Negotiators for the city have reached a multibillion-dollar agreement with a developer to build two new schools in Manhattan and a 59-story mixed-use tower at 250 E. 57th St.

Lawyers for the New York City Educational Construction Fund announced yesterday that they had closed on the first phase of financing for the World Wide Group to construct a new elementary school and a new high school that would replace the High School for Art and Design. In return, the World Wide Group has secured a 75-year lease from the city for a 1.5-acre site at East 57th Street and Second Avenue, where it plans to construct 200,000 square feet of retail space and 488,000 square feet of residential space. The developer plans to build 300 residential units, an unspecified number of which will be dedicated to “affordable” housing.

This type of deal, which allows for the creation of new schools at no cost to taxpayers, was more common in the 1970s, and is being revived by the Bloomberg administration. It calls for lease payments to be used for similar public school projects and, in total, the New York City Educational Construction Fund estimates the agreement has a capital value in excess of $4.2 billion.

The developer will add 40% more space to the High School for Art and Design, along with an art gallery and other upgrades. The new elementary school will be built on the site where P.S. 59 exists.

World Wide Group has built about 1,350 residential apartments in Manhattan, and was a partner in the development of the mixed-use Worldwide Plaza on West 50th Street.