The Pleasanton school board signed off on the final plan to purchase an office complex in the Hacienda Business Park to serve as the new district headquarters location Thursday night.
The two-building property, located on 5758 and 5794 West Las Positas Blvd., will cost $23,480,261 for the Pleasanton Unified School District to acquire from the current owner, ECI Four Arroyo LLC. The board voted 4-1 to ratify two amendments to the final deal and advance the relocation project, with Trustee Kelly Mokashi dissenting.
According to PUSD staff, three acres of the current district headquarters on the edge of downtown Pleasanton, at 4645 and 4665 Bernal Ave., will be kept while the rest of the seven acres will be put up for sale.The property was recently estimated in value between $31 million and $34 million, which would help pay off the newly purchased Arroyo Center.
"This is a crucial first step that will allow the district to leverage a portion of our current property to help finance needed investments in our aging school facilities," Superintendent David Haglund said during the meeting. "By maintaining a portion of the Bernal property we will pave the way for significant improvements for our Village High School facility, and create a dedicated space for the growing Pleasanton Virtual Academy."
Ahmad Sheikholeslami, assistant superintendent of business services, said the district has been discussing the need for a new district office for years and that the pandemic gave staff the opportunity to begin looking because of lower commercial prices in the market at the time.
Rather than spend the money on renovating and updating the current headquarters site, which would cost more, Sheikholeslami said the best course of action was to take advantage of the prime real estate market and use the current property as financial leverage.
After the board's initial approval of the purchase and sales agreement of the new property on May 12, the district was presented with an updated lease agreement for the sole tenant currently renting a portion of the Arroyo Center, electron microscopy firm Gatan Inc. -- which would make the district the landlord of the lease going forward after escrow closes on the purchase.
The district plans to use a certificate of participation of $30 million, which is a type of financing where an investor purchases a share of the lease revenues of a program, and the future tenant payments to pay for the space and any future renovation and construction projects.
The company will begin paying the district about $80,000 starting next year every month from now until 2027, which Sheikholeslami said would bring in even more revenue into the district's general fund.
"This is one of the most fiscally responsible decisions I have ever made on this board because what it does is it takes assets that we have and turns them into dollars that we spend on improving our facilities all across the district that we don't have to pay for out of general fund dollars," Trustee Joan Laursen said.
The board also reviewed two amendments to the lease agreement on Thursday night.
The first identified that the seller entered into a lease extension, deleted the current tenant's option to extend the lease by seven years and agreed to complete about $500,000 worth of tenant improvements.
According to the district report, the agreement was to ensure the district will not have to pay any costs arising from correcting violations in any existing building under the Americans with Disabilities Act, amongst other modifications.
The second amendment includes a letter from ECI Four Arroyo LLC that outlines the approved plans for improvements and modifications that will be done to the building.
It also includes a $100,000 reduction to the purchase price following negotiations between district officials and the seller resulting from discoveries made by the district during its due diligence investigations.
According to the Arroyo property inspection and financial report, which contains information about the investigation, tenant improvement planning and costs, property and land usage and financial information, the building is overall in good shape but does have some heating and air conditioning units that need to be replaced, along with the building's roof which has reached "the end of its useful life and should be replaced within two years."
Apart from reviewing these new amendments, the board discussed the plans for the early childhood programs, Horizon and STEAM, as well as Village High School, the Pleasanton Virtual Academy and adult transition programs – which currently operate on the district's Bernal property.
While Village and Virtual Academy will remain on the three acres at the Bernal site and get renovated, Horizon and STEAM will be relocated to Harvest Park Middle School.
Both these plans are included in the Facilities Master Plan that is contingent with the bond that the board has been drafting to get on the November election ballot. That bond must first be adopted later this month and then be delivered to the Alameda County Registrar of Voters' Office and the clerk of the county Board of Supervisors. The election for the bond would be part of the statewide election to be held on Nov. 8.
That uncertainty of whether or not voters will pass the bond to fund the master plan is something that led Mokashi to not agree with the purchase, along with the acquisition being effectively contingent on the Bernal property being sold.
"Yes, I'm being asked to support, you know, the purchase of the sale, but at the same time down the road and how we're paying for this is contingent on this sale and that sale and I hadn't even necessarily made up my mind on if I feel comfortable representing and saying that we should sell those properties," Mokashi said.
But Board President Mark Miller said that is a risk worth taking.
"I think about it this way: Would we still do this if we weren't going out for a bond? And in my mind yes, we would," he said.
The Arroyo inspection and financial report also included backup plans in the case the bond does not pass including funds from the sale of one of its properties and possibly dipping into the Sycamore Fund, which came from sale of the property on Sycamore Road in the late '80s.
Now, the next steps staff will take will be reviewing and finalizing inspection and finance reports, initiating the certificate of participation sale and looking at architectural services to make improvements.
Sheikholeslami said it's probably going to be seven to eight months after they get the plans and get the tenant improvements done until the offices can begin moving into the new space.