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Even before enrollment started to decline, public schools across California were sitting on hundreds of square miles of property, worth north of $750 million and serving no educational purpose.
Across the Bay Area and other parts of the state, there are shuttered buildings, vacant plots, parking lots and built-out space leased to nonprofits or private entities. In San Francisco alone, the city school district owns the land sitting under the Westfield mall in San Francisco and the 300,000 square feet of dirt and weeds at two undeveloped plots where dogs often romp on district-owned land worth at least $400 a square foot.
But the amount of underutilized, surplus or completely unused property is only increasing as the number of public school students continues to shrink, with the loss of 310,000 state public school students since 2019, a trend propelled and maintained by a declining birth rate, the pandemic and a high-cost of living.
Meanwhile, the costs of maintaining or securing no-longer-needed real estate owned by school districts is starting to add up as many districts struggle with tight budgets or deficits. At least $750 million worth of public school property is officially designated by the state as serving no purpose at all.
“Districts are increasingly being forced into the position both financially and practically to look at how they manage these assets,” said attorney Harold Freiman, who has represented Bay Area and other school districts in resource management, including what to do with their vast real estate holdings. “We’re seeing both more districts selling properties and more districts leasing properties.”
That’s a shift from decades past when the vast majority of districts clutched their land like family heirlooms. Once gone, it’s gone for good, officials have repeated like a mantra, especially given the value and relative scarcity of real estate in many urban areas.
Yet in recent years, some Bay Area school boards have hotly debated and then decided to sell off shuttered school sites, including the 2020 votes to take a $125 million offer for San Mateo Union High School District’s Crestmoor High School site and another $79 million bid for the San Bruno Park Elementary District’s former Engvall Middle School.
Both, however, are a lesson in how hard it is to sell school land even when a district wants to part with property.
The abandoned Lake Merritt headquarters of the Oakland Unified School District.
Michaela Vatcheva/Special to The Chronicle
The initial Crestmoor deal fell through after the housing developer purchasing it faced a battle to get its plans approved by the city. Another developer then stepped in with an $85 million offer, the purchase also contingent on getting plans approved.
The Engvall site is also under contract pending approval from the city to develop the site.
It remains to be seen if the Jefferson Union High School District, which wants to lease property to a developer to build housing that would help fund its priorities, will be more successful.
The list of state and local bureaucratic requirements to consider a school district property eligible for sale and then sell it and get the proceeds is long and complicated, experts say, restricted by state laws and limited by local politics, including community backlash over the loss of a beloved school and the idea of housing or other options on the sites.
Adding to the complications is a state law that limits the use of sale proceeds to capital projects, meaning revenue from selling facilities must be spent on district facilities. The money can’t pay for people, supplies and other education-related costs.
For some districts, that offers little incentive to sell.
SFUSD, one of the biggest property owners in the city, has so far declined to consider selling an inch of its 16.7 million square feet outdoors, equal to 289 football fields, or the 9.9 million in square footage inside buildings, about the same amount as seven Salesforce Towers.
That includes some prime real estate, including a whole block of buildings with seismic issues as well as historic designations near the Civic Center, part of which is now used as administrative space. There is also an 83,000-square-foot vacant lot in the Inner Sunset used by the community as a de facto dog park as well as a seasonal pumpkin patch and Christmas tree lot.
“There are no immediate plans to sell property,” said district spokeswoman Laura Dudnick. “The long-term return on our investments outweigh the quick impact of a sale.”
The district collects $7.6 million in lease payments from 14 leased properties, including payments from the pumpkin and Christmas tree sellers as well as those managing the Westfield mall site — although that’s a small part of the district’s annual $1.2 billion budget.
The district is also among several across the state looking to utilize land for worker housing, leasing property to developers, who will build affordable units for teachers and other employees, including a former school site in San Francisco’s Sunset District where a project is under construction. In Daly City, 120 teachers have already moved into a new apartment building.
A new state law, in effect Jan. 1, 2024, will make it easier to build housing on school district sites, including for teachers. According to a state analysis, about 75,000 acres of district property statewide could accommodate 2.3 million housing units, more than enough for all 300,000 state teachers and 350,000 other district workers.
There are downsides in keeping property that is no longer needed or used for educating students, said Freiman, a partner at the Lozano Smith law firm.
A separate state law penalizes districts that sit on unused real estate for five years or more, typically meaning a site not used for educational purposes or leased, charging an annual fee of just over 1% of the property value.
San Francisco paid just over $74,000 annually in recent years for such properties, with the state collecting a total of $7.5 million based on a value of $750 million in idle real estate owned by school districts.
A vacant lot owned by the San Francisco Unified School District on Seventh Avenue and Lawton Street is seen on July 13. SFUSD, one of the biggest property owners in the city, has so far declined to consider selling an inch of its 16.7 million square feet of property.
Michaela Vatcheva/Special to The Chronicle
That’s just the beginning of the costs related to underutilized or unused school property, Freiman said.
Leasing means being a landlord and maintaining the property, which can get expensive as buildings age.
In addition, vacant and shuttered sites are not only an eyesore, but a safety issue, with people breaking in to steal copper wire or find a place to sleep, with districts paying for security, fencing and other costs to mitigate problems, he said.
Case in point: On Friday, a fire destroyed the gym and an adjacent building at the Bowman Elementary school site in Hayward, which the district closed a year ago. Fire officials told local media they’ve been at the site for multiple calls related to rubbish and nuisance fires.
Freiman said he encourages districts to treat the public property as an asset and manage it as such.
“We really are at a point to rethink how we look at land,” he said.
In Oakland, the school board has been trying to figure out what to do with its former central office near Lake Merritt for 10 years. After the building was flooded over a holiday weekend, the block-long site was vacated, with the district renting downtown offices since.
The school board recently voted to allow a bidding process to demolish the structure.
A community coalition hopes to build a hub of services for young people. Others would like to see a sale, with funds supporting critical facilities and infrastructure needs across the district.
Current school board President Mike Hutchinson wants the district, using in part philanthropic donations, to build a new administration building on the site.
He added he would never vote to sell the land or any other piece of property owned by the district.
“For me I’m philosophically opposed,” he said. “I think it’s a short-sighted decision. This is public property. Once it’s sold, it is gone forever.”
Reach Jill Tucker: jtucker@sfchronicle.com
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