PV School Board responds to WGP allegations
February 8, 2018
In response to misinformation disseminated by Western Gateway Recreation & Park District (WGP) to various media platforms. Our intent is to provide facts regarding the Pleasant Valley School (PVS) sale and other topics that are in fact public record.
At the beginning of this process with WGP the Penn Valley Union Elementary School District (PVUESD) School Board appointed a District negotiating team, which included the School Board President, to engage in negotiations with WGP for the sale of PVS. Despite numerous requests to WGP to direct all communication to the District negotiating team, WGP has insisted upon contacting the entire School Board directly with all offers.
This direct communication to the School Board not only ignored the School Board's express wishes, but also potentially caused a Brown Act violation, which arises when a board considers or discusses an issue outside of a scheduled meeting. The School Board as a whole was unable to respond to WGP outside of regular Board meetings for this reason. Further, WGP's statement that the District invited WGP to file a lawsuit on this matter is false, as WGP has no grounds for a lawsuit.
In November, 2017, the PVUESD provided WGP a copy of the completed appraisal of PVS. A professional appraiser specializing in school and public properties prepared this appraisal. It has always been the intent of PVUESD to obtain full, or close to, full market value for the sale of the property as significantly less would be a gift of public funds. The completed appraisal was conducted using a Direct Sales Comparison Approach with Cost Approach used as a secondary check.
The Sales Comparison Approach looks at other closed sales of both school/educational "nonprofit" type properties and church religious properties in the region. The report notes other properties of this type appraised between $58.91 to $93.26 per square foot, where PVS is valued at $32.70 per square foot because of the necessary deferred maintenance. The Appraiser noted in the report that the $1.1 million valuation is as-is for the property, including infrastructure and buildings. The appraisal is reasonable and fair contrary to the belief of WGP.
When negotiation started, WGP stated their plan to declare the Naylor Act for PVS and later mentioned they completed the resolution necessary for the Naylor Act to apply. PVUESD has never received official copies of WGP's Board resolution.
Nonetheless, based on this notification from WGP, PVUESD calculated the adjusted purchase price based on Naylor Act even after directly communicating to WGP that this would only increase the cost of the property.
Under the Naylor Act (Education Code 17491(a)), the property is valued based on cost of original acquisition of the property with adjustments made for any percentage increase or decrease in the CPI (Consumer Price Index) from the original date of purchase to the year in which the offer of sale is made, plus the cost of any improvements to the land made by the school district since the original acquisition, and the final sale price cannot be less than 25% of the fair market value. The value calculated under Education Code 17491(a) applies to up to 30% of the property for sale. The remaining 70% of the property may be sold at fair market value pricing. When this calculation is applied to PVS, the breakdown is as follows:
• Acquisition of the PVS Property: There were no costs to purchase the property as the law required Boise Cascade to donate a certain percentage of the overall development to be deeded to the District due to an increase in student enrollment. When the deed was completed in 1970, the land was bare and did not have sewer, electricity or any buildings making the CPI $0. The total acquisition cost to PVUESD was $0.
• Land improvements for the complete 17.47 acres include: water, sewer, electricity, landscaping, asphalting, structures such as classroom, libraries, gymnasium, office spaces, shade structures, playground equipment, necessary improvements to buildings, etc. The total land improvement from the first cost to the District in 1970 to 2014 equals $3,768,376.39 (breakdown available upon request).
• Per Education Code 17491(a), the $3,768,376.39 is used to calculate the sale price for 30% (5.24 acres) of the property. When calculated, 30% of $3,768,376.39 is $1,130,297.21 and the other 70% (12.23) is based on fair market value of the property, which equals $770,062.97. The total purchase price for the 17.47 acre property is $1,900,360.81 under the Naylor Act calculation stated in Education Code 17491(a).
December 5, 2017, WGP made a formal offer to the PVUESD Board of Trustees for the full 17.47 acres (document available upon request). Although promised by WGP earlier, the offer contained no operating, business or financing plan. The offer provided was as follows:
• Purchase Amount: $232,500
• Down payment: 10%
• This option comes with the guarantee that PVUESD could buy-back the property under provisions set forth by the Naylor Act.
• Purchase Amount: $187,000
• Down payment: 10%
• This option comes with the guarantee that PVUESD could buy-back the property
under provision set forth under the Naylor Act AND the following additional benefits: the guarantee that WGRPD will not host a K-8 charter school, but will make space available for before-school programming, after-school programming, high school charter, overflow classroom needs, and potential competitive youth sports programming.
Under both options, PVUESD carries the mortgage for 20 years at 3% interest, with payments beginning one year from the date of closing, and to continue for the duration of the loan.
On December 8, 2017, the District's negotiating team responded to the offer by providing the above Naylor Act calculations. A response from WGP was requested by December 15, 2017. WGP requested, and was granted, an extension making their response to the District's negotiating team due no later than January 11, 2018.
On January 5, 2018, legal counsel for WGP contacted legal counsel for PVUESD stating he was retained to assist with the purchase of PVS. After further discussion between the two parties, legal counsel for WGP requested the District agree to meet with WGP and a mediator regarding the PVS transaction.
The District requested an updated offer in order to determine if mediation would be beneficial and was notified by WGP legal counsel that no other offer would be made. The PVUESD Board of Trustees held a regularly scheduled meeting on January 17, 2018, and determined because an updated offer was not provided, and the prior offer was rejected, mediation would not be worthwhile.
A revised formal offer would be necessary prior to engaging in further discussions or mediation with WGP. It was during that same meeting the PVUESD Board of Trustees directed the Superintendent to move forward to tier 2 notifications to additional public entities for the sale of PVS as the District had been working with WGP since October, 2017 negotiating in good faith. Tier 2 notifications were mailed to the appropriate parties on January 19, 2018.
The District has been facing deficit spending since prior to the consolidation of Pleasant Valley Elementary School District and Ready Springs Union Elementary School District. The Pleasant Valley Elementary School District was deficit spending for years as a result of the decline in the economy. PVUESD had a consultant review the District finances in 2014/15.
One of the recommendations in the report was that the District would need to eventually look at a school closure. This recommendation, and the continued deficit spending, led to the process that closed PVS. The District is still facing deficit spending in future years due to the constraints of mandated spending.
This includes annual increases to retirement contributions and a 50% increase statewide in the number of students with disabilities. Districts are not receiving new funding to assist with these rising mandated costs so many districts across the state are facing the struggle of deficit spending. PVUESD has the added pressure of declining enrollment. The revenue lost for declining enrollment far exceeds the budget cuts the District is able to make to keep up with this loss of revenue.
The funds from the sales of PVS will go towards future deferred maintenance and modernization needs of the remaining two sites. No funds from the sale will go to the General Fund. If the District uses funds from the sale for the General Fund, the District forfeits future State Facility Funding, which often requires a match from the District. Williams Ranch School is 25 years old and will soon need modernization to keep the facilities in good repair.
The District learned that the Division of the State Architect did not close out a modernization project at Ready Springs School from 2008. The District will now be required to close out this project using today's building codes. This project is estimated at $250,000.
As of today, no developers have contacted PVUESD regarding the purchase of PVS. If the parties notified under tier 2 requirements do not respond within the 60 day timeline, public notice will be provided and the process will move forward.
Once the process outlined in Government and Education Code has been completed, any interested party, including Western Gateway Park, may make a formal offer for purchasing the property using the fair market value of $1,100,000.