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May 18, 2016

Comments

school real estate.

I've worked with public and private schools on their real estate strategy and execution for the past ten years. I've completed over $30M in such transactions. I regularly get hired by public school districts to value and underwrite their non market transactions. I'm one of the few brokers who is willing to invest time to work with schools because they are more difficult, take more time and decisions are made in complicated and sometimes obscure means as opposed to regular business decisions.

I have colleagues that could answer most of these questions.

You can email me to get the resource referral. And then perhaps you want to publish your findings from your discussion here.

old-timer

Good questions. I also wonder, if a teacher leaves the district, how does SMUHSD "evict" them? And what is the cost of the district being a landlord -- are they going to hire additional staff or contract with a property management company? And who is paying for that?
Personally, I don't like the idea of the school district getting into the real estate business -- they have enough trouble with the education business, and adding real estate on top of that?
As for conflicts of interest when school boards start getting involved with real estate, did any of you B'gamers follow that crazy time in San Bruno some years ago when trustee Chuck Zelnik got his cousin from the Midwest involved in some deal where he was trying to bring a Wal-Mart to the old Engvall school site? I don't remember the details, but I'm pretty sure there was a lawsuit that came out of that episode.

old-timer

Having trouble finding info on the San Bruno debacle since it was so long ago, but here's a bit of info:
http://archives.smdailyjournal.com/article_preview.php?id=62838

lenj

they can't even negotiate over swimming pool and burlingame aquatic center agreements, etc. I don't trust them to be able to handle being landlord and employee for teachers. and eviction after the teachers leave the district is another one. if it's voluntary, yes. but what if it was involunatary?

Bruce Dickinson

As Bruce Dickinson loves to say, nail the core competence first and then branch out into other things that may be complementary. Of course, with the whole Yim-Gate and Nelson debacle, as mentioned above, all trust has been breached. In that case, you gotta reign in control and oversight, not give carte blanche for another endeavor.
We already know the talent deficiencies at SMUSD, where they have shown no ability to select and manage the right people and when they make a mistake, they don't admit wrongdoing and find other scapegoats, begetting even more turmoil and distrust.

And now you want to let them into the real estate business? Sounds like a bigger scheme to get some kickbacks/subsidies and allows for more even more corruption and ways to protect incumbency.

Become a master of your domain before you start doing something you'll have almost zero chance of doing well!

TrumpTowers

How much money was "lost"to the construction consultants during the remodel? Superintendent Sam Johnson spend $85 million from the General Fund and no-one new about it until the Grand Jury showed up.

What is the district going to do if there is a personnel issue between teachers living in the units?

I guess Skelly we transfer the teacher to another unit. Many teachers are married to a dot.com spouse and this will underwrite the downpayment without selling the stock options.

Sell the San Bruno property to a developer and use the funds to benefit the public.

Let the county build teacher housing to allow all teachers k-12 a chance at a home and shift the risk away from the SMUHSD .

hillsider

I was agreeing with you until that last bit. Districts should NOT SELL their real estate and neitheer the district or the county should be in the housing business. That goes for the city too by the way.

@Alex Kent (school real estate), I have buddies who did $30M in deals last quarter. Not last decade. If Joe needs advice he should call a playah.

Bruce Dickinson

Another way to put it in perspective: A real estate agent in the 94010 zip code can sell 1 house a year for 10 years and claim $30 million dollars in transactions.

Maybe the zip code should be changed to 9401000000, ya know what I mean?

school real estate.

Ahh, the two (Ed: expletive deleted, c'mon please!), stumbling drunk Hillsider and coke snorting Bruce chime in because they can't handle being upstaged by an expert. I've actually done more like $500M in total deal volume, I was only referring to my school real estate deal volume. Is that enough for you two trust fund kids? I know who are are as well guys.

You are both the epitome of hubris and stupidity.

Now, back to reason.

Bruce Dickinson

Well, the censorship store called, and guess what? they're running out of you!

Seriously guy, yet another censored comment? BV readers (and the editors themselves) poke fun at Bruce Dickinson all the time and what do I do? Do I get my panties in a bunch? No, I just have a good laugh and play along.

Now, let's move away from the 3rd grade and into adulthood!

I agree with some of the comments above, government and educational institutions, no matter what, have no business in real estate, including the City of Burlingame. They have a hard enough time as it is with their own bailiwick, starting to plunge capital into real estate will probably be done with little economic analysis and most certainly at the wrong time. We are already seeing the beginnings of a bubble mentality in the real estate market.

Just something to chew on from Burlingame's own E.F. Hutton, Bruce Dickinson!

Joe

It looks like we have the cart firmly in front of the horse according to this Daily Journal article:

As interest and momentum builds across the Peninsula to build workforce housing for school teachers and faculty, a San Francisco senator is looking to supplement the effort through new legislation.

State Sen. Mark Leno, D-San Francisco, authored Senate Bill 1413, which aims to clear the path for school districts interested in using surplus property to build affordable housing projects and help educators live in the communities where they teach.

The bill, which Leno said he expects will reach the Senate floor next week, could have particular resonance in San Mateo County as a variety of local school districts have expressed interest in building housing projects as a means of offering staff relief to the constantly escalating cost of living.

The bill would explicitly allow districts to use surplus property for developing workforce housing, and Leno hopes it would make it easier for officials to seek state, federal, private and other funding sources such as tax credits to finance the projects.

Leno said it is unclear whether there are policies in place which could block interested districts from building workforce housing, and his bill aims to clear any ambiguity.

- See more at: http://www.smdailyjournal.com/articles/lnews/2016-05-23/teacher-housing-gains-legislative-support-bill-clears-path-for-school-districts-to-build-residential-projects/1776425163800.html#sthash.fiWrb0BV.dpuf

Do you think he might want to "get clear" on the other policies before going headline hunting??

buy when the inevitable recession is in full swing

I booked/introduced another stellar speaker today at my Rotary club, who heads up one of the top private schools.

She mentioned a Peninsula private school that is purchasing existing apartment buildings to provide housing for their teachers/staff.

Both public and private schools are starting to realize that they must purchase any type of real estate that they can secure in their area in order to plan for their future expansion.

New housing mandates and new job creation that's in-filling all around us, drive more demand for both more school supply (and as Joe reminds us, more water supply).

I've tracked the "surplus" property lists of public schools for several years, and while there isn't alot in our area, having on-site teacher/staff housing certainly has its benefits.

My advice to our local school superintendent (he appointed me to his strategic planning committee) was simple: ear-mark / raise the money now, buy when the inevitable recession is in full swing.

Bruce Dickinson

Now that all of government appears to be hopping on this bandwagon, you know the real estate bubble is about to pop! Kinda like the modern-day version of the shoe shine guy talking about investing in the stock market right before the 1929 crash, ya know what I mean?

Remember, you heard it from Bruce Dickinson first!

Hollyroller

What is the outcome of the Hillsbourgh's Hoover School?
Who was fired?
Who went to jail?
Who got paid?
Who did not get paid?

lenj

You mean Burlingame Hoover School? It's opening for operation this coming August...

The right amount of Socialism...

Bruce, I know that it's hard for you to imagine, but as the cost of housing gets more and more expensive, then teachers, staff and other government workers can't afford to live near their Peninsula place of work, and perhaps we lose the good ones to other areas - that's the point.

And, also Bay Area politicians love to see themselves as introducing the newfangled "Socialism", now called "Forward-Thinking" or "Progressive"...

Like I told a big Bernie fan at The Tourist Club Maifest, Socialism is like the volume control on your sound system - using just the right amount, without making everyone lose their motivation and stop taking business/personal risks is important.

Give teachers and government workers local, rental housing options - that's logical and good!

Now, just cut all the massive corruption out of the California State Government, and we'd all have no problem paying for world-class education and other social services.

Next up on my speaker calendar - The President of the San Mateo Labor Council who also heads up her teacher's union.

Primary resources are best, folks.

Bruce Dickinson

Aha!!! I think we now have someone "feeling the Bern" if ya know what I mean? That's ok, everyone makes mistakes when they are young and inexperienced, then begin to see the light once you've been walking around the block and down Success Blvd, like yours truly, Bruce Dickinson. And with success, means generosity and it goes without saying that I singlehandedly donate a lot more than people could even fathom!

Point being, is spending a bunch of money on real estate capital projects the best use of capital, or would it make sense to provide stipends, vouchers, alleviate the cost of capital projects improvements (via parcel taxes) to free up money to pay teachers more and tap into low income housing programs/aid? Also school districts do have different pay scales, and you get a few more Dickinson-sized checks (that this ego CAN write AND cash), and you may have enough to build Dickinson University complete with a bell-tower and dorms!

I just don't think getting in the real estate business will be done right, sounds like there are much better ways to not have the upfront cost and instead pay as you go by either doing more parcel taxes (for buildings improvements to alleviate costs to pay teachers more more), getting more donations (for living stipends), raising the teacher pay, and tapping into State and local resources for low-income housing/vouchers.

C'mon, just because you have a bag of hammers, doesn't mean you always have to look for nails to pound. Time to see what else is in the tool box and look at new ways to use the tools creatively, if ya know what I mean?

This folks, is called divergent thinking and without it, mankind would not get very far!

hillsider

Primary resources, primary resources, primary resources. Funny we never hear what these people have to say-just that they got an invitation. Sounds like the volume knob is all the way down to me.

Bruce Dickinson

Guys, the lesson that should be learned from purported, self-proclaimed "experts" who think they can know and do-it all by themselves is something that comes from the great Dickinson archives of invaluable advice: it is much better to be roughly right than precisely wrong!

Look at the whole Yim-gate thing as just one example of something that was completely missed from the "primary resource" meet & greet coffee-talks.

The right amount of Socialism...

Bruce, I'm not feeling the Bern. He'd be the worst option for our country.

We already have Socialistic services, so my point is that the best level between laissez faire to complete Communism is a balance.

I think that our country's level of Socialistic programs is already at nearly the right level. Clearly, there are millions that get demotivated by a laundry list of Free Stuff given to them by taxpayers. Add the rampant fraud throughout the government along with those that defraud the Free Stuff/Welfare system and those are the best opportunities to balance budgets better.

And Bruce, I've worked with public and private schools on real estate for 10 years. You haven't. And, I frequently work with clients with partners, but not always. So, perhaps you need to learn to listen more than you talk.

Hillsider, didn't I invite you to attend the Rotary lunch speaker events at the Steelhead bar a few times?

I'm happy to share what the speakers talk about with you and others if you'd like.

You are welcome to join us as my guest any Monday.

Joe

I'm betting none of my questions in the original post have been answered yet. But the DJ has this piece today:

A bill authored by a local legislator aiming to clear the path for school districts interested in building teacher housing made its way to the governor’s desk and is waiting approval.

State Sen. Mark Leno, D- San Francisco, proposed Senate Bill 1413 explicitly allowing districts to use surplus property for developing workforce housing and he hopes that could make it easier for officials to seek state, federal, private and other funding sources such as tax credits to finance the projects.

- See more at: http://www.smdailyjournal.com/articles/lnews/2016-09-01/teacher-housing-bill-reaches-governors-desk-lenos-law-aims-to-help-districts-seeking-housing-as-means-of-attracting-educators/1776425167591.html#sthash.sGAT94cZ.dpuf

Elliot Margolies

While a bit off topic, I thought that Burlingame residents would appreciate links to voter resources that apply to San Mateo County Voters.

Are you the type of voter who wants to know how the candidates present themselves publicly? The South San Mateo County League of Women Voters and the Midpen Media Center record candidate forums and candidate statements on many local races so that voters can compare the candidates in many ways that go beyond mailers and even printed newspaper articles.

There are links to the forums, statements and ballot measure arguments for voters in San Mateo County - on this webpage of the Midpen Media Center: http://midpenmedia.org/government/san-mateo-county/. You can click on the internet link for each race.

The races include:
San Mateo County Measure K
Peninsula Health Care District Board
Sequoia Healthcare District Board
San Mateo County Harbor Commission
Menlo Park Elementary School District Board
Ravenswood City Elementary School District Board

Next week, we'll add two more candidate forums:
East Palo Alto City Council candidates
Menlo Park City Council candidates

Additionally there is a webpage for voters that features video links about the state propositions. The page is at: http://midpenmedia.org/government/statewide-voters/

It includes an analysis of all 17 propositions by the League of Women Voters, a debate on Prop 63 (limits on purchasing ammunition), and the case to abolish the Death Penalty that involves Prop 62 and Prop 66.

Check them out before you fill out your ballot and see if they don't increase your voter IQ! Please share this information and help turn out the vote.

Joe

Thank you. Voice readers are the type that you reference. I'm planning to start another post on whether the League of Women Voters is still qualified to run these sorts of candidate forums. To me, their recent endorsement of the rent control measures in Burlingame and San Mateo take them out of the realm of impartial observers who just provide information. That takes them out of their traditional purpose and means they are no longer qualified to parade around as impartial. For the next council election, I'll be advocating for someone else to get the valuable Council chambers and TV time.

Bruce Dickinson

Joe, Bruce Dickinson agrees with you. Using an organization implicitly invoking womens' suffrage to back a crazy measure such as measure R, only serves to devalue any auspices of the organization's objectivity and quite frankly, credibility.

Sad and shameful!

G'day

Like my first post way above, I do business consulting for school districts and private schools, among other clients.

Check out my answers below [[ ]].

--How does the District do income verification of teachers' significant others? Or do they? If it's supposed to be "affordable" what is the combined income level?

[[I'd think that they would benchmark off of general population affordable housing standards and then generate a statistical analysis of teacher and staff incomes to determine a priority stack rank among the applicants.]]

--School districts are pretty insulated from zoning ordinances normally, but when they get into high-density residential development that would appear to be unfair to the neighborhoods. Do they intend to comply? If they get sued (a high probability ref: Hoover School), who foots the legal bills?

[[Hoover was a school built back when density in the neighborhood and the total student population was much lower. The site become obsolete especially with limited hilly land surrounding it, and the district closed and sold it. When the Buddhists wanted to sell it and had an offer from Valley Intl Academy Boarding School for $10M, they should have been allowed to sell their private property. Instead, the city aided in the fleecing of he Buddhists via threat of Eminent Domain. The Buddhists got less than half of the property value as a result of the city's bullying and malfeasance. The school district then wasted much more money per square foot and per student vs. other example sites and potential sites, got sued and wasted more money, and just wait until a child gets hit by a car in this cluster, poorly thought out frankenstein school site.

Conclusion, yes, cities and school districts should try harder to purchase/develop the right sites and shouldn't screw over private property owners.

School districts generally must comply with both state education code and also municipal and national zoning and building codes. They don't necessarily have to run a CUP and CEQA everytime they want to expand. The real expert on the Edcode and this answer is attorney Marilyn Cleveland.]]

--Can a district do a bond measure to build houses? It's not an education function, so do the same limits apply for passing a bond measure?

[[Ask the Community College District. They have teacher/staff housing on their sites. How did they do it? And, I'd ask former school bond manager, Roger Barnes (Santa Clara).]]

--Does the district then pay residential property taxes including parcel taxes?

[[Ask the Community College District Controller at San Mateo. Ask the County Assessor how this project is paying or not.]]

--And the perennial favorite: Where is the water coming from?

[[From us not giving it away to Southern California. From government agencies including our public schools not lushly watering their expansive grounds constantly. Perhaps the farmers can't grow as much food during drought years. Splitting the state at least in 2 would probably be a good idea.]]

[[Fair answers?]]

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