Schools

LASD Board to Leverage Other People’s Money

Los Altos School District looks again in Mountain View for Land
These 3 areas have not yet been developed to their "highest best use"
Written by lalahpolitico

Kudos to the Los Altos School District Board. Procrastination, luck, and the discovery of “TDR” may result in a new school site in Mountain View!

Last November 2016, the board announced it was changing its school site search strategy. It would pursue new land for a new school, not at 5150 El Camino in the City of Los Altos, but rather return to looking for deals in the City of Mountain View.

A MV San Antonio area location could confer two advantages. The district could scoop up $25M of developer paid “park-in-lieu” funds now in City of MV coffers to help pay for the new school campus. The District could avoid having to pay the full market price for “highest, best use” of the site by using a Mountain View TDR (Transfer of Developer Rights) program/policy rather than eminent domain.

Furthermore, the board’s procrastination on spending any of the $150M Measure N bond has allowed time for Prop 51 to pass. The proposition replenishes an empty State School Construction fund. Grants from 51 could possibly pay not only toward a new MV school, but also for Bullis Charter School needs, “modernization” of the exisiting schools, seismic upgrades and more.

Ivanovich wrote a letter to Mountain View about TDR

Newsy Documents that have Caused Puzzlement

MV Voice article FEb. 17 on TDR

Trustee Ivanovich letter to City Council of Mountain View

Los Altos Town Crier article

Lalahpolitico has done a bit of reading up on how TDR policies work. What follows is my interpretation of how they could help LASD.

 


Transfer of Developer Rights (TDR) programs…

A Jurisdiction can avoid paying for “highest-best use”

 

There are two or three sites in the San Antonio Precise Plan area that the LASD board could be eyeing as potential school sites.

The District could pay what current owners are asking/expecting – the “market price” – which is the price a developer buyer would pay given that the zoning on those sites allows 5 to 7 stories of high density housing or office.   In other words, in the open market the District should expect to pay for the “highest, best use” of the land allowed by the new San Antonio Precise Plan zoning. However, the District has no intention to develop the land for the “maximum” of economic uses for which it is zoned. The District will not be earning rents that could pay for the very high cost of acquisition, the way a Prometheus or Sobrato would. What a conundrum.

If the District decided to use it’s right of “eminent domain” on the parcels, the price could be even higher than “market” and there could be litigation and delay. In the case of eminent domain, courts expect the government jurisdiction to fully compensate the seller. Eminent domain is a not shrewd approach; it’s the most expensive of all.


These above Comments on MV Voice article of Feb. 17 could be from Trustee Ivanovich.  Who else would have researched this?  I don’t blame him for using  the anon handle.  The comments align with my reading of some of the legal scholarly article offered by Google.


So how do TDR programs make a jurisdiction’s desired changes in land use policy cheaper? How do they make “downzoning” legal, voluntary, and affordable?  Land Ownership can be thought of a bundle of ownership rights. We’ve all heard of mineral rights, water rights, airspace rights, and recently of Developer Rights. We know that typically local zoning confers rights about what can (and cannot) be done on your property. The different rights can be sold separately to different owners.

 

Suppose a jurisdiction decides some private land would better serve the public interest if it did NOT develop to its highest, best use under its current zoning. [The jurisdiction created the high-density zoning in prior years, not anticipating this new public benefit use. ]  Now it wants to downzone that property.

 

In the case of a prospective Los Altos School District school site in the San Antonio Precise Plan area, the City of MV will help the sellers “broker/trade/sell” their high-density zoning rights to the developer of a project at a site with lower density zoning and at a different location. Some San Antonio Precise Plan area land – stripped of the high-density rights – can be sold to LASD for less than full price. What made the local news is that the transfer of zoning rights could be to a developer located not only in the San Antonio Precise Plan Area, but also to a developer in the emerging East Whisman Precise Plan Area. [ See the above image of a MV Voice commenter.]


More Details

The San Antonio Precise Plan is at least half built out at the new high-density zoning. The remaining areas with high-density potential are 1) the old Safeway/Old Mill, 2) Federal Realty’s Walmart/Trader Joes/ 24hr Fitness/Kohls and 3) Target.  [ Image at top of this post shows those locations. ] At the moment, only Federal Realty has floated an “informal” plan to the City of Mountain View planning for developing its landholding. [Ap 6 2016 EPC agenda file has links to the staff report and applicant renderings of the vision.]   Strictly for purposes of illustration, let’s suppose the School District is trying to do a land deal with Federal for some of its large site. 


Federal Realty Mountain View

A map from the EPC Ap 6, 2016 staff report about Federal Realty’s  preliminary redevelpment ideas. Much of the Walmart area is under a long term lease.  Red areas are not.  One cannot put structures on the yellow Hetch Hetchy water easement.


We know that the City Council of MV agrees with Los Altos School District Board that some of this underdeveloped San Antonio Precise Plan land would better serve the public interest if it were a Los Altos School District school, rather than high-rise housing and offices. Federal Realty is of course asking for zoning concessions in its vision for redevelopment. But a several acre carve-out of land for a school is too rich of community benefit; it could make Federal’s project “not pencil out” economically. [ [As a comparison, the 7 acre Prometheus project now under construction on San Antonio where Dittmers used to be, has about .5 acre “donated” as mini-park.]

 

If Los Altos School District exercised eminent domain on say 10 acres, it would have to pay Federal Realty (FR) the market price at least for that land. But if FR can transfer/sell its Developer Right to high density zoning to another project in different 10 acre location, then Los Altos School District could pay LESS for the FR land. [I assume the land would be removed from the Precise Plan and downzoned as CF community facility. Is Federal willing to sell?]


Federal Realty started the conversation about redevelopment with the EPC by asking for more office space and more height. Max of 95 feet.

 


Now Let’s turn our attention to the emerging East Whisman Precise Area. The zoning there is still being defined by city staff and city council, but 4 stories and medium FAR appear to be likely. Of course owners there – Symantec, Linked In, Google and potentially others – will likely be asking for zoning concessions to build higher and denser.

 

East Whisman area owner/developers can “PAY” for their desired zoning concessions – perhaps 6 stories, rather than 4, more floor area, more units per acre– by buying some of Federal Realty’s TDR. Because there are a good number of potential buyers of the TDR over there in Whisman, the “price” of the rights from the San Antonio Precise area would be maximized. That means what LASD has to pay for the San Antonio Precise land is lower, more “feasible.” [There are few potential buyers left in the San Antonio Area now.] Essentially, the developers in Whisman would be providing the “community benefit” of a new Los Altos School District school…at the other end of town!

Google has a large foothold in the East Whisman Precise Plan area

City of MV page about the the East Whisman Precise Plan process which will run from 2016 thru 2018. It is at an early stage. Google, Linked In and Symantec are some of the land owners wanting to undertake redevelopment.


Sounds nice..but…uncertainties

Mountain View usually gives developers a menu of community benefits. For example, the City probably won’t force a particular developer to provide the school benefit rather than perhaps a bike route benefit. “Pricing” of the TDR will be administrative, negotiated on a case by case basis…and Lalahpolitico does not envy the MV Planning staff the job of being the TDR “banker” or broker. [ Is this a new City Planning service? Will they need consultants? ]

And how will negotiating the TDR slow down the timeline for constructing a new LASD school? Would the seller close the land deal with Los Altos School District before knowing what the TDR is worth?

The East Whisman Precise Plan Area is just getting off the ground. The MV council is defining how much it will be upzoned right now. There will be lots of potential developers there who will be wanting to get density and zoning exceptions. These are potential buyers of the school site TDRs.  A TDR – Transfer of Developer Rights of high-density zoning –from the San Antonio area school site looks quite saleable to Google, Linked In, Symantec and other property owners in the East Whisman area who are looking forward to more intense development of their properties. MV Voice says Google has a “huge foothold.”

This real estate TDR “market” is similar to the more familiar concept of a Carbon Credits market. Entities that want to pollute can buy “credits” from entities which have conserved. The School District does not want the density rights; so they can be sold off to someone who needs to build high-density development.


PROPOSITION 51 OPPORTUNTIES?

Prop 51 could be used by LASD to pay towards facilities

Here in red are some programs that might work for LASD


Prop 51 Grants Could Stretch Measure N funds ….somewhat

Lalahpolitico has checked out the website of the Department of Public School Construction which administers State grants for brand new schools, school modernization, portables replacement, seismic upgrade and charter schools.

Through email correspondence with DGS staff, I have learned that the grant process for Charters is starting up right now. The first round for charter grant applications closes June 2017. Will some responsible party determine if this is an opportunity for Los Altos School District to get some help paying for long-term Charter facilities? There is “how to apply”  seminar in Sacramento March 21.

I have learned that grant processes for all the other purposes – new schools, modernization, seismic upgrade, etc. — are not being started for some months or longer. Apparently Governor Brown has insisted that grant processes be reviewed and accountability audits be upgraded before he will authorize the sale of any Prop 51 bonds for any of the non-charter programs.

 

The grants don’t really pay for 5o or 60 percent of the project cost. Much much less. But a dime instead of a dollar is not to be sniffed at.

If you visit the DGS web site and look over the obtuse grant information and forms, you might get the wrong impression that grants might pay for 50% to 60% of eligible projects total costs. They do not. The amount of a grant is first based on the number of “eligible students.”  Then depending on type of project, one gets 50 to 60% of that eligible student count grant amount. The largest size example grant award I saw, was $25 million for a 500-student, new school for a new, greenfield subdivision – think Dublin, CA.  Lalahpolitico is not sure a new LASD MV school would garner anywhere that much.

 

And in the case of need based enrollment growth, there are some rather arbitrary formulas about eligible students. There are forumula differences between district-wide grants vs. grants for a specific site. Lalahpolitico found the forms and online guidance very obtuse. Nonetheless, there will be real money there and Lalahpolitico hopes Los Altos School District is keeping an eye on the possible opportunity.

The gotcha about funding is the way the program calculates “eligible” students… This is an excerpt from the DGS website

 


LALAHPOLITICO  POLITICAL ANALYSIS

Let’s suppose the MV land acquisition negotiations work out and thanks to TDRs and park-in-lieu fees the price is “affordable” or as the board seems to be saying recently …”feasible.” What’s unknown is how many acres is the board aiming for? 5 acres or 10 acres? Perhaps the amount of land determines whether the school would be a 400-500 student, district-run, k-6 school or a 900-student, charter-run, k-8 school? The board isn’t saying but certainly must be looking at both scenarios.

 

Imagining a 900 student Bullis Charter in Mountain View by 2022?

Let’s suppose the board acquired a minimum of 8 acres and built a new school to CDE guidelines. Given that amount of land and facilities, it is easy for Lalahpolitico to imagine the Charter thriving there…provided the board continues to execute on a commitment to support ALL students in the Los Altos School District. The board got a good start last year by including Bullis Charter School in the recent Measure GG “supplemental” parcel tax renewal. Next they need to include BCS in the basic, much larger parcel tax. Let’s have equity in per pupil funding.

Let’s support ALL students in our District. That should include BCS participating not only in the supplemental parcel tax (Measure GG), but the base parcel tax.


When that equity happens, no parent will feel pressure to donate more than they can afford to the district PTA’s or to the Bullis equivalent. Parents who are attracted to the charter school alternative program will feel totally free to apply and attend. They are free to apply and attend now…but knowing that there is a per pupil funding shortfall…well, one can feel like a cheapskate.

Because of the “5-year agreement,” by 2019 the charter admissions lottery will have 0% preference for kinder admissions from LAH. It will be a pure, simple lottery. Right now, charter students are already coming from every elementary attendance area in the District. [Yes there are somewhat fewer from S. Los Altos.] If the charter were located in MV along California Ave. or along Showers, well yes… there might an uptick in the percentage of applicants from MV.

But a “shiny new school” with Mandarin starting in kindergarten will attract applicants from all over the District. And because of that, the District will need to implement busing for the charter or something equivalent. The District will need to take responsibility for reducing car trips.

If the Bullis Charter School is located in the high density – high traffic area of Mountain View, the LASD will need to provide busing or an alternative…google Waymo self-driving cars contract?

Lalahpolitico assumes the District will not interfere with the independence of the parent-led, non-profit charter. The Charter will continue to own their “own” programs and answer to the County of Santa Clara Board of Education and State Board of Education. [Unless of course the charter board and parents come to feel after some more years pass, that the District should become their authorizer.] Expanding on the equity theme, if the Los Altos School District board has teacher support programs, such as teacher housing, the District should include charter teachers on an equal footing.

Because of the complexity of the prospective Mountain View land acquisition, the slow pace of Prop 51 grant processing, the lengthy CDE inspected construction process, and the need to do a first round of Measure N bond selling…it will probably be at least 2022 before the school doors would open. BCS would need to continue on in the Egan-Blach camps until 2022, when perhaps the portables could be removed and the Board will finally approve moving 6th grade to the junior high schools, as is the case in virtually all other public schools in the state.

Can BCS teachers be included in the LASD teacher housing program…it trys to find local affordable rooms and granny units for teachers starting their careers


 

 

This MV BCS  “solution” will theoretically be the one that does not inconvenience any families at district-run schools. Perhaps district attendance areas will not need to be redrawn now or in 2022. But actually by then one should expect boundaries will again be tweaked at the margin. Perhaps more kids near downtown will need to transfer from Santa Rita to Bullis-Purissima in LAH. MV kids will continue to be dispersed to Santa Rita, Almond, and Covington.

The downside is that even if the MV site is “feasible” for a 900 student charter school, it is still the most expensive and leaves much less money to spend on meeting the modernization needs of the existing District-run sites.  $300K – $400K of needs have been identified at existing schools.

Many cost-conscious District voters would still prefer the board, to hand over Covington to Bullis Charter School, and redistrict Covington homes back to the elementary schools they used to attend before 2000 [when the long closed Covington was reopened as a school.]


Imagining a 500 student District-run School in Mountain View by 2022?

 

This would be more affordable/”feasible” than the 900 student school. If it is a neighborhood school, there would be no need for a busing program. Car trips could be negligible as most students could walk or bike. Much of the NEC parent community would be glad that they no longer need to cross El Camino to get to school. Some might miss the more leafy, spacious feel of attending the Los Altos campuses.

However, what is the permanent solution for BCS? Are they going to permanently have two campuses? One on Egan the other on Blach? Will both locations become 450 to 550 student k-8 schools. Egan and Blach science labs and P.E. spaces will be shared with BCS 6, 7, 8 graders? This would certainly dismay a large segment of the BCS community who continue to desire a single campus. But perhaps there are advantages? Heck, several year ago, then BCS Board Chairman Ken Moore proposed a design for a two campus arrangement…as long as the facilities were equivalent.  So some of the BCSers might be ok with it.

 

If the BCS community concludes it is unhappy with that outcome and litigation resumes, the larger community of voters for Measure N will be very, very upset.

 

The LASD board is currently totally focused on pursuing ” actions” a, b that were among the most “supportable”…according to Conteneo research participants. This means the board does not have to evaluate solutions that use some of the 100+ acres of exisiting LASD land; they don’t have to pick a “victim” school. Now with this TDR angle, they probably have a year or more to try to pull a deal together.  After that, the public will get annoyed. However, Lalahpolitico points to the supportability of using existing land… j, k, d, n in the Conteneo research. Many voters just say, “Give Covington to BCS, move District 6th graders to Egan and Blach. It’s the cheapest and leaves the most money to spread around all the other schools.”  And it’s the fastest too.

 



Recommended READING LIST

Just try googling “tdr program vs. eminent domain. My favorite is the Fordham University .pdf, “Elimination of the Highest and Best Use Principle…a middle way….”


About the author

lalahpolitico

Norma Schroder is an economics & market researcher by trade and ardent independent journalist, photographer and videographer by avocation. Enthralled by the growth of the tech industry over the decades, she became fascinated with the business of local politics only in the past couple of years.

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