Duluth school district finds buyer for Central High School property

After sitting on the market for more than three years, the former Duluth Central High School finally has a buyer.
The Duluth School Board voted unanimously, after a closed meeting Tuesday evening, to move forward on a purchase agreement with an as-yet-unnamed developer. The sale price of the 77-acre property at 800 E. Central Entrance was not disclosed, but has been listed for sale at $13.7 million.
The sale would include the Central building, built in 1971, and the two Secondary Technical Center buildings, built in the mid-1990s.
Of the properties left over from the recent years of closing and consolidating schools, Central, which closed in 2011, carries the most value. Its failure to sell was among the reasons the district transferred money from its reserves to pay off long-range facilities plan construction debt, and when that was no longer viable, led the board to significantly raise property taxes in both 2012 and 2013.
The sale would help the district get on “better financial standing,” said Superintendent Bill Gronseth.
“And it will be beneficial to the community in the long run,” he said. “All along we talked about the property’s ability to add to the tax base. Now the city will benefit from the sale of the property.”
Central land has been rezoned twice in an effort to find a buyer. The most recent zoning change, helped along by the district’s new partnership with the Duluth Economic Development Authority, allows for housing, higher education use and commercial property. District officials declined to say what the unnamed developer’s plans were for the Central property, but said they were in line with approved uses and probably wouldn’t require another zoning change.
DEDA’s vision for the site has been high-end office space surrounded by market rate housing and trails, its executive director, Chris Eng, said last spring. Restaurants and a hotel also were part of the vision.
The new zoning allowed the district to sell the property in parcels - an option it and the city wanted to make the property more attractive. In the end, it wasn’t needed.
“The good news certainly is that we have a developer who is interested in the entire property, and offered business terms that the board and administration believe are viable,” said Kerry Leider, property and risk manager for the district.
A sale to one entity, as opposed to several, saves the district and the city considerable time, he said.
Leider wouldn’t disclose whether any of the buildings would be torn down by the developer, whose identity probably will be revealed soon, he said.
He said he expects the sale - contingent on an environmental study, among other factors yet to be resolved - would be completed by mid-summer.
School Board chairman Mike Miernicki said the probable sale not only will help the tax base and the district’s budget, but also will end the district’s yearly maintenance costs for the property.
The cost to maintain the campus in both 2011-12 and 2012-13 was about $170,000 per fiscal year. One of the Secondary Technical Center buildings still is used by facilities management, and the Federal Emergency Management Agency rented one STC building for six months after the 2012 flood. During the last year the school was open, operational expenses were about $322,400.
Leider said there were about five other serious potential buyers since 2011 that had the finances, experience and plans for the property that were in line with the district’s vision. There also were a few others.
Duluth Edison was touted last year by its board members and other officials as a buyer interested in the property for a high school. The Duluth School Board’s policy of not selling to other K-12 entities is the probable reason a formal offer never came to fruition.
Duluth Mayor Don Ness said the city’s goal for the site was private investment for tax purposes and maintenance of the public’s access to green space. An easement has been granted by the district for a trail through the property.
It’s important for people to feel welcome there, Ness said. “Whether it’s to appreciate the views or have that connection to the site for the many of us who went to Central. The vision we have heard about for that site accomplished those goals and will be the sort of development this community could be proud of.”
Ness, a 1992 graduate of Central, said the empty state of the building and the public’s inability to use the property has saddened him more than knowing the campus will change.
“In my mind, I would much rather see it put to productive use than as a reminder of the pain of a school closing,” he said.
Other higher-value properties left to sell include the former Rockridge Elementary School in Lakeside and land near Hartley Park.
Rockridge is priced at $995,000, reduced this summer from $1.45 million. A small residential parcel is listed for $85,000 and a larger residential parcel behind the school property for $200,000. Zoning also was changed for Rockridge to allow it to be sold in parcels.
The Hartley land is listed at $800,000. It is surrounded by Hartley Park, Woodland Avenue and housing.
The board will decide where the money from a Central sale ultimately will go. A likely possibility is to replace general fund money that was borrowed in an effort to help rebuild once nearly depleted reserves. Those reserves are projected to be more than $9 million in 2015, before Central profits are counted.
The sales of the buildings had been figured into the district’s plans to pay off debt from its long-range facilities plan, also known as the Red Plan.
Gronseth said the DEDA partnership and work with a group of real estate advisers helped to more successfully market the property.
“The sale of Central is a direct result of those efforts and that partnership,” he said.
Board member Annie Harala, a 2002 Central graduate, said she became “choked up” reading the resolution for approval, thinking of her time there and her love of the former school.
“Our district is tied to the (new) facilities we built and moving our schools forward,” she said. “My heart is sad to see it not be used how it was, but the potential for what it could be is what I am hopeful for.”