TUSD looks to sell headquarters to student housing developer for $18M

A company that develops housing complexes for university students wants to buy Tucson Unified School District’s longtime administration building for just under $18.3 million.

The offer to buy TUSD’s Morrow Education Center at 1010 E. 10th St. comes from Up Campus Properties, LLC, the Chicago-based developer of Hub high-rise apartment complexes in Tucson and other cities.

That’s the figure “on the table,” district leasing manager Bryant Nodine told the TUSD Governing Board Tuesday night. Terms and conditions are still being developed, he said.

The possibility to redevelop the site, known as “1010,” with housing is through zoning options in the city’s Sunshine Mile Overlay District, Nodine said.

He said this creates an option for “mixed use multifamily development with up to 300 units of residential and some commercial.”

Should the deal between TUSD and Up Campus go through, the school district’s headquarters would be relocated to the University of Arizona Service Annex, at 220 W. Sixth St. north of downtown, which TUSD would buy.

That sale would have to be approved by the Arizona Board of Regents. The offer would be based on a property appraisal. Nodine said the UA has agreed not to put the property up for auction.

The purchase would be contingent upon TUSD’s finalizing the sale of 1010 and whether Up Campus receives tax abatements from the city.

Any TUSD profit would go towards more building improvement projects, the board was told.

Avoiding costly repairs

If it sells, the district would avoid having to make about $7.4 million in capital expenses to fix the Morrow center, which dates to the 1940s-’50s, officials said.

An aged HVAC system and elevators are the two big-budget repairs needed. Replacing the HVAC would cost an estimated $3.3 million. Fixing the elevator system would run about $900,000.

Employees refer to the aged elevators as “the death tubes,” TUSD Chief Financial Officer Ricky Hernández told the board.

Nodine added, “Any of these renovations when we start digging into the walls, into the windows — into anything like that — we have asbestos abatement that we have to consider, too.”

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The University Annex building would require some renovations, should TUSD purchase it, but they would be minimal compared to the Morrow Center’s needs, the officials said.

Governing board member Sadie Shaw was reluctant to lend support to the deal, particularly concerning property tax relief from the city.

Nodine clarified that these tax breaks would not go to the UA, but to Up Campus.

Shaw remained dubious. “It still sounds like a kickback.”

Nodine said the practice isn’t uncommon. “It’s part of the … state authorization to the city to encourage development that in the long run will generate tax revenues.”

Shaw said, “I think as long as we keep it in our coffers the value of 1010 and the adjacent parking lot, and other parcel is just going to increase in value. Once we sell it, we can’t get it back.”

Board members split

Shaw also expressed concern for how another student housing site would affect the Rincon Heights neighborhood.

She added, “I’m not really in favor of this. You have a deal that seems to be a little bit questionable.”

Board President Ravi Shah, however, expressed enthusiasm for the potential sale.

“Not only is it fiscally responsible, because we drive a profit … that we can use to better our sites even more,” Shah said.

The district has been trying to sell the property for at least 15 years, Nodine told the board. Offers submitted did not reach the district’s requirements.

The potential real estate deal is slated to appear as an action item on the TUSD board’s Dec. 12 meeting agenda.

Up Campus officials did not immediately respond Wednesday to requests for comment.