BEVERLY — The Beverly Public School District will make nearly triple in rent next year after turning McKeown Elementary School over to the Northshore Education Consortium.

The special-education school was paying $220,000 a year but agreed to a five-year lease that will start at $600,000 annually and gradually increase over the years.

It's still a verbal agreement, but they're working on a contract, Superintendent James Hayes said.

The space includes McKeown — where the Consortium is running an alternative secondary school for students with behavioral and emotional disorders — and the lower half of the Memorial Building, where Recovery High School is located.

"We've got two great sites," said Bob Gass, executive director of the Consortium. "The McKeown School has been a phenomenal facility for our kids."

Despite strong opposition from parents, the district closed the elementary school last year, to help alleviate a $2.6 million budget gap between spending and revenue.

"As difficult as those decisions were, it's just been a very positive change," Hayes said.

Now, in addition to the extra rent, Beverly is also saving about $600,000 through closing the school, reducing staff and bringing some special education programs in-house, Hayes said.

The additional revenue will be used to offset building costs like custodial expenses and utilities.

"I think we've done better than we thought in the first year," Hayes said. "It's hard to see it when you're going through closing a school, but there's a silver lining."

The program in McKeown School is a joint venture between the Consortium and Beverly, which plans to start its own alternative school with the Consortium's help.

In addition to paying rent, the Consortium is providing in-kind services like administrative staff and nurses. Of the 115 students in the Consortium's program at McKeown, 11 of them are from Beverly, Gass said.

When the Consortium began leasing McKeown last year, the institution worked out a deal with the school district to increase its rent from $220,000 to $300,000.

"We fully realized it wasn't the fair market value," Hayes said. "But to be fair, the Consortium had already set its budget."

They agreed to wait until the 2010 budget to renegotiate a price.

Gass said the rent increase may result in a slight increase in tuition, which currently ranges from $26,000 to $55,000 per year.

"We're trying to keep our tuition as low as possible," he said. Although the rent is significantly higher than what they were paying before, he said it's worth it.

"Essentially, this has been an incredibly positive relationship," Gass said. "It's a real school for our kids."

Staff writer Cate Lecuyer can be reached at clecuyer@salem news.com.