HBCSD Corruption

The Misleading Information:

Pat Escalante, Superintendent, Hermosa Beach City School District

dated 11/08/13, HBCSD.org website:  (for the original document click here)

Background:

During the 2012-2013 school year, the Board of Education convened the District Facilities Committee (#1) address the issues of the increased enrollment and the lack of available classrooms for future growth. (#2) During the discussions, the issue of using Pier Ave School was presented as a possible option.  However, there was not enough data regarding the school and if it was a viable option for the District. (#3)

The following is a chronology of the conditions and events leading to the sale and transfer of Pier Ave to the City.  The Superintendent wishes to thank Kat Bacallao and Chris Miller for their work in collecting the archival data of the transactions for analysis and validation.

The Hermosa City School District (District) Board minutes from 1974-1978 reveal that many discussions were held by the Board about property acquisition and exchanges between the District and the City of Hermosa Beach.  Pier Avenue was closed by the District in 1975 due to declining enrollment.

During this time frame, there was a growth of development in the City.  The City was in need of open/recreational space and was exploring how to achieve that goal.   At the same time, the District was starting to decline in enrollment and began to examine a reorganization plan on how district owned properties could be identified as surplus, leased or sold, to assist in downsizing the District and generate funding.

In June 1978, Prop 13 was approved by California voters which dramatically changed the funding of school districts from local property revenues to state funding based on caps of local revenue.  Wealthier districts such as HBCSD were negatively impacted by this Proposition as income to the district began to decline.

Sale of Pier Avenue School to the City:

In June 1978, a conversation was initiated by the District “Land Use Committee” to discuss the property options.  (#4)   Out of these discussions came an agreement between the District and the City to purchase Pier Avenue School for $650,000.00.   Because the City purchased the property for under fair market value, a lease agreement was included as an integral part of the sale transaction. (#5)   The lease provides for limited usage by the district of certain portions of the Pier Avenue School.  The lease agreement is for a period of 50 years (in 3 year increments) and will expire in 2028. (#6)

Sale of Pier Avenue School: Article 4 of the MOU (Escrow Exhibit “B”)

Article 4, Section 4.03, of the MOU provides that for a period of 10 years the District shall have first priority to use Pier Avenue School, during the school year and summer school, rent free subject to conditions (development of a “notice procedure”, classrooms if enrollment exceeds 1,266.  District use of office and storage space, District will pay the city for maintenance, utilities, and other normal costs).   The District did not utilize this lease option because enrollment was declining during this time.

The MOU states that at the close of the 10-year period (1988) the district shall have the continued right to use the school for the purposes above at a “reasonable rent” in accordance with what comparable facilities are used such as classrooms, office space, storage, showers and lockers.  (#7)  This option has not been utilized by the District.

In essence, the City owns Pier Avenue School (Community Center), the District has a 15 year lease agreement (#8) 

Points of Consideration:

·         Will the term of the lease agreement address the overcrowding issue to the District’s satisfaction over the long term?  (#9)

·         How long would it take to make the appropriate repairs and upgrades to make the building habitable for students? (need to modernize and upgrade to current state standards)  (#10)

·         Is it better to spend money on a facility/property that you own or better to spend money on a property with 15 years remaining on the lease?  (#11)