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Seattle school leaders Wednesday voted down the chance to acquire the former Federal Reserve building downtown and turn it into an elementary school.

Consensus in the unanimous vote was clear: School Board leaders say the district does not have enough money.

“The idea of having a downtown school makes perfect sense,” board member Sue Peters said during a meeting Wednesday. “We don’t have the funds to pay for this at this time.”

The board voted in July to apply for the building and the land at the corner of Second and Spring streets, but with caveats. Board members said they wanted time to look at district finances and seek public opinions. The board’s original resolution allowed interim Superintendent Larry Nyland to “possibly” accept the building, which has been empty since 2008, when the Fed moved its regional offices to Renton.

Supporters of the project said the need for a downtown school would only increase, and the Federal Reserve building was a good deal that wouldn’t come again. But critics, who include some parents and the council representing parent-teacher associations across the city, argued the district’s most overcrowded schools are not downtown and that the renovation money would be better spent elsewhere.

Earlier this fall, the U.S. Department of Education sent the district’s first application back, asking for a less tentative version.

The resolution voted down Wednesday would have authorized Nyland to negotiate for the building, as the Department of Education required.

Then, if its application had been approved, the district would have been given the land and building for free. But it would have been required to scrape up an estimated $50 million to $53 million for remodeling. It also would have to commit to use the building as a school for 30 years, otherwise the federal government could take it back.

And, if the district didn’t find the renovation money and start construction within a year, it would have faced monthly fines.

There was another wrinkle, too: Board policy says the district must have a plan for how it will pay off debt before borrowing money or issuing bonds.

“Because this motion does not identify the source of funding, if passed it would violate the policy,” the board-action report states.

Had it passed, the resolution would have authorized the district to borrow as much as $48 million for the downtown project if levy funding didn’t work out. The district already has authority to spend about $5 million, approved as part of the last construction levy, to find a location for and design a downtown school.

Earlier this year, the district estimated the cost of remodeling and adding classroom space at nearby schools, and found it would cost more and add fewer seats than remodeling the Federal Reserve building. Adding 405 seats total to three nearby elementary schools — Bailey Gatzert, Lowell and John Hay — would cost $64 million, the district’s analysis showed.

Downtown leaders said Wednesday’s vote will not be the last chance for a school downtown.

Finding another spot will be challenging, but not impossible, said Jon Scholes, vice president for advocacy and economic development at the Downtown Seattle Association.

“There’s lots of creative folks downtown who care about figuring this out,” Scholes said after the vote Wednesday.

The Downtown Association will encourage the district to buy land and building at auction — the federal government is now expected to auction off the property — and consider leasing space in another building downtown. That way, though the property won’t be as cheap, the district will be freed from the timeline and fines the Fed’s initial proposal would have imposed.

Richard Best, the district’s director for capital projects and planning, encouraged a group of downtown advocates to not lose contact with the district after the vote Wednesday.

“I’m just saying, ‘Keep in touch,’ ” Best said. “There are other options downtown.”

Leah Todd: ltodd@seattletimes.com