The San Diego Unified School District will begin making payments to help build the downtown library, resolving a months-long dispute with the city.

The district owed the city of San Diego $5 million following the downtown library’s July groundbreaking. But the district was holding back because the city hadn’t been able to put up the proper collateral under the 40-year lease the two sides signed before construction began. Now the city has.

“The payment is forthcoming,” Mayoral spokeswoman Rachel Laing said.

School board member Scott Barnett confirmed that the district will begin paying the city.

The lease requires the district to pay $20 million in five installments, and the first $5 million was supposed to come at the beginning of construction. The lease also says the city must give the district $30 million in property as collateral in case the library isn’t finished.

The lease gave the district first rights over the property in question — the land underlying the Hilton La Jolla Torrey Pines hotel — but that required the signoff of the hoteliers who are leasing it and have prior rights. The hoteliers, or more precisely their lenders, hadn’t done that.

During its closed session meeting Thursday, the school board agreed that the district would accept the property as collateral anyway.

Barnett said there was no financial risk to the district by allowing the hotel to have first rights.

“If the city doesn’t pay, I think I’d rather own a hotel,” Barnett said.

Asked why the district hadn’t agreed to the deal before now, Barnett said the district’s lawyers hadn’t clearly communicated that the district wouldn’t be harmed by allowing the hotel to have priority rights to the land.

The district’s failure to pay hadn’t affected the library’s construction schedule, and the first phase is planned for completion in January. As of last month, private donors needed to raise an additional $30 million by then to finish the building.

The nine-story building, which includes two stories for a charter school, is located at Park Boulevard and J Street and is scheduled to open in July 2013.

Please contact Liam Dillon directly at or 619.550.5663 and follow him on Twitter:

Liam Dillon was formerly a senior reporter and assistant editor for Voice of San Diego. He led VOSD’s investigations and wrote about how regular people...

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