It's official: The Los Altos School District is now the owner of a large chunk of the San Antonio shopping center, buying it for $155 million with intent to build a school campus for Mountain View students.
The district finalized the deal with the prior property owner, Federal Realty, on Dec. 11, acquiring 11.7 acres of property near the corner of California Street and Showers Drive from the real estate giant. The transaction puts the school district in an unusual position of becoming the landlord to the JoAnn fabrics store, Kohl's, 24 Hour Fitness and several other smaller tenants on the site.
The purchase caps off an eight-year effort by the school district to buy land for a new school. Despite the lengthy planning process spanning four school board elections, the district's mission has remained remarkably consistent -- make space for students from the rapid residential growth in Mountain View.
"I think the boards had the foresight to look toward the future and take into account housing," Assistant Superintendent Randy Kenyon told the Voice. "Looking at the long-term, this makes a lot of sense. The boards should be congratulated."
The mechanics behind the district's deal are remarkably complicated, harnessing a unique way to finance the high cost of land in a way that doesn't decimate the school district's construction budget. In addition to a $150 million bond measure passed by voters in 2014, the district is getting $20 million from the city of Mountain View in exchange for 2 acres of the newly bought land, which will be developed into a park. The city is also chipping in another $23 million for joint-use open space adjacent to the classroom facilities.
Because a school campus won't fully develop the land to its maximum-allowed density, the district is "selling" other developers the property's remaining density rights to use elsewhere in Mountain View. The so-called transfer of development rights (TDRs) is expected to generate $79.3 million and is a rare, if not unprecedented, method in the state for raising funds for school construction.
The city's combined $43 million, the Los Altos district's bond anticipation notes -- essentially borrowing against future funds -- and $65 million in Measure N funds were cobbled together to create the $155 million needed to buy the land, Kenyon said.
Federal Realty released a statement on Thursday, Dec. 19, hailing the sale as a "testament" to the value of its real estate portfolio in Silicon Valley, noting that it controls 140 acres in the region, totaling 2.4 million square feet of commercial space. Unlike the district's announcements, Federal Realty is describing the deal as a sale "under threat of condemnation."
The company originally bought 35 acres of the shopping center in 2015, which includes the district's land and the Walmart site, for $62.2 million, or about $1.8 million per acre, according to the statement. The sale price to Los Altos School District amounts to $13.3 million per acre, more than seven times what Federal Realty paid four years ago.
Kenyon said the agreement brokered with Federal Realty allows the commercial tenants on the school's portion of the shopping center to stay for three years, during which time the school district will be collecting about $2.5 million in annual rents. Though that income is entirely unrestricted, Kenyon said he is recommending to the board that the rent money go straight into the district's capital fund.
As for managing the day-to-day operations of fabric stores and gyms, Kenyon said the district isn't getting involved.
"We'll be their landlord essentially, but we're using Federal (Realty) as a property manager," he said. "They're going to still be involved, they will be doing things like taking care of the property and collecting rents."
What kind of school to put on the land has been the subject of fierce debate in recent months and remains a major question hanging over the expensive endeavor to build a campus in Mountain View. Los Altos School District's boundaries extend well outside of the city of Los Altos, including areas of Mountain View in and around the shopping center north of El Camino Real.
For its part, the Mountain View City Council has made clear it wants the school to serve students living in the surrounding neighborhood. Los Altos School District community members are more split, with some advocating that the district move Bullis Charter School to the future Mountain View campus. Bullis is currently housed in portable classrooms across two campuses, and consolidating the charter school on a single, permanent site has been a priority for more than a decade.
Representatives from the charter school have raised concerns that its more than 1,000 students couldn't reasonably fit on the Mountain View site, nor would the school be located in a place that's convenient for families traveling from throughout the Los Altos district.
A third option, proposed by the district and the charter school in April, would be to relocate Egan Junior High School students to the new Mountain View site starting in 2024, relinquishing the current Egan campus to Bullis Charter School. The idea has proved deeply divisive and lambasted as a mistake by district parents and residents, who feel the proposal was tantamount to losing a neighborhood school to appease Bullis. School board members are tentatively planning to make a decision on the future school site's use by the end of the school year.
In the coming months, Kenyon said the district will be working with the city of Mountain View on a master plan for the site, including where the 2 acres of city-owned parkland will be located and how to orient the school and joint-use facilities. The only real hard deadline the school district has committed to is that sports fields, blacktop space and other recreational amenities will be available for city use by 2024, Kenyon said.
But planning for the property can only go so far, he said, when the school district still hasn't decided what school will be there.