Sweetwater Union High School District’s new trustees are picking their way slowly through real estate land mines bequeathed to them by the previous administration.
On January 12, the district held a workshop on several items, including the “Asset Utilization Plan.”
For two years, Sweetwater has sought to entitle, or make developer-ready, several pieces of district-owned property on Third Avenue, Fifth Avenue, and L Street in Chula Vista. Two of the properties have yet to be declared surplus.
The district paid exorbitant fees to the consultant group E2ManageTech to entitle its Third Avenue property for a high-density apartment development called the Colony. The entitlement (or pre-development process) included environmental studies, working with the City of Chula Vista to perfect a design, and maneuvering the design through city channels.
Keyser Marston Associates was hired by Sweetwater to give an independent review of the Asset Utilization Plan. They presented their review on January 12 — and it wasn’t pretty.
Paul C. Marra, the Keyser Marston representative, said the Third Avenue property, called the Colony, was only worth $4 million; six months ago the district put it on the market for $7 million. There were no takers.
Further, Marra told the trustees that a developer would not buy into the E2ManageTech design for the Colony because it required podium parking. Podium parking, as described by Marra, is a parking-garage structure with stacked flat housing on the top.
This design was necessary because of the density the district was seeking. “The South Bay Market is not ready for podium parking. The economics won’t support it,” Marra said. He estimated the market would not support this design for at least a decade.
So, wave goodbye to all the money the district paid to E2ManageTech to entitle and design the Colony. Marra advised the district that developers like to do their own entitlements.
The Keyser Marston news got worse.
Marra also told the district that the L Street property would only be worth $23 million after it was entitled for high-density housing.
In August, Tom Calhoun, Sweetwater’s chief facilities executive, told the interim board and former trustee John McCann that the property would fetch $40 million when it was entitled.
Aside from the podium-parking problem, Marra stated that the expense to develop L Street would be “extraordinary” because it was a bulk site, would have to be subdivided internally, and some land would have to be set aside for a park.
Included in Sweetwater’s Asset Utilization Plan is the purchase and remodel of a new district office. The district has been considering a controversial move to the Leviton Building on the east side of Chula Vista.
Marra did the math for district’s capital facilities Fund 40, the fund that was devoted to accomplishing the district’s asset plan. After all the properties were disposed of at the newly determined values, and the new district headquarters and bus yard purchased and remodeled, Marra said the fund would be $5.4 million to the negative.
Board president Frank Tarantino called the Keyser Marston report “eye-opening” and said it was good to know “what we thought and what the market will actually bear.” Interim superintendent Tim Glover called the report “bleak.”
Calhoun suggested that the Facilities Fund 40 total could achieve a positive cash flow if the district only leased the Leviton building rather than purchased it.
For many Sweetwater families there was also some good news. Three of the five boardmembers indicated they were dissatisfied with the district’s proposal to purchase or lease the Leviton building.
Trustee Nicholas Segura kicked off the dissent by saying the location didn’t sit well with him.
Trustee Paula Hall, who represents Imperial Beach, Nestor, and South San Diego, said, “Moving everything over to the east side will send a wrong message regarding the district being viewed as a whole. We have been cut off from the district for many years…. The move would prohibit many people from being engaged.”
Tarantino said, “I remember when the city of Chula Vista was confronted with the same decision. Do they demolish their old civic center that needed to be revamped, or do they move it to the east side where land is available? The point was brought up [that Chula Vista’s] roots are on the west side, and I feel the same way. Our roots as a district are on the west side and moving to the east would go against that premise….”
Regarding the district’s financial problems with the L Street property, Tarantino offered this comment via email:
“Saturday, December 6, 2014, the Board of Trustees received the initial briefing on the Sweetwater Union High School District’s properties. This is a very complex and detailed issue that the Sweetwater District has been engaged in for 10 years. We recognize that there are several intricacies and potential legal implications involved in this issue and because of these, we are not at liberty to openly discuss the matter. We are taking our time to learn as much as we can about the issue and we are committed to finding a solution that is in the best interest of the Sweetwater District and the entire community.”