When the Sweetwater Union High School District held its May 28 meeting, three County Board of Education trustees were sworn in to fill seats vacated by indicted Sweetwater trustees. A fourth county trustee, Lyn Neylon, will be sworn in at the next meeting.
The May agenda for new trustees — Sharon Jones, Susan Hartley, and Mark Anderson — was challenging. It included an item for additional funding for the district’s financial albatross — the L Street property.
The property was purchased, ostensibly for new district headquarters, in 2005 — just before district superintendent Ed Brand retired the first time.
The byzantine finance deal ties the L Street property to two other district properties and transfers the title for these properties to Plan Nine Partners Inc. The topic has been explored in previous Reader articles.
The status of this money pit was divulged, in 2013, when E2Manage Tech Inc, a company contracted by Sweetwater to manage the district real estate, produced a report that states: “The district purchased the L Street property in 2005 at a price that exceeds the current value of the property by approximately $12 to $15 million.
"Since purchasing the L Street property, the District has been making interest only loan payments to its lender and it is estimated that over $6 million of expenses have incurred.” The L Street property is now being audited by the IRS. At the time of the real-estate deal, the district entered into an agreement to pick up the attorney fees for Plan Nine Partners and California Statewide Communities Development Authority (the bonding entity).
Attorneys for the district are also racking up bills for the audit.
The district has already been invoiced by Best, Best & Krieger for $47,756 for IRS work done on behalf of the bonding agency.
The L Street property encompasses district offices and several for-profit storefronts. According to Brand, the IRS needs to be assured that at least 70 percent of the property is utilized by a nonprofit agency (the district).
The May 28 discussion on the dais reflected the difficulty the new boardmembers faced. Several of them asked for more clarification — or asked for a full presentation of the district’s asset management.
Trustee John McCann described the land deal as “bad,” and Brand characterized it as so complicated that the IRS was asking the Sweetwater staff to explain it.
Brand urged the boardmembers to approve the agenda item, as it was a step toward “unwinding” the property agreement.
In the end, the newly formed board voted 3-1 to pay the attorney fees. Mark Anderson voted against the measure.
The Reader has attempted to contact Anderson via his San Diego Office of Education email address, but he has not responded.
Brand announced that he intends to retire in October. Critics are wondering if the district will be left holding the L Street bag.