New Orleans school buildings sold at auction | Real Estate

Six pieces of surplus real estate owned by the Orleans Parish School Board, including an art deco school building in the Warehouse District, will be sold at a fraction of their appraised price after the board narrowly voted to accept bids for the properties it received at a recent auction.

The properties, which include the 87-year-old former L.E. Rabouin Memorial School at 727 Carondelet St., will generate a total of $3.7 million for the cash-strapped School Board.

Earlier this year, the properties were estimated collectively to be worth more than $10 million.

The board’s experience underscores the challenges that New Orleans school systems, churches, governments and other institutions face when trying to sell off unused and aging properties to generate cash. 

“We’ve been sitting on some of these properties for 20 years, and it’s time to move forward,” said School Board President Katie Baudouin. “There was a lot of interest in the properties, but this is what the market decided the value is.”

The three-story former Rabouin school, the most valuable and highest profile of the properties, was valued at $5.2 million. It sold at auction for $2.1 million. The winning bidders, a group of Louisiana developers, hope to convert it to a hotel, according to Bear Cheezem, a partner in the group.

“Our hope is to turn it into a hospitality concept,” Cheezem said. “But we have a long way to go with planning, permitting and financing. Having it under contract does not guarantee anything.”

Despite the disappointing “fire sale” prices for the properties, as one school board member described them at the Thursday board meeting where the vote was taken, the board accepted the bids because two previous auctions failed to attract any bidders.

Both of those auctions, in April and July, had reserve prices, or minimum amounts the board was willing to accept, for the properties. The September auction had no reserve.

Preserving and returning to commerce

Despite market realities, the former L.E. Rabouin Memorial School is an attractive asset, said Cheezem. Built in 1937, the building was a vocational-technical school for much of the 20th century and remained in operation until it was shuttered after Hurricane Katrina. It reopened a few years later as the International High School of New Orleans, a charter school, which operated on the site until it moved to Gentilly last year.

At nearly 58,000 square feet, the U-shaped building takes up much of the block between Julia and Girod streets and has a large courtyard as well as a parking lot that backs up to Baronne Street. Its interior still has classic art deco features, including terrazzo floors and inlaid chrome molding.

The building’s past includes a prominent role in an MTV-era video of Bruce Springsteen’s “Human Touch.”

Cheezem is partnering on the project with New Iberia businessman Thomas R. LeBlanc Jr. Both have experience in commercial real estate, and Cheezem, a native of South Carolina who now lives in New Orleans, spent nearly a decade at Woodward Interests, where he was part of the team that converted the World Trade Center into the Four Seasons.

Cheezem said preliminary plans for the Carondelet Street building call for turning it into a hotel with roughly 75 rooms. He declined to provide a cost estimate or timeline for the project. He and LeBlanc do not even officially own the building yet, as the sales are not scheduled to close until late December.

“The most important thing is that we preserve the building — the architecture, the detailing, all the reasons it is special and that we were so attracted to it to begin with,” Cheezem said. “We do not want this to become another blighted, deteriorated building in New Orleans.”

Other properties that sold at the September auction were: McDonogh No. 32 in Algiers, a two-building complex with a winning bid of $400,000; a vacant lot on St. Maurice Avenue in the Lower 9th Ward, with a winning bid of $120,000; and a vacant lot on Reynes Street in New Orleans East, with a winning bid of $120,000.

The former Jean Gordon Elementary School in Gentilly sold at one of the earlier auctions this year for $977,000.

Market realities

The Orleans Parish School Board has nearly three dozen vacant or unused properties, many of which date back to Katrina. Some of the buildings could still potentially be used as schools or for education-related purposes, so they are not considered surplus property.

Others, however, no longer fit the needs of a modern school facility, hence the school board’s efforts to sell them.

At Thursday’s meeting, board members signaled their willingness to accept the recent bids for the Algiers school and two vacant lots. However, three board members raised questions about the $2.1 million bid for the Rabouin building, arguing that when market conditions improve, a buyer might be willing to pay more money for it.

“We are treating this as a fire sale and it really isn’t,” said board member Nolan Marshall. “We’re leaving $3 million on the table, and I say let’s give it at least another year.”

Board member Carlos Zervigon also pushed for rejecting the bid.

“I would like to explore what happens if we put together sealed bids or treat this more strategically,” he said. “This is a unique building.”

A majority of the board disagreed, however.

“I worry about us as a board trying to time the market and believe in a market that does not exist,” said board member Olin Parker. “I am of the impression while I wish the number was higher and believe it should be, reality is reality.”