The San Diego Unified School District has one of the largest real estate portfolios in town, but its assets are quickly dwindling as it sells off “excess” schools and properties to restore furlough days and pay for promised pay raises to teachers and staff.
The school board dug itself into a financial hole in 2010 when it promised increased pay and ever-more-costly benefits packages to employees even as enrollment – and the economy as a whole – fell off. To fill the gap, the board agreed to a one-time sale of assets to plug the budget hole.
Two Clairemont properties hit the market Monday, both currently used by a private school operated by Horizon Christian Fellowship. The larger of the two sites is the former Hale Junior High School, which has a minimum bid of $22 million. The other site is the former Stevenson Elementary School, listed for a minimum bid of $10.7 million.
A recap of some of the other properties the district has sold or tried to sell:
• Over the summer, the district sold two sites it owned but never developed in Sorrento Valley. The first, known as the Porterfield Junior High site, is a 24-acre property that sold for $41.79 million. The second, known as the MacMullen Elementary site, sold for $20.8 million. Both sites have generated revenue through long-term leases to private companies, which have built commercial buildings on the sites.
• In May, the district agreed to sell the former Mission Beach Center for $18.5 million. The site is a former elementary school and is located a block from the beach, but was most recently used for administrative purposes. Beach area residents, including the town council and the school cluster, a group representing stakeholders from each of the area’s schools, opposed the sale. Escrow is expected to close on the deal this month with McKellar-Ashbrook LLC, a developer that plans to build high-density residential units.
• In June, the district sold the Barnard Elementary site for $16.5 million. Barnard, a Mandarin Chinese magnet school, moved from its former site in Point Loma to a new site in Pacific Beach (formerly Bayview Terrace Elementary). That sale closed before the end of the 2012-13 fiscal year and the proceeds went to fill last year’s budget gap.
• Two other property sales fell through earlier this year.
So far, the properties have been purchased by developers and real estate companies.
Last month, the district hired Midori Wong as a special projects director to oversee real estate sales and potential joint-use agreements. She was formerly chief of staff of the city’s 2010 Redistricting Commission.
When all the sales are final, which is expected by year’s end, the district will have completed over $130 million in property sales.
The properties being sold are categorized as “excess” – but that doesn’t mean nobody wants them.
Charter schools are always looking for space. They often have to rent units in an office park or even a strip mall. Many charters would love to get their hands on some of the district’s excess property.
At least two laws are aimed at this exact problem – a law that went into effect on July 1, 2012, that requires school districts to first consider charter school bids before selling excess property. Then there’s Proposition 39, approved by voters in 2000, which was intended to give charter schools first dibs on unused school space.
But many charters still end up in a crunch to find classrooms – so what’s the deal?
For one, the 2012 rule isn’t retroactive, and most of the properties San Diego Unified put up for sale were declared “excess” before the statute went into effect.
“Charter schools are very interested in some of those properties and had hoped to bid on some of them, but the market rate is something that is very challenging for charter schools,” said Miles Durfee, managing regional director of the California Charter Schools Association. “If the facilities’ cost is too large, it takes away from their educational program.”
Tim Wolf, CEO of King-Chavez Charter Schools, said his schools would be happy to share space at Memorial Preparatory for Scholars and Athletes, which once had 1,800 students, and is now down to 800. Instead, King-Chavez High students, most of whom live in the Barrio Logan and Logan Heights areas now travel by trolley to go to school in the northern section of downtown. Trolley passes cost the school $200,000 a year.
Wolf said the district’s property-selling spree violates the spirit of Proposition 39, if not the letter of the law, by circumventing the requirement to offer unused school space first to charter schools. But, he said, the district has gotten better every year at granting the Proposition 39 requests. “They’re getting better at listening to where people want to go,” Wolf said.
Wolf said that with the recent passage of Proposition Z, which authorized $2.8 billion in construction bonds, charter schools will have an easier time finding suitable space. Charters are expected to get $350 million of those funds, which can be used to make improvements to district-owned space.
Other proposed uses of the excess property are for other public agencies, such as fire and police stations, military use or city parks. The properties put up for sale by San Diego Unified first had to be offered to public agencies, then to nonprofits, which includes charter schools, before going up for general sale. None of the public agencies or non-profits submitted a minimum bid.
Scott Barnett, a school board member who has long opposed the concept of selling off land – he’s likened the approach in the past to selling off furniture to pay the rent – was the lone holdout in several 4-to-1 votes to sell off district properties.
“I didn’t want to sell them, I wanted to find ways to generate revenue,” he said. “To me, it’s like a farmer taking his prized milk cow and slaughtering it for beef. That’s really what the district has been doing.”