DPS, city cut deal on vacant schools
Detroit — Mayor Mike Duggan and Detroit Public Schools Emergency Manager Jack Martin announced a deal Tuesday to erase $11.6 million in debt DPS owes the city in return for the transfer of 77 vacant school buildings and lots.
Under the agreement, the city will forgive the debt, primarily electric bills DPS owes, according to a statement posted on the city's website.
In exchange, DPS will turn over control of 57 vacant schools (31 secured and 26 unsecured) and 20 vacant lots where schools once stood. According to the district, the value of the properties equals what the district owes the city.
"We will take between 10 and 12 buildings and move in a timely manner to demolish them," Duggan said.
The city has identified $4.3 million in Neighborhood Stabilization Program funds that can be used to raze those structures by mid-July, the mayor said.
"Each property that has a good playground will be assessed by Parks and Recreation," he said. "If they are well maintained, the rec department will make them available to the neighborhood."
Duggan said all of the buildings will not be demolished.
"There may come a day when more people move back into the city," he said.
He also said between 14 and 16 buildings will be secured for future use.
"We'll hire up to 150 18- to 20-year-olds who will help do the work to secure the buildings," he said.
Martin said both sides benefit.
"We've got a liability of $12 million, and when we close the deal, the liability will go away," he said. "We have to talk to our lawyers, but we expect it to go forward in about two to three months."
He said there are about 20 vacant schools not covered by the deal.
"We didn't include them in the transaction because we're either in the process of remodeling or selling them," he said.
The 77 properties in the deal will be placed in escrow, pending environmental assessments. Over the next three months, the city will do an environmental analysis of each school property to determine how much remediation may be needed, at an estimated cost of $2 million.
During that time, the city will maintain and secure the properties.
"This agreement is great for our neighborhoods and DPS schoolchildren," Duggan said. "It allows DPS to put all of its energies into its core mission, which is to educate our children. It also recognizes that the city is better suited to addressing the important issue of neighborhood blight and redeveloping these properties in a way that is in harmony with the surrounding community."
Martin said the agreement would help the district, which is struggling to get out of debt and state control, concentrate on educating students. The district's deficit was $127 million at the end of its most recent fiscal year in June, according to the state.
"Our primary focus must be the education of the children of Detroit," he said.
Since the state took over DPS in March 2009, the district has closed 100 school buildings. In a tweet, Martin said Tuesday, "DPS understands schools are often the center/hub of a neighborhood. We'll do everything in our power to avoid more closures."
The district has been leasing and selling property since 2005 and had more than 100 properties on the market.
Since March 2009, DPS has generated more than $16 million from the sale of vacant school properties and annual lease revenue.