Costs Threaten School Building Plans

Santa Ana Unified School District’s long-promised campus building campaign is running $100 million over budget, raising questions about whether officials can make good on promises to voters.

The first 13 projects on the district’s list of improvements are now expected to cost $289 million, rather than the $181 million projected three years ago.

Other modernization, expansion and new-school projects, promised when voters passed a 1999 construction bond measure, are languishing for lack of funds.

Some officials say they did not expect costs would rise as they have.

“Perhaps people were overly optimistic,” said district spokeswoman Lucy Araujo-Cook. “We have had to put pencil back to paper. We are trying to avoid a crisis of confidence.”

District officials say statewide increases in real estate and construction costs are partly responsible. They also have blamed the budget disarray on a construction management company hired in 2000 to oversee the building campaign.

Confronted with growing construction delays and steadily increasing costs, the school board voted in February to fire Del Terra Construction Group of Los Angeles alleging “gross mismanagement,” and sued the company. Del Terra officials did not return phone calls seeking comment.

The company’s construction budget figures “run all over the map,” said Margie Brown, the district’s facilities planning director. “We still need to ... determine who did what when.”

In August, the school board hired Capital Program Management of Sacramento to analyze the district’s construction program. The consultant, which will be paid as much as $766,000, will present its initial analysis at a special school board meeting on Monday.

Among the district’s challenges is determining how many of the 1999 building promises can be salvaged, and at what cost.

When the 1999 bond was put before voters, the district planned to build two high schools and 11 elementary schools, expand two schools and modernize or expand an unspecified number of others.

Since then, work has begun on three new schools -- Segerstrom High School, Manuel Esqueda Elementary School and Hector Godines Fundamental High School -- and 10 existing campuses where improvements or additions are planned.

The $145 million in bond revenue was to be supplemented with $185 million in state construction funds, totaling $330 million in construction work. But the cost of that work is now estimated at $420 million, Brown said last week.

Further straining the situation, the district used more than $15 million intended for school construction to balance its budget this year. The money is supposed to be returned to the fund by 2005.

In the county’s most overcrowded school district, some trustees and parents wonder how construction of other schools will be funded and whether the district will need to ask voters to approve another bond measure.

“The district has been off [in its cost estimates] since Day One,” said John Palacio, a school board member often critical of Supt. Al Mijares and his administration.

Other school board members, however, blame an alliance among Palacio, Nativo Lopez, who was recalled from the board in February, and former board member Nadia Davis for delaying approval of construction projects, resulting in rising costs. Critics of the alliance said the trustees usurped the role of district administrators by directing Del Terra Construction themselves.

Even so, trustee Audrey Yamagata-Noji agrees with her board adversary, Palacio, that construction priorities are confused. “I really want to get a handle on that,” she said.

At least one former district employee raised concerns more than 18 months ago. Diane Schwartz, a district architect at the time, wrote in an e-mail to a facilities planner in April 2002 that the $145-million bond measure was insufficient to fund the district’s construction wish-list. A copy of the message was obtained by The Times.

She warned that “the public and board” needed to be advised that the bond measure would pay for only two high schools at most.

There is no indication that the district heeded the warning.

Those who have joined the board since then share concern about the construction budget. Noji returned to the board in November and Rob Richardson replaced Lopez in February.

“There is no question that costs have gone up.... We need to complete the full assessment of what funds the district has available, what has been spent and to prioritize the projects within the funds we have available,” said Richardson. Brown, the facilities planning director, said that despite the cost concerns, Santa Ana is finally on the brink of completing much-needed expansions and construction.

Some building triggered by the 1999 bond measure began last December, but most was launched this year.

“The building program is back on track,” she said. “We have $172 million of construction going on. It’s phenomenal.”

District construction manager Jerry Hills attributed escalating costs in part to rising property values. The district expected to pay $16 million for the Segerstrom site in 1999, for example, but had to pay $41 million in 2002.

Construction cost estimates also have increased steadily, from $56 million in 1999 to $94 million in April, 2001, to $107 million earlier this year and then, this month, to $118 million, said Brown.

Costs increased for various reasons, she said. Originally intended to serve 1,800 students, the school was redesigned to accommodate 2,500. Brown said a low number of bidders on parts of the project meant higher costs. The price also grew when the board required the use of union contractors, she said.

Hills said overall construction costs have increased because of the demand for school contractors, which made it harder for the district to obtain competitive bids.

Comparing the Santa Ana district’s construction budget woes with experiences in other districts is not easy, school experts say, because each community is unique.

David Doomey, assistant superintendent of facilities planning for the Capistrano Unified School District, said his district does not have to deal with soil cleanup as does Santa Ana. Even so, land acquisition has also been difficult in San Juan Capistrano.

In budgeting for land for Canyon Vista High School, the district set aside $1 million an acre, even though the cost at the time was $750,000 an acre, he said. The high school opened last year at a cost of $18 million, $2 million under the 1999 estimate when voters approved a bond measure to pay for the school.

Last year, voters in the Anaheim Union High School District approved a $132-million bond measure to improve nine schools, aided by $135 million in state funds.

Work at four schools is underway, and all improvements are expected to be completed by March 2005; cost estimates for the first phase have risen slightly, from $146 million last year to $147 million today.

John Larner, the district’s chief business officer, said the district saved money by managing all the subcontractors, rather than hiring a general contractor.

“We looked at every way to get more bang for our buck,” Larner said.