Santa Monica-Malibu Unified School District (SMMUSD) has announced intentions to pursue flexibility with two of the district’s rental properties. During the November 21 meeting of the SMMUSD Board of Education, the board adopted a resolution authorizing staff to proceed with a financing plan to acquire all right, title and interest of properties at 902-926 Colorado Ave, as well as 1631-1645 16th Street and 1630-1646 17th Street.
The resolution authorized a Certificate of Participation for an amount not to exceed $13.4 million to purchase the leasehold interest of STG Three Properties, LLC.
The two properties were leased out to STG in 2002, with the lease scheduled through June 30, 2051. As part of the deal, STG paid the district a base land lease rent of $780,000 per year, while also paying an annual percentage rent. With the district disputing the amount of percentage rent payable over the years, STG offered to sell the leasehold.
District officials stated that the plan allows for more efficient management of the properties to increase revenue to the general fund, as well as provide flexibility and options for future uses. The 902-926 Colorado Ave property could potentially be used as a relocation of the current school bus yard, which is currently leased from a private owner at $550,000 annually.
“This project furthers the educational goals of the District by using its assets more efficiently to increase funding for student learning,” SMMUSD Chief Operations Officer Carey Upton said. “We are pleased with the school board’s approval of this resolution as this benefits the District’s general fund and its future. This action does not have any impact on our exciting and necessary facility projects that will continue, thanks to the voters’ support for SMMUSD bond measures.”
Financial advisors for the district stated that the purchase price was a “bargain,” with economist Allan Kotin adding that the 16th and 17th St. properties (adjacent to the old SMMUSD district offices) are “potentially one of the most valuable properties in Santa Monica.”
Those properties were owned by the district starting in 1933, when The Garfield School was relocated there after the 1933 Long Beach Earthquake. After The Garfield School’s closure in 1958, the campus was used for administrative offices, as well as for the original site of Olympic High School.
When the district moved its offices into the current 4th and Olympic site, the remaining 16th Street site was developed with office buildings and leased. As part of a “Three Property Exchange,” the district received ownership of the 9th and Colorado site.
The COP will be paid off with capital funds that can only be used for facility needs, funded through redevelopment funds and not facility improvement bonds. While there are still discussions to be had on uses for the spaces, the SMMUSD board was excited for the potential the lease buyout brings. Current leases by tenants of the properties will be honored through their current length.
“I think this, to me, is an amazing thing that we’re doing that will benefit the district, give us opportunities in the future, and create more revenue for our kids,” Board President Jen Smith said.
thomas@smdp.com
