Space-Saver School Funding May Be Rescinded : Construction: State officials are upset that part of $22.7-million allocation would go toward razing and rebuilding stores.

State officials have issued their strongest condemnation yet of a controversial proposal to build a middle school with state funds in a shopping center here, and they have set a vote for next month on whether to revoke $22.7 million set aside for the project.

The proposal for a “space-saver” school, designed to build schools in already developed areas without having to condemn houses and businesses, sparked intense criticism after a preliminary appraisal valued the property--at the Bristol Market Place--at $21.8 million.

State officials say part of that money would go toward tearing down and rebuilding a HomeBase store and Montgomery Ward auto center at state expense. But that is one of the issues now causing the state “substantial discomfort,” said Lyle A. Smoot, assistant executive officer of the State Allocation Board, which oversees school construction money.

“We’re not condemning the property, so there is no reason why we would have to replace the existing structures. I can’t see why an appraiser would include the replacement value of those buildings in an appraisal,” Smoot said in an interview.

“I’m not going to put any money into tearing down a building and putting it back up somewhere else,” said state Sen. Leroy Greene (D-Carmichael), who authored the legislation creating the space-saver concept and is chairman of the allocation board. “I wouldn’t give them a Canadian dime for that, let alone a German reichsmark from World War II.”

Greene and Smoot have both voiced skepticism in the past about the Santa Ana project, but their comments in recent days marked their most strident criticisms, signaling the possible death knell for a proposal that has already fueled community opposition.

The state board has placed the project on a “recision list” and will decide next month whether to proceed or put the money back in the pot for other districts to tap, Smoot said.

Michael G. Vail, the Santa Ana Unified School District’s top facilities planner, said he was not aware of the state’s criticism or the fact that the allocation board could revoke the funding next month, and he was deeply concerned that the district could lose the nearly $23 million that the state set aside in December for the project at Bristol and 17th streets.

The district has cooperated fully with the state in answering questions on the project, he added.

“The thing to keep in mind is that the allocation board staff contacted us and asked us if we wanted to do this project. They continually gave us guidance about what kind of site they wanted,” Vail said. “All I know is that we have a deal. It’s very clear in my mind that the people in Sacramento knew what the deal was.”

State officials have not complained to him about the cost of relocating the HomeBase and auto center, he added.

“Certainly the buildings need to be demolished. There’s a cost to that, and to relocate them, rebuild them,” Vail said. “I’m sure the allocation board staff knows that that is part of the appraisal. They have been out here a number of times.”

The board of the Santa Ana Unified School District approved the Bristol Market Place site in February after a contentious hearing.

Critics, including neighbors, two school board members and Santa Ana City Councilwoman Lisa Mills, have blasted the site as inappropriate for youths and too costly, while some real estate experts say the district appears ready to pay up to three to four times what the property is worth in today’s market. Critics insist that the district has not given serious consideration to any other sites, even though they might be substantially cheaper.

Vail countered that the district has reviewed many other sites. Bristol Market Place is the only one that satisfies state guidelines and the district’s need for at least 11 acres, he said. The two-story intermediate school would be built on the mall lot, and parking underneath the school would be made available to mall shoppers, a dual use that Vail said he believes would satisfy the state’s guidelines under the space-saver program.

Greene said moving the two businesses on the site contradicts the spirit of his bill.

“The original notion was that we had all this built-up territory in places like Los Angeles and San Francisco, so how can we build a school without moving anyone or tearing anything down?” Greene said.

The Santa Ana property “is not typical of what that thought was,” he said. “If they can prove it meets the conditions, fair enough. But they’re not going to have a simple time proving it.”

Greene said he hasn’t “foreclosed” on the idea of building a space-saver school on the Santa Ana property, and he has a meeting scheduled with Vail on May 18.

But if the allocation board decides at its meeting next month that the Santa Ana site doesn’t qualify as a space-saver, “that drops them way back in line” for any state school construction money, he added.

“We’ll do our best to give them whatever information they ask us for,” Vail said. “We’ve gone into this with good faith. . . . We have a tremendous need for school facilities and we’re a district that has no resources to pay for our own schools.”