving its offices there. For the schools, the proposed sale comes at a good time, one expert told The Tribune.

"They're looking at themselves as administrators and going 'Do we need this facility? How much are we utilizing? And, if we're not, what is it costing us to hold?'" said Edward Bradley, a senior vice president at Cressy Commercial Real Estate. "That sort of analysis and proposition is a good one."

So how do the numbers add up and exactly how can South Bend schools benefit financially from the sale?

School officials wouldn't provide The Tribune with those details.

Kareemah Fowler, the district’s assistant superintendent of business and finance, declined requests to discuss the proposed sale in person or by phone and said she would only answer questions by email. The Tribune does not conduct interviews by email.

Superintendent Todd Cummings, in a phone interview, said he does not comment on items requested through public records requests.

The Tribune has filed requests related to costs for the building. But there is no provision in Indiana law barring public officials from discussing issues related to records requests.

On the move: What's next for the County-City Building if city offices leave?

The superintendent also told The Tribune he would have someone from the district follow up on specific finance questions. After a week, no one followed up.

The failure to release detailed information leaves only what officials have presented at public meetings for insight on the numbers.

In a presentation to the school board last month, Fowler said the district received a $2.8 million offer from the city of South Bend, which is looking to move its offices from the County-City Building downtown.

Meanwhile, administrators have said they could renovate Brown Community Learning Center, in the city’s Keller Park neighborhood, and move their offices there. Expected renovation costs: $2.1 million.

Some Tribune readers have questioned how the district stands to profit from the sale of a building that had been renovated for more than $7 million, and with plans to renovate another building for more than $2 million.

The only clue provided publicly so far: Fowler said at a recent meeting that the district would save million of dollars in operating and maintenance costs over 10 years by selling the building.

District leaders said in a recent presentation that they studied several buildings owned by the corporation as potential sites for relocation, settling on the Brown Community Learning Center.

Administrators say with a renovation, the building offers the best opportunity in terms of cost, accessibility and parking, according to a feasibility study. But they declined to discuss detailed questions about the district’s study.

The Tribune has submitted a records request seeking more information about the study, as well as a 2021 appraisal of the current administration building.

Fowler, though not disclosing a dollar figure, said the building's value has "primarily remained the same" as a 2015 appraisal for $2.5 million.

'Millions of dollars' in savings

Before purchasing the then-Century Building in 2004 for a new school administration center, district leaders considered other options, such as leasing or buying space in the One Michiana Square building downtown or buying land for new construction.

But One Michiana Square was too large for the district’s needs, officials said at the time, and estimates for a new building ranged from between $8 million to $9 million.

The district spent about a year remodeling the downtown office space and moved from its longtime home, at the old Studebaker Corp. headquarters on Main Street, in mid-2006.

Since then, all seven South Bend school board seats have turned over and the district's superintendent has changed five times. School officials have said there is no outstanding debt on the administration building and that the downtown property has paid for itself with changing commercial real estate rates.

“We're dealing with issues that are of our own making and of other factors that aren't of our control,” Anella said. “We’ve got to do what we can with the cards we’ve been dealt and move the school corporation forward.”

A leading concern, district leaders say, is continuing to pay operating costs downtown while space becomes available in other buildings owned by the corporation.

The district, feeling the losses of recently imposed tax caps and enrollment decline, has closed or repurposed seven school buildings since 2018.

Fowler said in her presentation last month that deferred maintenance, like elevator repair, at the administration building could cost $750,000. Other annual operating expenses add up to $400,000 a year, and $100,000 of that is spent annually on parking at the Wayne Street Garage next door.

Where are they going? More students choose schools out of South Bend district

"You look at this building and it’s beautiful but, you know, we spent $100,000 a year on parking," Anella said. "I’m embarrassed.”

He said the district would save "millions of dollars over the next five to 10 years by moving out of that building."

Attempting to sell or lease space in an office building without an interested buyer can prove challenging in today’s market and affect a building’s value, Bradley said. He called a potential sale to the city a win-win for South Bend.

"In a finite city like South Bend," Bradley said, "there’s only a handful of users that could populate even half that building.”

Renovations proposed at Brown

Brown, formerly an intermediate school closed in 2018, is now used for community programs and weekend tutoring. The district recently leased space in the building to the St. Joseph County Public Library system as it completed a remodel of its Main Branch downtown.

“More accessibility to the public is the most important,” Cummings said of the building. “We’ve been doing family and community programming at Brown. We want to continue that. We want to have a space for families to gather.”

It’s unclear exactly how the corporation determined its renovation costs and what funding source administrators plan to use for the work.

Cummings, citing his practice of not commenting on items requested through public access laws, declined to discuss the district's recent feasibility study.

Administrators told The Tribune in 2020 that $34 million of the district's estimated $54 million capital referendum would fund “revitalization and enhance existing school buildings (right-sizing the district).”

2020 campaign: Here's how South Bend leaders plan to use $220 million referendum

Anella said Tuesday the corporation needs to be judicious with its referendum funds considering the total cost – $116 million worth – estimated of deferred maintenance across the district. He said it was important that Brown's renovation costs stay below the $2.8 million total the district is seeking in a sale downtown.

“In the end,” Anella said, “It’s paying for itself, plus money left over.”

Email South Bend Tribune education reporter Carley Lanich at clanich@gannett.com. Follow her on Twitter: @carleylanich.

This article originally appeared on South Bend Tribune: How will South Bend schools profit from administration building sale?