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San Diego Schools' Land Swap Plan for New Headquarters Draws Fire from Attorney

San Diego Unified is trying to swap its run-down headquarters and other properties totaling 22 acres for land elsewhere in the city, where it can build a new central office. But not so fast: a lawyer says the plan runs afoul of state contracting law.
The San Diego Unified School District is working on a deal to swap its headquarters in University Heights for property somewhere else.

San Diego Unified School District’s plan to swap three district properties for a new one that will house its central headquarters is attracting criticism from a San Diego attorney who believes the deal runs afoul of state bidding laws.

The district is soliciting proposals for the swap, which are due March 15. District leaders hope to close the deal in June.

The district wants to trade its current dilapidated headquarters and two other properties – nearly 22 acres total – for a single property elsewhere that will house a new district office. The new site could already contain existing buildings or have space for a new one that meets the district’s needs. That includes 180,000 square feet of space, including a 15,000 square-foot auditorium, a loading dock and warehouse for storage, plus facilities for an emergency center and school police force.

The new site has to accommodate 700 employees (including parking), be centrally located within the district and near the freeway, according to the district’s request for proposals. Additionally, the site “Shall be free of improvements that provide no value to the District such as buildings or other improvements.”

Though state law allows public schools to swap properties with a private landowner or business without putting the property up for sale to the highest bidder, attorney Gary Aguirre says the district’s plan contemplates new construction for a district office.

Aguirre contends that this runs against the state’s Public Contracts Code, which requires large public works projects be awarded to the lowest responsible bidder. The law aims to prevent favoritism and fraud and can help ensure the public gets a good deal for construction.

Aguirre is also taking aim at the district’s failure to obtain appraisals to figure out how much its properties are worth, even though the district “must receive at least (fair market value) for the district exchange properties,” per its proposal request.

“How do you know you’re not giving them $30 million extra dollars?” Aguirre said. “That’s reckless.”

He said a 2.2-acre parcel near the current district office recently sold for $35 million. Since the district office parcel is five times bigger, at 11.17 acres, it could be worth $177.7 million, not including the other two district properties offered.

The District violates state law when it awards a $200 million construction contract without competitive bidding, just as it did in the past,” Aguirre said in a statement. Efforts by Aguirre’s client, University Heights resident Ernie Bonn, to obtain communications between district employees and third parties about the swap through a public records request have been unsuccessful so far.

“School officials have shuttered the windows into a process that must be transparent under state law… School officials should open the shutters, so the public can see inside,” he said.

Aguirre expressed his concerns to the school board and the district’s general counsel, Andra Donovan, in recent weeks.

Any contracts awarded through the district’s existing plan would run afoul of the law and be void, he told the school board in a Feb. 23 letter.

“Since the contract would be void, the District could wind up with a half finished DCO (district central office) and an injunction barring it from paying for the completion of the project. In short, these problems need a solution now,” wrote Aguirre, who has a history challenging the district’s construction bidding process.

In a proposer Q&A sheet, the district answered “no” when asked if the district was already approached by someone about a desired swap deal, and proposals were only being sought to fulfill legal requirements.

Donovan, the district’s lawyer, replied to Aguirre in an email Feb. 26, telling him, “There is no legal obligation for the District to have obtained an appraisal prior to issuance of the RFP.” She added, “we see no need to withdraw our Request for Proposal based on any of the issues raised in your letter.”

The district’s request for proposals outlines the district’s facility requirements “for suitable land and buildings (new construction or existing) to become the new District Central Office,” and the Q&A sheet contemplates accepting “to-be-built buildings” to relocate to “within a reasonable time frame, given that new construction may be needed.”

Still, Donovan told Aguirre, “The District is not seeking to contract for the construction of any facility or portion thereof. The RFP is for an exchange of property only. Any required construction will be completed by the District in accordance with all applicable law.”

Aguirre replied Feb. 27 and suggested the district “obtain the advice of independent counsel who is not burdened with a potential conflict of interest before transferring assets worth more than $150 millions (sic) to a third party.”

The possible conflict, according to Aguirre, is that the district’s legal team may have proposed the deal and is now in the position of defending it for the district.

Proposals for the swap were sought in December. A mandatory meeting for those interested was held Feb. 7. Proposals are due no later than March 15.

According to the district’s timeline, proposals will be reviewed in March and April by a selection committee comprised of district staff and real estate consultants who will score the submissions. One of the criteria: “Demonstrate experience to successfully assemble and complete a property exchange,” the district’s request says.

Any interviews will be conducted in April or May, before the committee forwards its recommendations to the school board. Once the board authorizes negotiations with a single proposer, staff will hammer out a deal that will be finalized sometime in June.

Only then, according to the district’s request for proposals, will the district provide an appraisal of its properties.

“Appraisals, during the course of negotiation with a selected proposer, shall be prepared and made available by the District and the Proposer during the course of negotiations and prior to final approval by the Board,” the request says.

Questions sent to a district spokeswoman about the swap deal and Aguirre’s concerns late Wednesday were not immediately answered. Maps of the three properties up for grabs can be seen by clicking here.

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