Central-office real estate: can you upgrade your headquarters without looking self-serving?

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."

RELATED ARTICLE: Case Study No. I: Harford County, Md.

There's no denying the fact that something has to be done about the state of the administrative office facilities in the Harford County, Md., Public Schools.

"We're renting office space all up and down Main Street in Bel Air," says John Miller, supervisor of purchasing for the district. Space at those sites is designed to supplement office space in the district's 121-year-old administration building, which for years has been expanded with portable trailers. All in all, it's an inefficient and costly way to manage the 40,000-student, 5,000-employee district.

The school board's hand has been forced by rapidly increasing enrollment--the student population stood at 26,000 in 1984--to first build and renovate schools. A new administration building, says Miller, "was never a priority."

But Miller says he's optimistic that officials may have come up with a creative way to generate the capital funds in a "budget neutral" way. The idea is for Harford County to enter into a partnership with a private contractor who would design and build the district a new central-office building. The contractor then would lease the building to the district for 25 years, at which point the district would own the building. Leasing will cost the district no more than the $400,000 a year it now pays to rent space for administrators at six satellite locations.

A total of 17 contractors indicated interest in the project, and five were asked to submit formal proposals to the district. Miller hopes cons tracts can be signed this summer and the new offices opened by 2005. He calls the plan a "politically appealing" way of upgrading administrative space. With the county studying the feasibility of building a new high school and middle school, that's an important consideration.

Case Study No. 2: Orange and Broward Counties, Florida

School officials in two Florida counties, Orange and Broward, came under fire when they moved their district headquarters to glass-enclosed skyscrapers in 1990. In downtown Orlando, Orange County's new $20 million, 221,000-square-foot facility was quickly dubbed the "Ivory Tower." In Fort Lauderdale, Broward County's $23.3 million, 180,000-square-foot former bank building was termed the "Crystal Palace."

Thirteen years later, however, officials in the two districts are facing radically different scenarios when it comes to dealing with their high-profile administrative headquarters.

Thomas J. Calhoun, Broward's former deputy superintendent for facilities and construction management, concedes the building still raises the hackles of some locals. "Every once in a while you hear comments about luxurious quarters," says Calhoun. "We're still paying the price for something we did 10 years ago."

At the time, the building was undervalued, according to Calhoun, and was considered a bargain. The move also allowed the district to consolidate all its administrators under one roof. Yet the public saw the 14-story tower with a green glass facade as an extravagance. "I guess administrators are supposed to be in crumbling old buildings," he says.

In truth, Calhoun knows that a district's administrative headquarters has to be modern, spacious and efficient enough so workers can do their jobs, yet at the same time must not be too impressive. "It's a tough balance," he says. "You must show that you've taken care of the schools first and that [a new building] is only going to enhance the services you provide the schools. You can't build a Taj Mahal for administrators while the schools are out there crumbling."

As it turns out, Broward County may not have gone far enough, at least when it comes to size. The district already has outgrown the former bank building, officially known as the Kathleen C. Wright Administration Complex. With student enrollment increasing by roughly 10,000 students a year throughout the 1990s, the need for administrative space grew as well. Now district administrators are housed at seven additional sites, including a second bank building.

In the 160,000-student Orange County Public Schools, on the other hand, decentralization and administrative cuts have reduced not only the size of the district's central administration, but also its cost. A state report issued last February found that Orange County had the lowest administrative costs per student of any district in Florida.

Still, Superintendent Ronald Blocker proposed last year that the district sell its nine-story Educational Leadership Center. The building, which includes a parking garage, big-screen television monitor in the auditorium and views of downtown Orlando, has come under fire over the years from parents and others who contend it is extravagant. They have said officials should be embarrassed to be working in such a nice building while some teachers and students work in portable trailers.

When the building was constructed, officials billed the project as cost effective, noting it was located on land already owned by the district and built at a cost of $93 per square foot, less than comparable new office buildings in the area.

Still, complaints continued to surface over the years. The building became an issue again last fall, even as taxpayers approved a referendum that will generate $2.1 billion for school construction and renovation over the next 13 years. "People told us, 'Get rid of that building and you won't have to raise taxes,'" says Jackie Johnson, the district's director of community relations. (The referendum calls for increasing the sales tax and rolling back property taxes.)

However, Blocker, who became superintendent in 2000, says district officials worked with a real estate expert who determined it did not make economic sense to sell the building and move to a smaller central office.

Case study no. 3.: South Milwaukee, Wis.

There's no way administrators in the School District of South Milwaukee, Wis., would be getting a new central office if the community wasn't getting a new high school, auditorium, field house and football stadium.

"We couldn't have sold it. We wouldn't even have wanted to," says Superintendent David Ewald. "It would have been very selfish. Our needs are certainly no greater than those of the student population."

According to Joe Agron, editor-in-chief of American School & University magazine, South Milwaukee's approach to acquiring new administrative space is a strategy being used more and more often. He says it makes good sense. "When these projects are part of a package of improvements, a district is less likely to have problems getting voter approval," says Agron.

South Milwaukee s new administrative office space represents just a small piece of the $42 million building project now under way in the 3,600-student suburban school district. Voters approved the spending in a referendum in February 2002 by a margin of 58 to 42 percent. The referendum, the largest ever passed in Milwaukee County and the fifth largest ever approved in Wisconsin, encountered no organized opposition. It won approval from voters in each of the district's 16 voting wards.

Plans call for building a new high school adjacent to the existing high school and converting that building into a middle school. (The existing middle school, about a mile away, was built in 1913 and currently houses the 'district's administrative offices. It likely will he razed.) As a result, all students in grades 6 through 12 will be located on the same campus where Ewald says they will be able to share resources.

The new high school complex will include a 750-seat auditorium, a field house with a fitness center, a new football stadium and track, and a staff development center. Tucked into one wing of the new school will be the administrative offices, which Ewald estimates will costless than $500,000.

He says the main reason for relocating the administrative offices was the age of the present middle school and related maintenance issues. But members of the district's facility study committee also wanted administrators working in close proximity to students. "It's easy to become just a business instead of a child-centered business," says Ewald. "Being close to the kids reminds you of that every day."

Case study no. 4: Mt. Baker, Wash.

Buildings around the country deemed unsuitable for classrooms, cafeterias and gymnasiums are literally being given a new lease on life, turning up more and more often as offices for school district administrators.

"Space that is not good enough for students is being recycled for offices," says Michael Hall, the chief marketing officer with Fanning/Howey Associates.

That's the case in Mt. Baker, Wash., where officials work out of a building originally designed as the high school library. Later used for elementary classrooms, the space was converted to offices in 1999 following the construction of a new high school and elementary school. Bruce Burpee, assistant superintendent in Mt. Baker during the planning of the project, says the district was able to remodel the building into new central-office space because the price tag on the new elementary school came in under budget.

The new offices, says Burpee, now director of curriculum, instruction and assessment in the neighboring Meridian School District, are a big improvement over the two-story house where officials used to work. What was once a living room served as the reception area, and the former kitchen as an office for the superintendent's administrative assistant. The only space for meetings was in a converted garage. "Basically, we were just using rooms you'd think of as places to live for offices," says Burpee.

Reclaiming the former library building, which was built in the late 1960s, has given officials a much more appropriate space out of which to work. "There is a conference room and adequate storage," Burpee says. "It is a sturdy, functional building that should last a long time. It was a good solution."

Case Study No. 5: Chicago, III.

About 20 years ago, Chicago Public Schools administrators moved out of a cramped, downtown office building into a sprawling complex just southwest of the city limits. Built as a U.S. Army barracks during World War I, the Pershing Road facility was three blocks long and included three six-story warehouses. Originally home to a morgue, a hospital and jail--replete with individual cells--the space was converted to office and warehouse space for the district.

One result: "The bureaucracy expanded exponentially to fill the space," says Tim Martin, formerly the district's chief operating officer.

But in 1995 when Mayor Richard M. Daley took over control of the 440,000-student school district, he opted to move hundreds of central-office administrators back to schools. As a result, the number of employees working at Pershing Road fell to about 1,500, roughly half of what it had been. In addition, the condition of the facility, which never was ideal, had begun to deteriorate. The heating and cooling systems and elevators were on their last legs. And the building's wiring system could not accommodate updated technology. The cost of renovation, estimated at between $8 and $12 million, seemed unjustifiable.

After an 18-month search, the district spent $8 million to purchase the former Commonwealth Edison Building, a 20-story office building located in the heart of downtown Chicago. The district spent another $25 million on the building, including $10 million for a new computer center, $12 million in general renovations, furniture and equipment, and $2 million for emergency electrical work. But Martin says the building, occupied in 1999, suits the district's administrative needs much better than Pershing Road.

The facility also generates income for the district. Approximately 1,200 administrators now occupy about 75 percent of the building, which is zoned for mixed use. The district leases out some office space on the upper floors and retail space on the ground level where tenants include Radio Shack and the Christian Science Reading Room. According to Martin, rental income offsets most of the building's utility and maintenance costs. Another plus: By borrowing against future revenue, officials were able to raise more than $25 million--money that has been spent on capital improves ments at Chicago high schools.

Martin says the project sparked little controversy, largely because officials were able to financially justify the move to the school board and the public. Beyond that, the new facility is "not elaborate," says Martin, and all renovations were modest.

The only complaints, Martin says, came from employees moving downtown who wanted the district to pay for. their parking. Ironically, 20 years ago when the district moved out of the city to Pershing Road, employees wanted the district to buy them cars.

A Royal Office Headache in Rochester.

By Raymond Yeagley

We moved our central office in Rochester, N.H., about three years ago. We had no problem convincing our school board of the need for a larger facility that would give our administrative and support staff a little breathing space and comply with the Americans with Disabilities Act.

We had outgrown our 50-year-old downtown building. Several staff members were working in inappropriate spaces, and much of our storage and a few offices were located in the hallway, which was a violation of fire safety codes. With two upper stories and a basement, no floor could be reached without ascending or descending a steep, narrow set of stairs. No portion of the district's headquarters was wheelchair accessible. Further, the only close parking was three on-street spots in a two-hour zone in front of the building. Most visitors parked at the bank next door, causing friction from time to time.

Because our district is a fiscally dependent department of the City of Rochester, our challenge was to gain financial support for a more appropriate office site from a mayor and a city council whose majority had been elected primarily to keep tax rates low.

A Modest Proposal

We proposed to rent a space from the city in what used to be our open-concept high school. (It reverted to city ownership when we moved the high school to a new location. It is used now as a community center that houses the recreation department, a senior citizen center and some regional state offices.) With the help of our facilities manager, I had estimated a cost of $250,000 for remodeling, plus some additional expenses for a new phone system and a local area network that would be needed even if we stayed in the old facility.

This estimate was kept intentionally low because (a) we were working with an open-concept space that was easy to remodel; (b) we intended to keep the existing drop ceiling and carpeting that had been replaced only two years before we moved our high school; and (c) some of the work was to be done by our own maintenance crew. The proposal was beneficial to the city because officials had been unsuccessful at filling more than half of the available space in the building. They could use the rent.

In addition to the $250,000 remodeling estimate, we already had approximately $40,000 in previously appropriated funds for installation of the LAN wiring, a phone system and a few other things that had been planned for our old facility. Those funds would have been expended regardless of our location and were not directly related to a move to a new central office.

This was the maximum we thought our board could support. A few of the city officials who wanted to make the school district look bad in public scoffed at the estimate and required us to use the city's architect for a feasibility study and more reasonable cost estimates. The architect estimated a $500,000 price tag and insisted we couldn't get anything close to our needs for less than that. The estimate was unacceptable to our 13-member school board and to me.

We then went to the architect who does most of our work. He gave us a plan that would fit the original $250,000 estimate for the remodeling, including his fee. We finally were able to sell the concept to the city council, largely because we absolutely had to make the old facility compliant with federal disability standards if we remained there. The cost of that was close to $180,000 and would have resulted in a loss of space. By losing space, we would have to secure an additional location for displaced personnel, which would have driven the cost beyond the $250,000 we proposed for the renovation.

The council reluctantly appropriated the funds, with a couple of councilors hoping privately we would overspend and look foolish. They told us not to expect a penny more if we got into trouble with the costs.

Pleasant Conditions

Ultimately, with the help of an outstanding architect, cooperative contractors and a talented maintenance staff, we were able to design and remodel approximately 11,000 square feet at a total cost of $250,000 plus the phone system and LAN wiring. We met our goals and kept our promise to the taxpayers.

With regard to whether we were able to get what we wanted, our facility is designed efficiently for our operation and provides a pleasant atmosphere for the 30 staff members who work in the central office. We are blessed with spacious offices, adequate storage and some conference and meeting rooms. We are all pleased with the final product.

Raymond Yeagley is the superintendent of the Rochester School Department, 150 Wakefield Street, Suite 8, Rochester, NH 03867. E-mail [e-mail]

Priscilla Pardini is a free-lance education writer in Shorewood, Wis. E-mail: [e-mail]