The main base of operations for the San Ramon Valley Unified School District is set to shift from Danville to San Ramon in the coming year following a vote by the board of education this week to approve the purchase of a new site.
The board voted unanimously Tuesday to approve the $18 million purchase of the commercial site at 3130 Crow Canyon Place, which will be funded by the eventual sale of the district’s current headquarters in Danville.
“This is able to help the district in the near term while we figure out what’s happening with this property that we’re sitting in right now, 699 Old Orchard,” Chief Business Officer Danny Hillman said at the special meeting Tuesday in which the item was brought before the board. “But it doesn’t preclude us from going ahead and purchasing the new building.”
The move is the latest in the district’s ongoing efforts to increase revenue and reduce costs amid a longstanding structural deficit that has reached a critical point over the past year.
The upshot of the deal, Superintendent CJ Cammack said in a press release from the district Wednesday, is “turning a static asset and a restricted funding source into a dynamic and sustainable financial engine.”
Despite the hefty price tag for the purchase of the Canyon Commons Corporate Plaza, the deal means that the district will effectively be able to convert restricted funds into unrestricted funds.
Redevelopment Agency (RDA) funds can be used for the purchase of the building and the relocation of the district offices, which is in turn set to generate an estimated revenue of $1.3 million annually from commercial tenants. That revenue would then go into the unrestricted general fund.
“If we didn’t do this deal with the building and we just sold this outright, we wouldn’t be able to use any of those monies for the General Fund,” Trustee Shelley Clark said. “We would have to put them into the facilities fund. What this gives us the ability to do is to use the funds from the eventual sale of this property to help purchase the building that we’re looking at.”
Cammack, who began his tenure as superintendent when the district’s financial crisis was reaching a fever pitch, told DanvilleSanRamon that the idea for the move came from his experiences and observations in other districts. He pointed to the adult school site for the Martinez Unified School District as an example in which the school district’s property had been leveraged to generate commercial revenue, with the site now hosting a Dutch Brothers coffee shop.
However, SRVUSD did not have existing property in its portfolio that would lend itself to commercial leasing, according to Cammack. And selling property outright would do little to help the unrestricted general fund, with revenue from property sales going into the restricted facilities fund.
The move is similar to that of the Pleasanton Unified School District, in which the board of trustees used funds from the sale of its previous Vineyard Avenue offices to pay off the debt from its $30 million new location on West Las Positas Boulevard. It’s also a tried and true practice that has been enacted in other school districts throughout the state, as Cammack and Hillman noted Tuesday.
“We started thinking about how we might do this over the course of the last year, and then we started working very hard to look at different properties in different locations, and different options, towards the end of last year,” Cammack said.
“And through that we ended up analyzing this property. We were looking for a property that could house our staff now – the people working at 699 Old Orchard – and also wanted to find a place where we could pull some of our staff out of the service center, because the service center is overcrowded,” he continued.
The size and location of Canyon Commons – neighboring the district’s San Ramon service center – made it a natural fit for the district’s needs, Cammack said, as did the multiple longstanding tenants.
“Most of the tenants have a strong history in the building,” Cammack said. “We look forward to joining the commercial space and being good partners with our tenants, and we hope they will stay with us.”
Early talks have also been underway, Cammack said, with “interested parties” eyeing the vacant portions of the building.
Cammack said that he was optimistic about the deal and the future revenue it will generate despite what has been a tumultuous commercial real estate market since the onset of the COVID-19 pandemic.
“We looked at the fact that there are more companies returning to work in person, and we also looked at the fact that a lot of the commercial real estate in the area is being turned into housing developments,” Cammack said. “So we believe that there will continue to be a need for commercial real estate in the long term, while the overall availability of commercial office space is decreasing.”
The purchase is set to be completed in the coming months, with the district expecting to see rental revenue start coming in as early as the spring. Cammack said that the official move of the district’s operations would likely be over the summer.
The purchase of Canyon Commons is the first step in the overall move of the district’s headquarters. The next step, Cammack said, will be to get the board’s approval to declare the current headquarters as surplus property and move toward selling it. He estimated that the sale could take another 12 to 16 months to complete.
While more information on that next step is still to come, district officials noted in the announcement that the site is likely to be attractive to developers, given its identification and zoning as a housing opportunity site in the town of Danville’s current Housing Element.
Town and district officials had already discussed the potential sale of 699 Old Orchard Road in the planning phase of the 2023 to 2031 Housing Element.
“Given the new development rights we believe the value of our site has increased substantially and may afford us the opportunity to finally sell our property,” district staff wrote in a letter to the town in 2023, according to the housing element.
The town’s goal, according to the housing element, is to facilitate the development of 113 “lower income” units on the site, and 68 on the site of the former town offices at 510 La Gonda Way. However, that goal has an expiration date.
“For both the 510 La Gonda Way and 699 Old Orchard Drive sites, if by the end of 2028 there has not been a planning application submitted for one or both of the sites, the Town will take action to remove the site(s) from the RHNA inventory and designate additional properties to meet the RHNA requirement, as found necessary,” town staff wrote in the current housing element.
In addition to the financial incentives, Cammack said that moving to the new building “puts our headquarters almost in the center of our entire district”.
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