Partnership With Developer to Net Downey Schools $10 Million

The Downey Unified School District has entered into an agreement with a development company that plans to build and sell single-family homes on the 11.3-acre site of a closed elementary school.

The Board of Education voted in September to sell the property to M. J. Brock & Sons Inc. for $9.1 million, Supt. Edward A. Sussman said. The company also offered to give the district 35% of its profit from the home sales, which would be about $1 million. The district’s total income would be about $10.1 million.

The old Edith Unsworth Elementary School, 9001 Lindsey Ave., which was closed in 1972, will be demolished, Sussman said. The sale will not be final, however, until Downey city officials approve the plans for the homes.

The development company expects to submit a formal proposal to the city at the beginning of the year, said Les Thomas, the Orange County division manager for M. J. Brock, headquartered in Los Angeles. “We have entered a limited partnership with the school district to develop and sell single-family homes to earn profits,” Thomas said.

He said his company obtained the property through a sealed bid submitted in September. If everything goes as planned, construction will begin sometime next year.

If the city does not approve the new homes, the school district is guaranteed the $9.1-million price for the property, Sussman said.

But, Sussman said he is confident that the city will grant approval, because the property is zoned for R1-5000 single-family homes--one house per 5,000 square feet--and the company’s preliminary presentation was for single-family home construction.

“A joint venture between a school district and a developer is a new concept that school districts have been involved in the last five years,” said Eric Bathen, legal counsel for the district for 10 years. Although the 65-35 split of the profit is common, he said the ratio can vary.

Bathen has arranged a similar deal between a developer and the Fountain Valley Elementary School District, and has heard of more arrangements of this type in Huntington Beach and Northern California.

Such deals are becoming more attractive, he said, because they have tremendous profit potential. “They work well because they benefit both parties,” Bathen said. “The developer acts as the general partner and manager of the property and shares the profits with the school district.”

Sussman also said that these contracts are common and that districts enter into these agreements to gain credibility in dealing with the public, plus a share in the profit.

He said that $5 million of the sale price would be used to refurbish four buildings at Downey High School, and the rest of the money would be used to renovate other schools in the district. “The buildings at Downey High School are more than 30 years old and in dire need of repair,” Sussman said. “There has not been any major work done on the school since 1939.”

Because of the need, Sussman said that construction would begin on the high school first. The plans for renovation are complete, and work should begin in June.

In April, 1988, voters rejected a bond issue to generate $11.4 million to renovate school sites in the Downey Unified School District, Sussman said.

The district then applied for other state bonds, he said, but found that there was no money available at the time. He said that even though the district qualified for funding, it would have to wait several years.

The Downey board voted this year to sell one of its three vacant schools. He said Unsworth was chosen because there are not many students in the northeast section of Downey where the school is located, and no major growth is anticipated. Sussman said Unsworth would not be one of the schools reopened if overcrowding ever became a problem in the district.

Deputy Supt. Donna Boose said that Unsworth was the first elementary school in Downey to be closed due to a decline in student enrollment. She was principal of Unsworth when the district voted to close the school after enrollment fell to 400, with projections of further decline.