Developer Bids $610,000 a Year to Lease Site of Field School
Glendale Unified School District officials watched with both delight and astonishment Tuesday night as developers squared off in what became an auction for the right to lease the property now occupied by the vacant Field Elementary School. District officials consider the property their most important unused financial asset.
After 21 rounds of bidding during half an hour that was spiced with both humor and frustration, a Glendale developer came out on top with a bid of at least $610,000 a year for 65 years for an option to build town houses or apartments on the Field School property. That was $215,000 more a year than the district’s minimum asking price.
“We’re just delighted at how it came out,” district Supt. Robert Sanchis said Wednesday.
The district is not required by law to accept the offer of the highest bidder, however, and district officials are not expected to make a final decision until next week, after scrutinizing the proposal of the top bidder, Howard/Platz Development Co.
Since the school, on Central Avenue just north of Glenoaks Boulevard, was closed in 1981 because of declining enrollment, the district has been trying to use the property to generate income to restore programs that were eliminated after the Proposition 13 tax-cutting measure.
The 4.8-acre piece of land, however, has been tough to lease. Tuesday’s action was the third time that the district has solicited bids. No qualified developers approached the district the first time bids were solicited in 1982. The second time, one developer qualified and was awarded the bid on a 65-year lease at $395,000 a year. But his plans to build a 240-unit apartment complex were turned down last year by the City Council when he asked the city to issue tax-exempt bonds to fund the project.
District officials attributed Tuesday night’s turnout of five competing developers to the strong economy and low interest rates.
The action began after board President Blanch M. Greenwood opened the sealed written bids, all of which exceeded the minimum offer. Howard/Platz had made the highest written bid, $451,000 a year.
Greenwood then opened the floor for oral bids, which because of district requirements started at $473,550, 5% above the highest written offer. After the first few rounds, three developers--IDM Corp., Bell Financial Corp. and Guy Hocker Realtors--dropped out, leaving only Howard/Platz and the Los Angeles-based Central Development Co.
For the next 15 minutes, representatives of the two companies raised the ante, at times mentioning humorous compromises such as proposing joint ventures or simply flipping a coin to decide who should receive the property. The dust finally settled when Central stopped bidding at a lease price of $606,000 a year, $4,000 less than Howard/Platz’s final offer.
Wayland Parsons, deputy superintendent of administration, who has been overseeing the lease effort, said that at next Friday’s meeting Howard/Platz is expected to be awarded the bid and that two alternate developers will be appointed should Howard/Platz’s plans run into trouble with city officials. The land, now zoned for single-family homes, would need a zoning change to permit the developer’s proposal.
Greg Galletly, a general partner for the developer, said his firm had not made final its plans for the property, but he is favoring what he called “yuppie housing.”
“We’ve looked at several concepts . . . but we’re mainly interested in town houses that would go for about $250,000,” Galletly said. “Most apartments you see in Glendale are sort of stucco boxes with not a lot of charm. We want something that will appeal to younger people.”
Don Platz, another partner in the firm, said Wednesday that the company is also considering an alternative--several hundred rental units.
District rules give Howard/Platz six months to receive approval from the City Council on its housing plan. After that, the firm will still hold the lease option but will have to pay the district “significant” financial penalties, Parsons said.
Should the developer’s plans be approved, the lease price will be renegotiated after 10 years to make allowances for inflation, district officials said.
Sanchis said the money the district will receive from the lease has been earmarked for reinstatement of a sixth-period class for seventh- and eighth-graders, although the added class time has previously been put in next year’s tentative budget.
“This will make it all the more easier to get that period back,” Sanchis said.
The district, which could have sold the property for an estimated $5 million, decided instead to lease it because, according to the state education code, any money generated through the sale of property must be put in a fund that can be used only for construction and deferred maintenance.
Besides, Sanchis said, if California experiences an economic recession, lawmakers may rule that school districts having a financial surplus should receive less state funding. A $5-million surplus from the sale of Field Elementary School could mean a corresponding reduction in state funding for Glendale, Sanchis said.