The New York City Department of Education has wasted over a staggering $5 billion in taxpayer funds on rent to private landlords — often paying above-market prices to house flailing schools, a Post investigation found.
The wasteful spending, uncovered via detailed examination of Checkbook data, has been slammed by political and real estate experts, who say the city has thrown money down the drain that could have been used to build schools and improve the standard of education in the nation’s largest public school district.
“That is taxpayer rent. It is taxpayer money that could be used to build schools, frankly,” Democratic political consultant Hank Sheinkopf told The Post.
“It would be better for the city to spend that money on after-school reading improvement sessions. Spending [the budget] on rentals doesn’t accomplish that.”
While the city is meant to own most of the school buildings it runs, bringing costs down, fiscal data from 2024 shows that the DOE was on the hook for $235.6 million that year alone in lease payments across its 132 active leases, according to council data.
This comes as The Post revealed this week how the DOE has spent over $100m in rent over on 3K centers that are still empty — and as student test scores still lag.
Worse, a New York Post review of city contracting records, property valuations and expert analysis reveals the DOE has locked taxpayers into decades-long leases on properties that, in several cases, were at the time worth a fraction of what the DOE has paid out.
At least one school building in The Bronx had a market value of zero in 1983 — when the city first took the lease — yet the DOE has since spent $52.16 million on that site alone. The building is now worth $29 million.
Experts also estimate that the DOE is paying well above market rental rates in a number of buildings. The cumulative cost to taxpayers since 2010 has exceeded billions upon billions — money that built no equity, purchased no property and left the city with nothing to show but a stack of expired contracts.
In the Woodhaven neighborhood of Queens, records show the DOE has paid roughly $3.2 million a year over the last two decades to lease the building at 45-10 94th St., home to Voyages Preparatory High School, Pan American High School and Civic Leadership Academy.
The contract, which runs through 2036, totals $96 million — and the city has already spent $48.07 million of it.
When the lease was signed in 2006, the property was worth an estimated $9.7 to $10 million, according to commercial real estate broker Adelaide Polsinelli of Compass. Today, it is valued at $28 to $30 million — nearly triple what the city could have paid to own it outright at the outset.
Voyages Preparatory currently enrolls approximately 208 students — a school that is significantly under-enrolled and with only 29% of English language learners actually graduating. Pan American High School enrolls approximately 510 students; Civic Leadership Academy serves approximately 656 students.
Pan American and Voyages Preparatory place in the bottom 10th percentile of SAT test-takers, while Civic Leadership is placed below the national average.
At 30-20 Thomson Ave. in Queens, a sprawling facility housing the High School of Applied Communication, the DOE has spent $53.96 million and counting under a lease that runs through 2029.
In 2004, when the contract started, the property was worth $95 to $97 million, according to Polsinelli. It now fetches an estimated $125 to $131 million. By the time the contract ends, they will have spent over $65 million — until its renewal.
The high school has an average SAT score of 864, placing it below the national average of 1050.
At 26 Broadway in Lower Manhattan — the ornate Standard Oil Building, now home to several DOE-affiliated schools including the Urban Assembly School of Business for Young Women — the city paid $74.21 million in rent between 2009 and 2019 alone, and is currently in renewal. The building was valued between $225 and $230 million when that lease began. Today it is worth an estimated $300 to $308 million, according to Polsinelli.
“An important point to note is that the idea of the DOE occupying these properties and paying an above-market rent in many cases, makes the properties worth much more,” Polsinelli said.
At the Urban Assembly School of Business, with just 125 students, an alarming 86% are chronically absent — missing at least 18 days a year or more — while academic performance lags far below national averages.
At 275 Harlem River Park Bridge in The Bronx, the site was a railroad track when the city signed its lease in 1983. But the property is now estimated at $29 to $30 million, value that has accrued entirely to the landlord over 40 years of city-funded occupancy. The schools there, which became PS 274/the New American Academy, ran under a lease that ended in 2023 at a total cost of $52.16 million. The latest renewal contract has not yet been revealed.
Only 26% of students at this school met state standards on the state English test, according to city data.
Other contracts of the hundreds of other buildings listed tell similar stories:
Polsinelli, Vice Chairman at Compass and one of New York’s most prominent commercial real estate brokers, reviewed the portfolio at The Post’s request. Her assessment was unsparing.
“In 90% of the cases it is always better to own than rent, especially considering the many layers of bureaucracy — think payroll dollars — involved to get a lease executed through the DOE and the many hands and eyes that touch that lease costing millions in salaries on the government’s payroll. There are many layers of redundancy that a site goes through before the DOE approves it and all the hired professionals involved to oversee the buildout, etc.” Polsinelli said.
The logic cuts both ways: the city’s presence as a stable, government-backed tenant inflates the value of these buildings — value that goes entirely to the private owners, not the public.
She added a broader, more pointed critique of how the city may have understood — or chosen to ignore — its own leverage.
“A more contrarian perspective would be to consider what the properties would be worth had the city not leased them. The question is not whether the city should have bought instead of leased. It is whether the city understood, at any point, that it was the single most important variable in the value equation and chose to benefit someone else anyway,” Polsinelli said.
While the rent bills mount, academic performance across the city’s public schools has been declining.
New York City public school students scored an average of 473 on the math portion of the SAT last year — the lowest average in at least seven years, and a full 71 points below the rest of New York State. Reading and writing scores held flat at 482, but the rest of the state and the country still outpaced the city by wide margins.
“It’s another wake-up call for New York City Public Schools to concentrate on improved instruction in core subjects,” David Bloomfield, an education professor at Brooklyn College and the CUNY Graduate Center previously told The Post.
Eric Nadelstern, former deputy chancellor for instruction under Mayor Bloomberg, told The Post that poverty, language barriers and the lasting effects of pandemic-era school closures all factor into the city’s academic struggles.
The wasteful leasing pattern extends beyond schools that are open and operating. The Post has also learned that the city has spent nearly $100 million in taxpayer funds renting more than two dozen buildings intended to house preschools — facilities that have never opened, in some cases sitting empty for nearly five years.
A former DOE official, speaking on condition of anonymity, previously described the outcome bluntly: “I don’t think it’s corruption. It’s incompetence.”
The DOE did not respond to The Post requests for comment on this story.
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