THE heritage former Wickham Public School is set to be sold to the Samaritans Foundation for $1.
The building was recently valued at $3 million, but Newcastle City Council has decided to sell because of an analysis that says maintenance costs will skyrocket during the next 10 years.
The Samaritans will use the building to accommodate homeless and at-risk youths studying at the University of Newcastle or TAFE.
A council report said the building, which is managed by a Building Better Cities Committee whose mission is to provide sustainable and affordable rental housing, earns the council about $180,000 a year in rent.
But a cost analysis undertaken in 2011 estimated that annual management and maintenance costs for the school building would increase from $67,000 this year to $533,000 in 2022.
"The proposed sale of the former Wickham Public School to the Samaritans Foundation offers the opportunity to convert the facility from one offering student accommodation to one that delivers positive outcomes for at-risk youth," the council report said.
The move also frees up a sinking fund of about $1.6 million that will be used in the delivery of affordable demonstration housing projects elsewhere in Newcastle.
The school, built in 1904 and closed in 1976, has been prioritised for a state heritage listing.
It was transferred to the council in 1996 for the nominal price of $2 and converted to student accommodation.
A deal to sell the school to the University of Newcastle as a Research Institute for Regional Futures was effectively concluded in 2009, but the university pulled out when the NSW government advised that about $1.6 million in associated funding could not be made available unless the project was used for affordable housing.
The Samaritans responded to a call for expressions of interest in the building earlier this year. Their proposal would accommodate homeless and at-risk young people who have made a commitment to engage in ongoing university, TAFE or similar tertiary education and training opportunities.
"It also removes council from the costs associated with . . . maintaining a large scale heritage building," the report said.
"Whilst the second, third and fourth ranked offers . . . would have delivered a greater financial return to council, the opportunity to deliver a facility and services directly aligned with the [Building Better Cities] Committee objectives would have been lost."