Sweetwater district’s mellow ruse

The district hopes to turn a profit on three pieces of property it owns by making them “shovel ready” for high-density residential developments. One property, located on Third Avenue, was put on the market; July 31 was the final day of the bidding process.

The district did not receive a single bid — even though it paid the City of Chula Vista $82,000 in “entitlement fees” (for plan reviews, zone changes, and the like) and paid the consultant group E2Manage Tech $247,500 over the past three years to ready the three properties for market.

The asking price for the Third Avenue property was $7 million. According to Sweetwater’s Asset Utilization Plan (or, the plan to offload the district’s property and acquire new property), the profit from the sale was supposed to be $6 million.

The Reader queried the district about the future of the property. On August 9, Nadege Johnson, Sweetwater’s grants and communications manager, responded via email: “The district plans to place the Third Avenue property on the market again. At this time, it is still to be determined, however it may be as early 2015.”

Johnson also averred that the district has studies to support the asking price, and that the next price tag is “yet to be determined.”

A related and equally thorny problem is that the district is acquiring new administration offices. Buying the new offices on 860 Harold Place in eastern Chula Vista, hinges on the sale of the three properties. In the meantime, the trustees voted to pay a hefty lease for Harold Place.

According to the district’s Asset Utilization Plan, the lease payment will be funded in part by “Community Facilities Districts,” which is to say, Mello-Roos taxes. (School districts and municipalities often fund school infrastructure projects with Mello-Roos revenue, which is essentially an extra property tax.)

When the Reader queried the district about using this funding for the new district office, Johnson answered, “Several CFD [community facilities district] mitigation agreements allow for funding of an administration center.”

There have been a number of complaints from Sweetwater parents about the fact that Mello-Roos schools appear to be deteriorating even though the fees continue to be collected from the residents. At the July meeting, Sweetwater trustees approved a 2 percent raise in Mello-Roos fees.

The fact that Mello-Roos monies could be diverted from school sites to a new district headquarters might not sit well with Sweetwater parents, especially because in August, many of Sweetwater’s Mello-Roos–funded schools opened with impacted classrooms, insufficient seating, insufficient books, and with students being housed in portable classrooms.

There’s one more twist to Sweetwater’s worrisome real-estate stratagem.

A nonprofit land trust, California Trust for Public School, holds the title to the district’s L Street property. The nonprofit’s CEO, Marc Litchman, sent a letter August 7 to interim superintendent Tim Glover, in which he implores the district to do the right thing with the L Street property. He wants to see the district use the property for educational purposes rather than high-density housing and commercial development.

Here is an excerpt from Litchman’s letter:

“Should this property be sold, as currently envisioned by District staff, it will have a catastrophic effect on District finances — so staggering it might be considered by legal and regulatory authorities as an illegal and unconstitutional gift of public funds. By ‘buying high and selling low’ the only interests served will belong to the speculators paying the District pennies on the dollar for prime property. If somebody is going to eat $25 million dollars in losses caused by the recent real estate recession, it shouldn’t be Sweetwater school children or South County taxpayers.”

The specter of a lawsuit appears to be raised when a bad real-estate deal might be considered “a gift of public funds.” In fact, Litchman’s letter concludes, “Make no mistake, the road we’re on is dark and dangerous; rife with peril and litigation. We’ve got a way out that rebuilds community and credibility AND provides the funding needed to meet the District’s objectives.”

Litchman also sent a Notice of Default to interim superintendent Tim Glover and to the bonding company for the L Street property on August 7. In the letter, he asserts that the district has failed to fulfill its contractual obligations with California Trust. He argues, “We do not have the desire, ability or legal status to support speculative real estate developments.” He says the district’s actions pose a threat to the trust’s nonprofit status and “undermine the tax-exempt nature of the bonds.”

A search of board documents shows there will be a board workshop on facilities and asset utilization on August 14 at 10:00 a.m.